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TMI Blog2010 (12) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee against the order of the CIT(A) on following grounds:- 1. The Ld. CIT(A) is not correct in confirming the order of the ITO, making the addition of Rs.5,56,000/- (50% of Rs.11,12,000/- being 50% share in Property by the Assessee) u/s 50C of the Act, 1961, being the difference between the Sale Consideration in Sale Deed and Market Value adopted by Registrar for Stamp Duty purpose without considering the circumstances in which the Assessee has entered into such a sale deed. 2. The Assessee contends that the Ld. CIT(A) is not considered the latest amended position of Provision 50C which applies to Sale Agreements also according to which the conditions of Sec 50C fulfilled at the time of Sale Agreement where the Market value of sold property for the purpose of stamp duty is less than the actual sale consideration. Sale deed is nothing but furtherance of sale agreement. 3. The Assessee contends that Cash advance was taken as soon as the deal was finalized through agreement not giving any scope for the Vendee to back trap from the deal if a condition is posed that may cause delay in arranging for a demand draft as the Assessee was in a desperate mood to sell. Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the case of Koduru Satya Srinivas vs. ACIT in ITA Nos.556and557 of 2008 in which the Tribunal has taken a view that the rates prevailing as on the date of agreement are to be adopted instead of rates prevailing on date of registration of property. Copy of the order of the Tribunal is placed on record. 4. The Ld. D.R. placed a reliance upon the order of the CIT(A). 5. Having gone through the order of the Tribunal in the light of rival submissions, we are of the view that impugned issue is squarely covered by the aforesaid order of the Tribunal. The Tribunal while adjudicating the issue in the aforesaid case has followed its order in the case of M/s. Lahiri Promoters in ITA No.12/Vizag/2009 dated 22.6.2010. The relevant observation of the Tribunal on this issue is extracted hereunder:- "8. We have heard the rival contentions and carefully perused the record. The issue agitated before us revolves around section 50C of the Act. For the sake of convenience, we extract the section 50C(1) below:- "50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be its fair market value on the date of its transfer. The revenue took the stand that in order to invoke the provisions of section 52(2), it is enough if it is shown that the fair market value exceeded the disclosed value by 15%. However, the Hon'ble Supreme Court held that a fair and reasonable construction of Sec 52(2) would be to read into it a condition that it would apply only where the consideration for the transfer is under- stated and hence it would have no application in the case of a bonafide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. For the sake of convenience, we extract below the relevant observations of the Hon'ble Apex Court on the rule of interpretation and the logical conclusion:- "5. Now, on these provisions the question arises as to what is the true interpretation of s.52, sub-s.(2). The argument of the Revenue was, and this argument found favour with the majority judges of the Full Bench, that on a plain and natural construction of the language of s.52, sub-s.(2), the only condition for attracting the applicability of that provision was that the fair market value of the capital asset tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose which the legislature had in view in enacting that provision and in the context of the setting in which it occurs. We cannot ignore the context and the collocation of the provisions in which s.52, sub-s (2) appears, because, as pointed out by Judge Learned Hand in the most felicitous language:- " ...the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes, and no degree of particularity can ever obviate recourse to the setting in which all appear, and which all collectively create." Keeping these observations in mind we may now approach the construction of s.52, sub-s. (2). 6. The primary objection against the literal construction of s.52, subs,(2), is that it leads to manifestly unreasonable and absurd consequences. It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision but it can certainly help to fix its meaning. It is a well recognized rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the Revenue would lead to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received the market value of the property as on the date of resale, if, in the meanwhile, the market price has shot up and exceeds the agreed price by more than 15%. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply s.52, sub-s (2), according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of s.52, sub-s (2), and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the Court may modify the language used by the legislature or even "do some violence" to it, so as to achieve the obvious intention of the legislature and produce a rational construction; Vide Luke vs. IRC (1963) AC 557 : (964) 54 ITR 692(HL). The Court may also in such a case read into the statutory provision a condition whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eps into amend the IT law to catch such an income within the net of taxation." Hence the object of introduction of section 50C is to prevent under valuation of the real value of the property in the sale deed to avoid payment of tax or duty which the Government is entitled to, which, in our opinion, is akin to the objective of introduction of section 52, which was existing earlier. 11. In the case of K.P. Varghese, supra the Hon'ble Apex Court contemplated a situation, by way of an example, where the completion of sale took place after a couple of years after the date of agreement. In this connection it is pertinent to extract the relevant observations of the Hon'ble Supreme Court, at the cost of repetition, as the said example contemplated by the Hon'ble Apex Court is squarely applicable to the facts of the present case. "There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement - and it is quite well k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the object of introduction of section 50C was not mentioned in the relevant Finance bill or in the speech of the Finance minister, yet, the Hon'ble Madras High Court in the case of K.R. Palani Swamy and others, Supra has stated that the provision of Sec 50C was inserted in the income-tax act to prevent large scale under valuation of real value of property in the sale deed, so as to defraud revenue which the government is legitimately entitled to, by pumping in black money. Thus we can see that the purpose of introduction of section 52(2) earlier and section 50C w.e.f. 1.4.2003 are for the purpose of achieving similar objectives. 11.3 In the instant case also, the assessee herein has fulfilled a contractual obligation on 30-6-2005, which the assessee is bound by law to carry out as per the sale agreement entered in March, 2003. Now the next question that requires to be addressed is whether there was any under statement of actual consideration at the time when the sale agreements were entered into. The assessee has placed a copy of the certificate dated 16.4.2010 issued by the Jt. Sub Registrar, Visakhapatnam by way of additional evidence. According to the said certificate, the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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