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2022 (8) TMI 376 - AT - Income TaxCapital Gain on sale of land - application of provision of section 50C - HELD THAT - Since the consideration was fixed and paid by the parties at the time of agreement of sale on 09.07.2010 and possession of the land was also given to the buyer, only the registration of the Sale Deed was pending which was done on 24.03.2012 i.e. these two events took place in two different assessment years. In such a situation amended provisions of Section 50C(1) of the Act brought by the Finance Act, 2016 will be applicable in the case of the assessee, which are retrospective. therefore, as per amended provisions of section 50C(1) for computation of Capital Gain in the hands of assessee, the AO should consider the guideline value of the land which the stamp duty authority has adopted for charging of stamp duty on the date of agreement to sale and not on the date of sale deed. We therefore find merit in the contention of the assessee and accordingly decide this issue in favour of the assessee. Amount of consideration - As noted that the assessee has actually received a consideration of Rs. 4,36,000/- and Rs. 1,00,000/- i.e. in aggregate Rs. 5,36,000/- by way of 2 Sale Deeds for completion of the sale of parcel of land referred to in the Agreement to Sale dated 09.07.2010. Since, the actual consideration received by the Seller / Assessee for Rs.5,36,000/- is higher than the guideline value to be adopted following the judicial pronouncements with reference to the amended provisions of Section 50C(1) which is Rs. 4,08,000/- as discussed in preceding paras, therefore the consideration for calculation of Capital Gains would be higher of these two amounts which is the actual amount received by the assessee i.e. Rs. 5,36,000/-. Deduction u/s.54F - AO has rightly and undisputedly already allowed the claim of the assessee for exemption u/s 54F of the Act for purchase of land and construction of house at Raipur for Rs.16,05,000/-, however, the only dispute was regarding the amount of consideration u/s section 50C(1) of the Act, which was taken by AO for Rs.2,16,08,500/, whereas the same should be Rs. 5,36,000/- as decided by us in terms of our observations as above. Appeal of assessee is allowed.
Issues Involved:
1. Addition of Rs.1,96,18,540/- as Capital Gain on sale of land. 2. Determination of the date of transfer for capital gain calculation. 3. Rejection of the registered sale agreement dated 08.07.2010. 4. Valuation of the sale consideration. 5. Eligibility for exemption under Section 54F of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Addition of Rs.1,96,18,540/- as Capital Gain on Sale of Land: The assessee contested the addition of Rs.1,96,18,540/- made by the AO under the head Capital Gain. The CIT(A) had confirmed this addition. The assessee argued that no capital gain arose during the year as the transfer took place on 8th July 2010 when the agreement to sale was executed and registered. The Tribunal found that the assessee transferred and handed over possession of the land on 09.07.2010, and the payment was made through a cheque, which was cleared on 12.07.2010. Therefore, the Tribunal concluded that the transfer had taken place within the meaning of Section 2(47) of the Act, and the addition made by the AO was not justified. 2. Determination of the Date of Transfer for Capital Gain Calculation: The primary contention was whether the transfer occurred on the date of the agreement to sale (09.07.2010) or the date of the actual registration (24.03.2012). The Tribunal noted that the agreement to sale was registered, and the entire sale consideration was paid on 09.07.2010. The Tribunal referred to the amendment in Section 50C(1) by the Finance Act 2016, which is retrospective, stating that the value adopted by the stamp valuation authority on the date of the agreement should be considered for computing the full value of consideration. Thus, the Tribunal held that the date of agreement (09.07.2010) should be taken as the date of transfer. 3. Rejection of the Registered Sale Agreement Dated 08.07.2010: The CIT(A) had rejected the registered sale agreement dated 08.07.2010. The Tribunal found that the agreement to sale was indeed registered, and the entire consideration was paid on the same date. The Tribunal emphasized that Section 53A of the Transfer of Property Act applies as the sale agreement was registered, and the assessee received the entire sale consideration by cheque. Therefore, the rejection of the sale agreement by CIT(A) was not justified. 4. Valuation of the Sale Consideration: The AO had taken the value of the sale at Rs.2,16,08,500/- as against Rs.1,79,01,000/- claimed by the assessee. The Tribunal referred to the amendment in Section 50C(1) and various judicial pronouncements, which state that if the date of the agreement and the date of registration are different, the value on the date of the agreement should be considered. The Tribunal concluded that the AO should have considered the guideline value of the land on the date of the agreement (09.07.2010), which was Rs.4,08,000/-. However, since the actual consideration received by the assessee was Rs.5,36,000/-, this amount should be used for capital gain calculation. 5. Eligibility for Exemption under Section 54F: The assessee claimed exemption under Section 54F, stating that the sale proceeds were invested in a new residential house. The AO had allowed the exemption for Rs.16,05,000/- but disputed the amount of consideration under Section 50C(1). The Tribunal held that the consideration should be Rs.5,36,000/- as discussed, and since the exemption under Section 54F was already allowed by the AO, the assessee's claim was justified. Conclusion: The Tribunal allowed the appeal of the assessee, concluding that the transfer took place on 09.07.2010, the sale consideration should be Rs.5,36,000/-, and the exemption under Section 54F was rightly claimed. The addition of Rs.1,96,18,540/- made by the AO was deleted.
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