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2021 (8) TMI 270 - AT - Income TaxIncome from other sources u/s 56 - purchase was lower than the ready reckoner rate - tolerance limit 5% or 10% - Assessee had purchased a residential flat for a consideration less than the stamp duty value of the property -assessee. Assessee being a layman agreed with the consideration amount without knowing the implications of provisions of sec 50C - HELD THAT - We note that the difference between value declared and value as per stamp value authority is less than 10%. This is within the tolerance limit specified in section 50C. The authorities below have rejected it on the premise that the tolerance limit was introduced by the Finance Act, 2018; hence it is not applicable for the year under consideration. We note the plea that the amendment was intended to cure a hardship and hence retrospective has been duly accepted in the ITAT decision referred in the assessee s submission above. Moreover, the speech of Hon'ble Finance Minister while introducing the provisions duly support this premise. Moreover, in such situation curative provision to remove hardship should be retrospective is duly supported by decision in the case of Allied Moters (P) Ltd. 1997 (3) TMI 9 - SUPREME COURT as held that proviso which is inserted to remedy unintended consequences and to make the proviso workable, a proviso which supplies an obvious omission in the section and is require to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation. Undoubtedly this amendment was done to obviate hardships arising out of minor variation in value of transaction qua 50C valuation. In this view of the matter assessee s plea succeeds. Hence, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
Issues Involved:
1. Excessiveness and legality of the Assessing Officer's order. 2. Applicability of Section 50C of the Income Tax Act, 1961 to the case. 3. Consideration of the difference between agreement value and stamp duty value. 4. Retrospective application of the amendment to Section 50C. Detailed Analysis: 1. Excessiveness and Legality of the Assessing Officer's Order: The assessee contended that the order dated 30.11.2018 by the Assessing Officer (AO) was excessive and unlawful. The AO had added ?4,55,000/- to the assessee's income, citing that the stamp duty value exceeded the consideration amount by ?50,000/-. The assessee argued that the AO failed to consider the minimal difference between the agreement value and the stamp duty value, which was less than 0.5%. 2. Applicability of Section 50C of the Income Tax Act, 1961: The assessee purchased a residential flat for ?9,00,00,000/- while the stamp duty value was ?9,04,55,000/-. The AO applied Section 50C, which deems the stamp duty value as the full value of consideration if it exceeds the consideration received. The assessee argued that the difference was minimal and should not attract Section 50C, especially considering the amendment introduced by the Finance Act, 2018. 3. Consideration of the Difference Between Agreement Value and Stamp Duty Value: The assessee highlighted that the difference between the agreement value and the stamp duty value was only 0.5%, which is within the 5% tolerance limit introduced by the Finance Act, 2018. The AO, however, did not accept this argument, stating that the amendment does not cover the assessee's case. 4. Retrospective Application of the Amendment to Section 50C: The assessee argued that the amendment to Section 50C, which provides a tolerance limit of 5% for the difference between the agreement value and the stamp duty value, should be applied retrospectively. The assessee cited various case laws and the Finance Minister's speech to support this claim. The assessee also argued that the amendment was curative in nature and aimed to minimize hardships for taxpayers. Tribunal's Decision: The Tribunal noted that the difference between the value declared by the assessee and the value as per the stamp duty authority was less than 10%, which is within the tolerance limit specified in Section 50C. The Tribunal accepted the assessee's plea that the amendment was intended to cure a hardship and should be applied retrospectively. This view was supported by the ITAT decision and the Hon'ble Supreme Court's decision in the case of Allied Motors (P) Ltd. (91 Taxman 205), which stated that curative amendments should be treated as retrospective to avoid unintended consequences. Conclusion: The Tribunal set aside the orders of the authorities below and decided the issue in favor of the assessee, allowing the appeal. The Tribunal concluded that the minimal difference between the agreement value and the stamp duty value should not attract the provisions of Section 50C, and the amendment should be applied retrospectively to minimize hardship for the assessee. Result: The appeal was allowed, and the addition of ?4,55,000/- made by the Assessing Officer was disallowed.
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