2024 (6) TMI 674 - AT - Income Tax

Capital Gain computation - Applicability of amended provisions of Section 50C - Retrospective or prospective application - whether the amendment made to the provisions of Section 50C of the Act with effect from A.Y. 2017-18 would apply retrospectively for the A.Y. 2010-11 or not? - HELD THAT - As decided in SHRI VUMMUDI AMARENDRAN 2020 (10) TMI 517 - MADRAS HIGH COURT wherein held proviso to Section 50C(1) deals with cases where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital assets are not the same the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer. Thus an amendment by insertion of proviso seeks to relieve the assessee from undue hardship. No hesitation to hold that the proviso to Section 50C(1) of the Act should be taken to be retrospective from the date when the proviso exists. As amendment to Section 50C should be applied retrospectively and the capital gain should be recomputed considering the stamp duty value as on the date of the agreement. Decided against revenue.

Summary

Issues Involved:
1. Applicability of amended provisions of Section 50C of the Income-tax Act, 1961.
2. Retrospective or prospective application of the amendment to Section 50C.

Summary:

Issue 1: Applicability of amended provisions of Section 50C of the Income-tax Act, 1961

The assessee, an individual deriving income from salaries and Long Term Capital Gain, jointly held two plots of land inherited from his grandfather. A development agreement was entered into with a developer in 2006, but the conveyance deed was executed in 2010. The assessee offered capital gain based on the actual sale consideration agreed in 2006. The learned Assessing Officer (AO) found that the stamp duty valuation as on the date of the conveyance deed was significantly higher than the agreement value and assessed the total income accordingly, applying the provisions of Section 50C of the Act.

Issue 2: Retrospective or prospective application of the amendment to Section 50C

The learned CIT (A) held that the amendment to Section 50C by Finance Act, 2016, which allows the consideration of stamp duty value as on the date of the agreement, is retrospective in nature. This decision was based on several judicial precedents, including the Hon'ble Madras High Court's ruling in CIT v. Vummudi Amarendran, which held that the amendment is curative and should be applied retrospectively to relieve undue hardship to the assessee.

The learned AO appealed, arguing that the amendment is prospective and applicable only from A.Y. 2017-18. However, the Tribunal upheld the CIT (A)'s decision, citing the Madras High Court's judgment and other precedents that support the retrospective application of the amendment. The Tribunal found no infirmity in the CIT (A)'s order and dismissed the AO's appeal.

Conclusion:

The Tribunal concluded that the amendment to Section 50C should be applied retrospectively, and the capital gain should be recomputed considering the stamp duty value as on the date of the agreement. The appeal by the learned AO was dismissed.