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TMI Blog2018 (1) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER For The Assessee : Shri H.N. Montiwalla, A.R. For The Revenue : Shri Purushottam Kumar, D.R. ORDER Per D.T. GARASIA, Judicial Member: The present appeal has been preferred by the assessee against the order dated 27.09.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12. 2. The short facts of the case are as under: Assessee jointly held certain land at LBS Marg, Bhandup (E), Mumbai admeasuring 6321.20 sq. mtrs. The said land was inherited land and was acquired in the year 1965 by assessee s father late Mr. Narendra Singh and his brother late Mr. Balbir Singh. Accordingly, the assessee s father s share in the said land was 50% and the balance 50% was that of the assessee s uncle. The assessee s parents died in air crash in 1990 and thereupon the 50% share of late Shri Narendra Singh devolved upon the assessee and his brother Shri Tapendra Singh in equal proportions. The assessee had entered into development agreement with developer M/s. Horizon Enterprises dated 19.08.06 for transfer of 50% share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er consideration was the valuation of land on the date of registration i.e. 19.08.2006 at ₹ 9,32,38,000/- on the date of development agreement made on receipt of furnishing money of ₹ 10,00,000/-. When there is a difference between the members fixed at the time of agreement to sell and actual execution of sale deed is the date of execution which is recognized by section 50C for the purpose of computing capital gain because it is relevant for the purpose of computing the stamp duty or registration of sale deed. The fundamental purpose of introducing section 50C was to counter suppression of sale consideration on sale of immovable properties, and this section was introduced in the light of widespread belief that sale transactions of land and building are often undervalued resulting in leakage of legitimate tax revenues. This Section provides for a presumption, a rebuttable presumption though-something with which I am not concerned for the time being, that the value, for the purpose of computing stamp duty, adopted by the stamp duty valuation authority represents fair indication of the market price of the property sold. Section 50C(1) provides that, Where the consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment (i.e. stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration, and capital gains shall be computed on the basis of such consideration under section 48 of the Income-tax Act. The scope of section 50C was extended w.e.f. A.Y. 2010-11 to the transaction which were executed through agreement to sell or power of attorney by inserting the word assessable alongwith words the value so adopted or assessed . Hence, section 50C is now also applicable in case of such transfers. The present provisions of section 50C do not provide any relief where the seller has entered into an agreement to sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement. A later similar provision inserted by way of section 43CA does take care of such a situation. [ 2]. It is therefore proposed to insert the following provisions in section 50C: ( 4) Where the date of an agreement fixing the value of consideration for the transfer of the asset and the date of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification Committee (Easwar Committee) has in its first report, pointed out that this provision does not provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property and the sale consideration is fixed in such agreement, whereas similar provision exists in section 43CA of the Act i.e. when an immovable property is sold as a stock-in- trade. It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration. It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property. 30 These amendments are proposed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th approval by Their Lordships, as follows: Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an intended consequence to punish the assessees for non-deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case which related to asst. yr. 1984-85. The relevant accounting period ended on 30th June, 1983. The ITO disallowed the deduction claimed by the assessee which was on account of sales-tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under s. 43B which, as stated above, was inserted w.e.f. 1st April, 1984. It is also relevant to note that the first proviso which came into force w.e.f. 1st April, 1988 was not on the statute book when the assessments were made in the case of Allied Motors (P) Ltd. Etc. (supra). However, the assessee contended that even though the first proviso came to be inserted w.e.f. 1st April, 1988, it was entitled to the benefit of that proviso because it operated retrospectively from 1st April, 1984, when s. 43B stood inserted. This is how the question of retrospectivity arose in Allied Motors (P) Ltd. Etc. (supra). This Court, in Allied Motors (P) Ltd. Etc. (supra) held that when a proviso is inserted to remedy unintended consequences and to make the section workable, a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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