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2021 (10) TMI 1095 - AT - Income TaxCapital gain computation - AO in adopting stamp duty value as per Section 50C of the Act as full value of consideration - Scope of amendment to Section 50C - HELD THAT - Difference in consideration adopted by the stamp valuation authority and the assessee is less than 5% and we find that there is an amendment which has been brought in Section 50C of the Act by way of third proviso w.e.f. 01/04/2019 wherein tolerance band of 10% has been specified. This amendment in third proviso has been held to be retrospective in operation by the Co-ordinate Bench of this Tribunal in the case of Maria Fernandes Cheryl 2021 (1) TMI 620 - ITAT MUMBAI stating that the said proviso even though not stated to be prospective must be construed as curative in nature and hence to be given retrospective aspect - Thus we direct the ld. AO to consider only ₹ 58,50,000/- as sale consideration while computing the capital gains as against ₹ 61,16,000/-. Exemption u/s 54EC - investment made by her in NHAI capital gain bonds within a period of six months - The primary fact of date of handing over of cheque together with the application form is duly supported by an affidavit filed by the sub-broker Shri Gobind M Vaswani who had categorically affirmed that he has collected the application form together with the cheque from the assessee on 24/10/2013 and had indeed handed over the same to authorised agent i.e. M/s. Karvy Stock Broking Ltd., on 24/10/2013 itself. The contents of this affidavit has not been controverted by the revenue by bringing in contrary evidences thereon. The law is very well settled that in the event of an affidavit not tested by the department in the manner known to law, then the contents of the said affidavit is to be construed as true and correct. Reliance in this regard is placed on the celebrated decision of the Hon ble Supreme Court in the case of Mehta Parikh Co. vs CIT 1956 (5) TMI 4 - SUPREME COURT We have no hesitation in holding that assessee is entitled for claim of exemption u/s.54EC of the Act in respect of investment made by her in NHAI capital gain bonds within a period of six months from the date of transfer. Accordingly, the grounds raised by the assessee are allowed.
Issues Involved:
1. Adoption of stamp duty value as per Section 50C of the Income Tax Act, 1961. 2. Rejection of the claim of exemption under Section 54EC of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Adoption of Stamp Duty Value as per Section 50C: The first issue addressed was whether the Commissioner of Income Tax (Appeals) [CIT(A)] was justified in upholding the action of the Assessing Officer (AO) in adopting the stamp duty value as the full value of consideration under Section 50C of the Income Tax Act, 1961. The assessee had sold a residential house property for ?58,50,000, while the stamp valuation authority valued the property at ?61,16,000. The AO invoked Section 50C and adopted the higher value of ?61,16,000 for capital gains computation. The assessee contended that the difference of ?2,66,000 (4.55% of the sale consideration) was minimal and should not invoke Section 50C. The CIT(A) upheld the AO's decision, leading to an addition of ?2,66,000. The Tribunal found that the difference between the stamp duty value and the actual consideration was less than 5%. It noted an amendment to Section 50C effective from 01/04/2019, introducing a tolerance band of 10%, which was held to be retrospective in nature. The Tribunal cited the case of Maria Fernandes Cheryl vs. ITO, where it was determined that such curative amendments should be applied retrospectively to avoid unintended consequences. Therefore, the Tribunal directed the AO to consider only ?58,50,000 as the sale consideration, providing relief to the assessee. 2. Rejection of the Claim of Exemption under Section 54EC: The second issue was whether the CIT(A) was justified in rejecting the assessee's claim for exemption under Section 54EC of the Act. The assessee had invested ?50,00,000 in National Highways Authority of India (NHAI) capital gain bonds, claiming exemption under Section 54EC. However, both the AO and CIT(A) held that the investment was made beyond the six-month period from the date of sale, thus disqualifying the exemption. The Tribunal found that the assessee had issued a cheque for ?50,00,000 on 24/10/2013, which was handed over to the sub-broker and then to Karvy Stock Broking Ltd., the authorized agent of NHAI, on the same day. However, Karvy Stock Broking Ltd. delayed handing over the cheque to NHAI until 06/11/2013, and it was encashed on 07/11/2013. The Tribunal held that the delay caused by Karvy Stock Broking Ltd. was beyond the control of the assessee, who had acted within the six-month period. The Tribunal also referred to the affidavit from the sub-broker affirming the timely submission of the cheque and application, which was not contested by the revenue. Citing the Supreme Court decision in Mehta Parikh & Co. vs. CIT, the Tribunal concluded that the assessee was entitled to the exemption under Section 54EC. Conclusion: The appeal was allowed in favor of the assessee, with the Tribunal directing the AO to adopt the actual sale consideration of ?58,50,000 for capital gains computation and granting the exemption under Section 54EC for the investment in NHAI bonds. The order was pronounced on 08/10/2021.
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