9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 620 - AT - Income TaxCapital gain Computation - Stamp duty valuation u/s 50C - difference between sale consideration and value adopted for the purpose of stamp duty was only 6.55% - HELD THAT - There is no variation in the material facts in this respect in 2021 vis- -vis the material facts in 2003. What holds good in 2021 was also good in 2003. If variations up to 10% need to be tolerated and need not be probed further under section 50C in 2021 there were no good reasons to probe such variations under section 50C in the earlier periods as well. We are therefore satisfied that the amendment in the scheme of Section 50C(1) by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis- -vis stamp duty valuation to 10% are curative in nature and therefore these provisions even though stated to be prospective must be held to relate back to the date when the related statutory provision of Section 50C i.e. 1st April 2003. What is means is that even if the valuation of a property for the purpose of stamp duty valuation is 10% more than the stated sale consideration the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. Once legislature very graciously accepts by introducing the legal amendments in question that there were lacunas in the provisions of Section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation anti-avoidance provisions under section 50C could be pressed into service and thus remedied the law there is no escape from holding that these amendments are effective with effect from the date on which the related provision i.e. Section 50C itself was introduced. These amendments are thus held to be retrospective in effect. Therefore the provisions of the third proviso to Section 50C (1) as they stand now must be held to be effective with effect from 1st April 2003. DR however does not give up. DR has suggested that we may mention in our order that relief is being provided as a special case and this decision may not be considered as a precedent . Nothing can be farther from a judicious approach to the process of dispensation of justice and such an approach as is prayed for is an antithesis of the principle of equality before the law which is one of our most cherished constitutional values. Our judicial functioning has to be even-handed transparent and predictable and what we decide for one litigant must hold good for all other similarly placed litigants as well. We therefore decline to entertain this plea of the assessee. As against the stated consideration of 75, 00, 000 the stamp duty valuation of the property is 79, 91, 500. The difference is just 4, 91, 500 which is about 6.55% of the stated sale consideration. As the difference between the stated consideration vis- -vis the stamp duty valuation is admittedly less than 10% of the stated consideration in this case we are of the considered view that Section 50C will have no application in the matter. The enhancement in capital gain computation as made by the AO thus stands disapproved.
Issues Involved:
1. Correctness of the order passed by CIT(A) regarding the assessment under section 143(3) read with section 147 of the Income Tax Act, 1961. 2. Applicability of Section 50C of the Income Tax Act concerning the difference between sale consideration and stamp duty valuation. 3. Retrospective applicability of the third proviso to Section 50C(1) introduced by Finance Act 2018 and its amendment by Finance Act 2020. Detailed Analysis: 1. Correctness of the order passed by CIT(A): The appeal questions the correctness of the CIT(A)'s order dated 28th May 2019, which upheld the assessment under section 143(3) read with section 147 for the assessment year 2011-12. The core issue is whether the CIT(A) erred in not appreciating that the difference between sale consideration and the stamp duty valuation was only 6.55%, thus challenging the addition under section 50C of the Act. 2. Applicability of Section 50C: The assessee sold a flat for ?75,00,000, while the stamp duty valuation was ?79,91,500. The Assessing Officer (AO) adopted the stamp duty valuation for computing capital gains, leading to the reopening of the completed assessment. The CIT(A) upheld the AO's decision, prompting the assessee to appeal further. The Tribunal noted that the variation between the sale consideration and the stamp duty valuation was only 6.55%, which is less than the permissible variation of 10% introduced by the Finance Act 2020. 3. Retrospective Applicability of the Third Proviso to Section 50C(1): The Tribunal examined whether the amendments introduced by the Finance Act 2018 and Finance Act 2020, which provided a tolerance band of 5% and later 10%, could be applied retrospectively. The Departmental Representative argued that these amendments are prospective, effective from 1st April 2019 and 1st April 2021, respectively. However, the Tribunal, referencing various judicial precedents, held that the third proviso to Section 50C(1) is curative in nature, addressing unintended consequences of the main provision. Therefore, the Tribunal concluded that these amendments should be retrospective, effective from 1st April 2003, when Section 50C was initially introduced. The Tribunal emphasized that the insertion of the third proviso was to address genuine variations between sale consideration and stamp duty valuation due to factors like the shape of the plot or location. Hence, the anti-avoidance provisions of Section 50C should not apply to such bonafide variations. The Tribunal rejected the Departmental Representative's plea to treat the relief as a special case, underscoring the principle of "equality before the law." Conclusion: The Tribunal allowed the appeal, concluding that the difference of 6.55% between the sale consideration and the stamp duty valuation falls within the permissible limit of 10%. Consequently, Section 50C does not apply, and the enhancement in capital gains computation by the AO was disapproved. The Tribunal did not address other issues raised in the appeal, deeming them infructuous. Pronouncement: The judgment was pronounced in the open court on 15th January 2021.
|
