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2020 (8) TMI 597 - AT - Income TaxAddition u/s 56(2)(vii)(b) - purchase of immovable property - difference amount between the consideration paid by the assessee and the Sub Registrar Office (SRO in short) value - Section 50C applicability - HELD THAT - The property was in dispute due to bank loan and the original title deeds were not available for complying with the sale formalities. Therefore, there was a delay in obtaining the title deeds for completing the registration. Thus, we find that there is genuine cause for delay in getting the property registered. CIT(A) relied on the decision of M.Siva Parvathi and Ors 2009 (10) TMI 618 - ITAT VISAKHAPATNAM which is rendered in the context of application of section 50C of the Act. In the decision cited, this Tribunal has considered the decision of K.P.Varghese 1981 (9) TMI 1 - SUPREME COURT and held that the provisions of section 50C which were not available in the statute cannot be applied during the interim period. Where any individual or Hindu Undivided Family receives any immovable property without consideration, the stamp duty value of such property required to be considered as the consideration paid and the said amount to be taxed u/s 56(2)(vii)(b) of the Act. In the instant case, as discussed earlier the assessee has paid the consideration and there was no evidence from the department to show that the assessee has paid the excess consideration over and above the sale deed. With effect from 01.04.2014, the Act has been amended and the new sub clause(ii) has been introduced to section 56(2)(vii)(b)in the statute. As per the provisions the Act from the A.Y.2014-15 sub clause (ii) has been introduced so as to enable the AO to tax the difference consideration if the consideration paid is less than the stamp duty value. The AO is not permitted to invoke the provisions of section 56(2)(vii)(b)(ii) in the absence of sub clause (ii) in the Act as on the date of agreement. The department has not brought any evidence to show that there was extra consideration paid by the assessee over and above the sale agreement or sale deed. No other case law of any high court supporting the contention of the department was brought to our notice by the Ld.DR. Therefore, we hold that the Ld.CIT(A) has rightly applied the decision of this Tribunal in the assessee s case and deleted the addition. Hence, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld.- Decided in favour of assesssee.
Issues Involved:
1. Delay in filing the appeal by the department. 2. Applicability of Section 56(2)(vii)(b) of the Income Tax Act, 1961. 3. Relevance of the case law under Section 50C for deciding issues under Section 56(2)(vii)(b). 4. Adoption of fair market value as certified by the registered valuer. Detailed Analysis: 1. Delay in Filing the Appeal: The department filed the appeal with a delay of 6 days. The Assessing Officer (AO) submitted an affidavit explaining the reasons for the delay and requested condonation. After hearing both parties, the delay was condoned. 2. Applicability of Section 56(2)(vii)(b): During the assessment, the AO found that the assessee purchased an immovable property for ?5 crores, while the Sub Registrar Office (SRO) value was ?12,67,82,500/-. The AO invoked Section 56(2)(vii)(b) and taxed the difference of ?4,55,11,750/-. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who allowed the appeal, citing the Tribunal's decision in M.Siva Parvathi & Ors., which was in the context of Section 50C. The CIT(A) noted that the agreement for sale was entered into in August 2012, prior to the insertion of Section 56(2)(vii)(b) in the Finance Act, 2013, effective from A.Y. 2014-15. Thus, Section 56(2)(vii)(b) was deemed inapplicable, and the addition made by the AO was deleted. The revenue appealed, arguing that Section 50C and Section 56(2)(vii)(b) are independent provisions. The revenue contended that the property was registered in F.Y. 2013-14, relevant to A.Y. 2014-15, when Section 56(2)(vii)(b) was in force. The assessee argued that the agreement was made in August 2012, before the provision's introduction, and the delay in registration was due to issues with obtaining original title deeds from the bank. The Tribunal upheld the CIT(A)'s decision, noting that the agreement was entered into before the provision's introduction and that the delay in registration was genuine. The Tribunal referenced the Supreme Court's decision in K.P.Varghese, which emphasized that the law applicable at the time of the transaction's initiation should prevail. 3. Relevance of Case Law under Section 50C: The CIT(A) relied on the Tribunal's decision in M.Siva Parvathi & Ors., which dealt with Section 50C. The Tribunal found that Section 56(2)(vii)(b) is an extension of Section 50C, applicable to the buyer instead of the vendor. The Tribunal concluded that provisions not in existence at the time of the agreement could not be applied later. 4. Adoption of Fair Market Value: The revenue's grounds related to adopting the fair market value as certified by the registered valuer for Section 56(2)(vii)(b). Since the Tribunal decided in favor of the assessee on the primary issue, it found it unnecessary to adjudicate these grounds, though the assessee argued that their case was covered by the Tribunal's decision in Venkateswara Vara Prasad Rao Karipineni. Conclusion: The Tribunal dismissed both the revenue's appeal and the assessee's cross objections, upholding the CIT(A)'s order. The decision emphasized that the provisions of Section 56(2)(vii)(b) could not be applied retrospectively to an agreement made before the provision's introduction. The order was pronounced in the open court on 17th August 2020.
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