2023 (7) TMI 407 - AT - Income Tax

Addition of long term capital gain - addition invoking provisions of Section 50C - Section 50C retrospective or prospective effect - CIT(A) deleted the addition holding that the amendment to Section 50Cis retrospective and allowed benefit of sale consideration as per agreement to sell in which sale consideration was lesser than the value adopted by the stamp valuation authority - HELD THAT - As decided in Dharamshibhai Sonani 2016 (9) TMI 1259 - ITAT AHMEDABAD provisos to Section 50C being effective from 1st April 2003 - This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is indeed well taken and deserves acceptance. Also see Amit Bansal 2018 (11) TMI 1699 - ITAT DELHI We decline to interfere with the findings of the ld. CIT(A). - Decided against revenue.

Summary

Issues involved:
The issues involved in the judgment are related to the deletion of addition of long term capital gain by the CIT(A) for Assessment Year 2016-17. The main contentions of the Revenue include the timing of sale deeds execution, reliance on amended provisions of section 50C, failure to contest valuation by Stamp Valuation Authority, and impact of section 50C transactions on the computation of capital gain.

Issue 1: Addition of long term capital gain
The Revenue contested the deletion of addition of long term capital gain by the CIT(A) based on the timing of sale deeds execution and the valuation adopted by the Stamp Valuation Authority. The Revenue argued that the value adopted by the stamp Authority should be considered for the computation of capital gain as per section 50C of the Income-tax Act, 1961. However, the CIT(A) held that the amendment to Section 50C is retrospective, allowing the benefit of sale consideration as per the agreement to sell, which was lower than the value determined by the stamp valuation authority.

Issue 2: Reliance on amended provisions of section 50C
The Revenue raised concerns about the CIT(A) relying on the amended provisions of section 50C, which included a proviso inserted w.e.f. 01.04.2017, for a transaction relating to F.Y. 2015-16. The Revenue argued that the CIT(A) erred in giving undue weight to the amended provisions, while the CIT(A) justified the decision based on the retrospective nature of the amendment.

Issue 3: Failure to contest valuation by Stamp Valuation Authority
The Revenue highlighted that during the assessment proceedings, the assessee did not contest the valuation by the Stamp Valuation Authority or request a valuation by the Valuation Officer. Despite this, the CIT(A) deleted the addition of long term capital gain, leading to a dispute over the proper consideration of the stamp duty valuation in determining the capital gain.

Issue 4: Impact of section 50C transactions
The Revenue contended that the CIT(A) unjustly deleted the addition of long term capital gain by ignoring the transactions governed by section 50C of the Income-tax Act. The Revenue emphasized that the value adopted by the Stamp Valuation Authority should be deemed as the full value of sale consideration for computing capital gains, which was a crucial aspect in the dispute.

In the judgment, the Tribunal considered the arguments presented by both sides and examined the documentary evidence in accordance with the ITAT Rules. The core of the dispute revolved around the discrepancy between the sale consideration shown by the assessee and the value determined by the Stamp Authority for the immovable properties sold. The Assessing Officer made the addition invoking Section 50C, while the CIT(A) ruled in favor of the assessee based on the retrospective application of the amendment to Section 50C.

The Tribunal rejected the contention of the ld. DR that there was no agreement prior to the execution of the transfer deed, citing specific details from the registered sale deed indicating the finalization of the deal and issuance of a cheque before the increase in stamp duty value post 31st March. The Tribunal emphasized the retrospective effect of the insertion of section 50C by the Finance Act, 2016, and referred to a previous case to support the interpretation of the retrospective nature of the amendment.

The Tribunal also mentioned a similar view taken by the Delhi Bench of the Tribunal in a related case. Ultimately, based on the decisions of the co-ordinate benches and the specific circumstances of the case, the Tribunal declined to interfere with the findings of the CIT(A) and dismissed the appeal of the Revenue in ITA No. 1292/DEL/2020.