2018 (1) TMI 1156 - AT - Income Tax

Capital gain computation - market value of conveyance deed taken under section 50C - Held that - In a situation in which there is significant difference between the point of time when agreement to sell is executed and when the sale deed is executed, therefore, should ideally be between the sale consideration as per registered sale deed, which is fixed by way of the agreement to sell, vis- -vis the stamp duty valuation as at the point of time when agreement to sell, whereby sale consideration was in fact fixed, because, if at all any suppression of sale consideration should be assumed, it should be on the basis of stamp duty valuation as at the point of time when the sale consideration was fixed. We restore this issue back to the file of AO to verify whether ₹ 10,00,000/- was received by the assessee on the date of registration by cheque or not. If the assessee produces the evidence that he has received the money by cheque then the stamp valuation should be taken as on 19.08.2006 - Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Determination of the valuation date for capital gains computation under section 50C of the Income Tax Act.
2. Applicability of amendments to section 50C regarding the date of agreement and date of registration.
3. Retrospective application of amendments to section 50C.
4. Verification of payment mode for consideration received by the assessee.

Detailed Analysis:

1. Determination of the Valuation Date for Capital Gains Computation Under Section 50C:
The core issue in this case revolves around the determination of the appropriate date for valuation of the land for capital gains computation under section 50C of the Income Tax Act. The assessee argued that the value prevailing at the time of the development agreement in 2006 should be considered, as the consideration was fixed at that time. However, the Assessing Officer (AO) adopted the market value as per the Stamp Valuation Authorities (SVA) at the time of registration in 2010, which was significantly higher.

2. Applicability of Amendments to Section 50C Regarding the Date of Agreement and Date of Registration:
The Tribunal discussed the amendments made to section 50C by the Finance Act 2016, effective from 1st April 2017. These amendments introduced provisos allowing the value adopted by the SVA on the date of the agreement to be considered if the agreement and registration dates are different, provided the consideration or part thereof was received by non-cash modes on or before the agreement date.

3. Retrospective Application of Amendments to Section 50C:
The Tribunal noted that while these amendments were intended to remove undue hardship and were curative in nature, they were made effective prospectively from 1st April 2017. Citing various judicial precedents, including the Delhi High Court's judgment in CIT Vs Ansal Landmark Township Pvt Ltd, the Tribunal opined that such amendments should ideally be treated as retrospective. This view was based on the principle that curative amendments addressing unintended consequences should apply from the date the original provision was introduced.

4. Verification of Payment Mode for Consideration Received by the Assessee:
The Tribunal directed the AO to verify whether the assessee received the consideration of ?10,00,000 by cheque or other non-cash modes on the date of the agreement (19.08.2006). If the assessee provides evidence of such receipt, the SVA value as of the agreement date should be considered for capital gains computation.

Conclusion:
The Tribunal restored the issue back to the AO for verification of the payment mode. If the assessee proves that the consideration was received by cheque on the agreement date, the valuation date for capital gains computation should be the date of the agreement in 2006, not the registration date in 2010. The appeal of the assessee was allowed for statistical purposes, pending this verification. The order was pronounced in the open court on 24.01.2018.

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