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2021 (12) TMI 862 - AT - Income TaxLTCG - date of Transfer of Immovable property as the date of registration of sale deed or date of agreement, date on which the possession is given - value of the property as per Section 50C - appellant contended that Section 50C came into operation from 01.10.2009 and the agreement of the instant property was entered into on 06.08.2006 and part payment was also received. Hence, Section 50C is not having any application - HELD THAT - CIT(A) has considered the net consideration of ₹ 41,41,000/- (which is the value given by SRO) in respect of computation of capital gains and the value mentioned in the sale deed for the transaction of the property is ₹ 25,25,000/-, which has not been disputed by any of the authorities. From the detailed written submissions of the assessee it is clear that the agreement was made for the sale of property on 06/08/2006 through cheque No. 754963 drawn on Andhra Bank for ₹ 5,50,000/- and paid cash of ₹ 50,000/- also and the subsequent payments received through cheques only. Therefore, the proviso of section 50C(1) will clearly apply here. Therefore, the assessee s net sale consideration shall be considered as ₹ 25,25,000/- for the computation of capital gains as it is immaterial that whether reference of the agreement is included in the sale deed or not because it is evident from the payments received by the assessee by way of cheques, which proves that there was genuine agreement made for the sale/purchase of the property. As decided in SHRI VUMMUDI AMARENDRAN 2020 (10) TMI 517 - MADRAS HIGH COURT AO could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance - AO could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance - Decided in favour of assessee. Exemption u/s 54F on the construction of new asset - AO has accepted construction value of ₹ 16,26,000/- for three individual houses, but, had denied for remaining houses the claim of exemption u/s 54F. This issue has been settled by various High Courts and the issue relates to prior to the amendment in the Act. Therefore, the assessee is eligible for claiming exemption u/s 54F for remaining two houses also - See VITTAL KRISHNA CONJEEVARAM, ANAND KRISHNA CONJEEVARAM, VINOD KRISHNA CONJEEVARAM 2013 (8) TMI 757 - ITAT HYDERABAD , SYED ALI ADIL 2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT , M/S. TILOKCHAND AND SONS 2019 (4) TMI 713 - MADRAS HIGH COURT - Assessee appeal allowed.
Issues Involved:
1. Applicability of Section 50C of the Income Tax Act, 1961. 2. Date of Transfer for the purpose of Capital Gains. 3. Reference to Valuation Officer under Section 50C. 4. Retrospective Application of the Proviso to Section 50C. 5. Eligibility for Exemption under Section 54F for Construction of Multiple Residential Units. Issue-wise Detailed Analysis: 1. Applicability of Section 50C of the Income Tax Act, 1961: The primary issue was whether the Assessing Officer (AO) was correct in adopting the value determined by the Stamp Valuation Authority (SRO) as the sale consideration under Section 50C. The AO replaced the actual sale consideration of ?25,25,000 with the SRO value of ?41,91,000, leading to an addition of ?16,16,900 to the returned income. The CIT(A) upheld this decision. 2. Date of Transfer for the purpose of Capital Gains: The appellant argued that the date of transfer should be the date of the agreement (06/08/2006) when part payment was received, not the date of registration (29/01/2007). The AO and CIT(A) considered the date of registration as the date of transfer. The Tribunal referred to Section 2(47) and various judicial precedents, concluding that the date of agreement should be considered for capital gains computation. The Tribunal observed that the proviso to Section 50C(1) applies, making the sale consideration ?25,25,000. 3. Reference to Valuation Officer under Section 50C: The appellant contended that the AO should have referred the matter to the Valuation Officer when the adoption of the SRO value was disputed. The Tribunal cited judicial precedents, emphasizing the duty of the AO to refer the valuation to the departmental valuation wing under Section 50C when disputed by the assessee. The Tribunal found the AO's action of not referring the matter to the Valuation Officer to be incorrect. 4. Retrospective Application of the Proviso to Section 50C: The appellant argued that the proviso to Section 50C, which allows the consideration on the date of agreement to be taken if part payment is made by cheque, should apply retrospectively. The Tribunal referenced the judgment of the Hon’ble Madras High Court in Commissioner of Income Tax, Chennai v. Vummudi Amarendran, which held that the proviso to Section 50C(1) should be considered retrospective as it aims to relieve undue hardship. The Tribunal agreed, applying the proviso retrospectively to the appellant's case. 5. Eligibility for Exemption under Section 54F for Construction of Multiple Residential Units: The AO allowed exemption under Section 54F only for one residential house, disallowing it for the other two constructed for the appellant's sons. The Tribunal noted that various High Courts have settled this issue, allowing exemption for multiple residential units constructed as one house before the amendment in the Act. The Tribunal cited multiple judgments supporting the appellant’s claim and concluded that the appellant is eligible for exemption under Section 54F for all three houses. Conclusion: The Tribunal allowed the appeal, holding that: - The sale consideration for capital gains computation should be ?25,25,000, considering the date of agreement. - The AO erred in not referring the matter to the Valuation Officer. - The proviso to Section 50C applies retrospectively. - The appellant is eligible for exemption under Section 54F for all three residential units constructed. Result: The appeal of the assessee was allowed.
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