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2020 (5) TMI 90 - AT - Income TaxLong-term capital gain computation - assessee had received 50% share out of the sale consideration recorded in the sale deed - applicability of provisions of section 50C - amount at which the property was registered for the purpose of the stamp valuation - AO has raised doubt on the genuineness of this agreement to sale - HELD THAT - If we read, the entire registered sale deed as a whole, then we cannot import part related to sale consideration only as in view of the other part, sale of the property would be taxable in the hands of the assessee in subsequent assessment year. Thus, we can t take the sale value shown in registered sale deed as sale consideration while treating the agreement to sale as genuine document. Applicability of section 50C on the agreement to sell - The word assessable has been inserted in section 50C w.e.f. 01/10/2009. Thus, prior to 01/10/2009, the section 50C was applicable over the sale of properties, which were sold by of the registered deed where the stamp value was assessed by the registration authorities and the section 50C was not applicable, where the properties were sold otherwise than by registered sale deed. The Hon ble Rajasthan High Court in the case of Satya dev sharma 2017 (9) TMI 1161 - RAJASTHAN HIGH COURT has held insertion of the word assessable by way of Finance Act 2009 with effect from 01/10/2009 as having prospective in nature. In the instant case, if we consider the agreement to sale as genuine, then provisions of section 50C are not applicable and in such circumstances, the deemed sale consideration as per the stamp valuation authorities cannot be invoked in the case of the assessee. In both the situation whether the agreement to sale is genuine or not, deemed sale consideration of ₹ 1.56 crore cannot be invoked and thus finding of the lower authorities on the issue in dispute are accordingly set aside. The ground of the appeal of the assessee is accordingly allowed. Loss on sale of the shares held by the lower authorities as not genuine and not allowing set-off of the same against the long-term capital gains - For the purpose of the computation of the capital gain on transfer of asset, in terms of section 48 of the Act, the cost of acquisition and cost of an improvement of the asset along with any expenditure incurred in connection with such transfer of the asset, are to be reduced from the full value of the consideration received or accrued as a result of the transfer of the capital asset. Thus in the instant case, first issue of dispute is regarding full value of the consideration received or accrued. The assessee has explained the consideration received of ₹ 50,000/-. The Revenue has not brought on record whether the assessee received consideration more than ₹ 50,000 or consideration more than ₹ 50,000 will be accrued to the assessee. In the relevant year the provision of section 50CB were also not in existence, which provide for deemed sale consideration in case of the sale of the shares less than fair market value. In the circumstances, there is no other option other than the considering ₹ 50,000 as the sale of consideration for the purpose of section 48 of the Act. Similarly regarding cost of the acquisition also the Assessing Officer has not brought on record any adverse evidence. The contention of the Assessing Officer that the transaction is not genuine is not based on any evidence brought on record. The reliance placed by the lower authorities on the decision of Sumati Dayal 1995 (3) TMI 3 - SUPREME COURT and Durga Prasad More 1971 (8) TMI 17 - SUPREME COURT are also out of the context as no surrounding circumstances like accommodation entry providers etc. which could justify human probability, have been brought on record. The addition has been sustained without any documentary evidences on record, accordingly set aside. - Decided in favour of assessee.
Issues Involved:
1. Legality and factual correctness of the Ld. CIT(A) order dated 31.03.2015. 2. Computation of long-term capital gain on the sale of agricultural land. 3. Treatment of loss on the sale of shares as non-genuine. 4. Direction for initiating wealth tax proceedings against the appellant. Detailed Analysis: 1. Legality and Factual Correctness of the Ld. CIT(A) Order: The appellant contended that the order dated 31.03.2015 by the Ld. CIT(A) was erroneous both in law and on facts. However, this ground being general in nature, did not require specific adjudication. 2. Computation of Long-Term Capital Gain on Sale of Agricultural Land: - Facts of the Case: The assessee declared a long-term capital gain of ?17,31,266/- on the sale of agricultural land. The Assessing Officer (AO) computed the gain at ?65,43,367/-, leading to an addition of ?48,12,100/-. - Dispute on Sale Consideration: The AO found discrepancies in the sale consideration. The assessee claimed a sale consideration of ?30,00,000/- based on an agreement to sell dated 01/04/2009. However, the AO obtained a registered sale deed showing a consideration of ?1,56,24,200/-, attributing ?78,12,100/- to the assessee's 50% share, resulting in the disputed addition. - Fraud Allegations: The assessee alleged that the Special Power of Attorney (SPA) dated 06/04/2009 was fraudulently obtained by the buyer, leading to the inflated sale consideration in the registered deed. - Section 50C Applicability: The AO alternatively justified the addition under Section 50C of the Income-tax Act, deeming the stamp duty valuation as the sale consideration. The assessee contested this, arguing that Section 50C's amendment inserting "assessable" was prospective from 01/10/2009 and not applicable to the 01/04/2009 agreement. - Tribunal's Findings: The Tribunal considered two scenarios: - If the agreement to sell dated 01/04/2009 is genuine, Section 50C is not applicable as the property was not registered or assessed for stamp duty at that time. - If the agreement is not genuine, the sale should be considered in the subsequent assessment year (2011-12) based on the registered deed, not the year under consideration. The Tribunal concluded that in either scenario, the deemed sale consideration of ?1.56 crore could not be invoked, and the addition was set aside. 3. Treatment of Loss on Sale of Shares as Non-Genuine: - Facts of the Case: The assessee reported a short-term capital loss of ?24,50,000/- on the sale of 50,000 shares of M/s PSJ Projects and Infrastructure Private Limited. The AO disallowed the loss, deeming the transaction as bogus. - AO's Reasoning: The AO questioned the high premium paid for the shares, the sharp decline in their value, and the relationship between the parties involved. The shares were unlisted, and the AO suspected the transaction as a means to introduce unaccounted money. - Tribunal's Findings: The Tribunal noted that the AO did not provide evidence of any cash consideration received over the declared ?50,000/-. The assessee had furnished necessary purchase and sale details. The Tribunal found no basis for the AO's claim of the transaction being non-genuine and allowed the assessee's claim of short-term capital loss. 4. Direction for Initiating Wealth Tax Proceedings: This ground was not pressed by the assessee during the hearing and was dismissed as infructuous. Conclusion: The Tribunal allowed the assessee's appeal, setting aside the additions made by the lower authorities and dismissing the grounds that were not pressed. The order was pronounced in the open court on 1st May 2020.
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