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TMI Blog2019 (1) TMI 1523X X X X Extracts X X X X X X X X Extracts X X X X ..... dmeasuring 900 sq.ft. in the new building to be constructed on the said plot. One of such flats admeasuring 405 sq.ft. was to be given to Shri Uday Vasant Shinde and his relative, the hitherto occupants and consenting parties, while the second flat admeasuring 495 sq.ft. was to be retained by the assessee and his sister. Market value of the property transferred under the deed amounted to Rs. 1,86,32,000/- on which appropriate stamp duty was paid. On being called upon to explain the reasons for not declaring capital gain arising out of this transaction, the assessee submitted that the property was originally acquired by Dr. Ramchandra Krishna More prior to the year 1972. After his death, the property devolved to Smt. Usha Umeshkumar More. After her death, the property devolved to the assessee and the members of his family. The assessee explained that his mother Smt. Uma Umesh Kumar More sold the property to M/s Jayesh Builders by a Registered Development Agreement dated 31-05-2002 and handed over the possession to the said builder by issuing a General Power of Attorney on 27-09-2002. The builder demolished 'Sai Chhaya' for constructing a new building. After the death of Smt. Uma Ume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proposed building to be constructed on the same property having total carpet area admeasuring approximately 900 sq.ft. In the meantime, one Shri Vasanat Shivram Shinde filed a petition in the Hon'ble Court contending that flat 5A situated at 'Sai Chhaya' of Villae Parle, Mumbai was in his possession for last several years as the said building was constructed by the deceased father of Smt. Usha Shinde, wife of the petitioner. He claimed to be in possession of such a flat and urged that the transfer of his flat by the assessee and his family to M/s. Jayesh Builders was illegal and void. After protracted litigation between Shri Shinde and family of the assessee, eventually, a consent decree was passed by the Hon'ble Bombay High Court in June 2010, a copy of which is available on record. As per the said decree, the assessee agreed that one flat admeasuring 405 sq.ft. carpet area be allotted to Shri Shinde, out of two flats having total carpet area of approximately 900 sq.ft. which were to be allotted to him in the new building. There was some revision in the monetary consideration to be paid also from the originally agreed amount of Rs. 30 lakh in 2002 to Rs. 51 lakh. After this con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 'indexed cost of improvement'. Section 50C is a special provision for full value of consideration in certain cases. For ready reference, we are reproducing sub-section (1) of section 50C, as under : - '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 adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "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, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer : Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset 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: Provided further that the first proviso shall apply only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on the date of agreement and not the date of execution of registered sale deed. It is quite logical also. Once an agreement is entered into between two parties for transferring a particular property and certain amount is also received, the transaction should be considered to have been locked on such a date with reference to its market value prevailing on that date. If the transfer by a registered sale deed is delayed for some reason and it actually takes place in a later year and the stamp value on such a later date is adopted, it would not reflect the true fair market value of the property, which, for all practical purposes, was actually agreed to be transferred on an earlier date of entering into agreement to sell with reference to the prevailing market price on that date. 10. However, to avoid misuse of this beneficial provision, second proviso to section 50C(1) categorically provides that the first proviso shall apply only when the amount of consideration or part thereto was received through banking channel on or before the date of agreement for transfer . In order to circumvent a situation of the parties to a transaction of transfer of land or building etc. trying to draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to assessment year 2017-18 and subsequent years.' 12. It can be seen from the text of the provision as well as the Memorandum that for the purpose of computation of capital gain in a situation where the agreement to sell was entered at an earlier point of time vis-à-vis the registration of sale deed, a benefit in terms of taking lower stamp value with reference to the earlier date of agreement should be substituted in place of the higher stamp value w.r.t. the later date of registration. Even the Memorandum admits that section 50C, as such, did not provide any relief in such a situation and the proviso has been inserted to provide such a relief. This proviso has been inserted by the Finance Act, 2016 w.e.f. 01-04-2017. The Memorandum also provides that the amendment shall be effective from 01-04-2017 and shall apply to the assessment year 2017-18 and subsequent years. Now the question arises as to whether this proviso, conferring benefit in specified cases, can still be treated as retrospective in nature? 13. It is a fundamental rule of interpretation that ordinarily, a legislation is presumed to be prospective unless there appears a contrary intention. Similarly, a st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 338 (SC). Unable to concur with the earlier view holding such an amendment to be retrospective, their Lordships referred the matter for consideration by a Larger Bench. It was pursuant to such a reference, that the Constitution Bench in Vatika Township Pvt. Ltd. 367 ITR 466 (SC) came to consider this issue. It has been laid down in this decision that ordinarily legislation is presumed not to be intended to have a retrospective operation as the law passed today cannot apply to the events of the past. Their Lordships of the Constitution bench further observed that a legislation which imposes new obligation should be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect. It was in this backdrop of the principles of statutory interpretation that the Constitution Bench held proviso to section 113 as prospective. After holding so, their Lordships observed that if the legislature is going to confer a benefit, then such an amendment will have a retrospective effect. Discussing this issue in para 33 of the judgment, the Hon'ble Apex Court held that : "We would also like to point out, for the sake of completeness, that where a benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout inflicting detriment on some other person or on the public generally. It further emerges that the idea behind this proviso is to grant a benefit in the circumstances noted herein only. Going by the observations of the Hon'ble Supreme Court in para 33 of Vatika Township Pvt. Ltd. (supra), we have no hesitation in holding that proviso to section 50C (1) is retrospective in nature and applies to the assessment year under consideration as well. It is so for the reason that the relief given through this amendment is to certain persons without inflicting a corresponding detriment on some other person or on the public generally. Further, it is overt from the Memorandum explaining the provisions of the Finance Bill 2016 that the object of the amendment is also to confer such a relief or benefit. Going by the ratio in the case of Vatika Township (supra), we have no doubt whatsoever in our mind that the insertion made through the above provisos w.e.f. 01-04-2017 is retrospective and applies to the assessment year under consideration also. 16. At this stage, it is significant to note that the benefit of first proviso would be allowed only if the condition as stipulated in second proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration is one 495 sq.ft. flat in the new building plus monetary consideration of Rs. 51 lakh, the Revenue has considered the value of two flats of 405 sq. ft. and 495 sq ft. plus Rs. 51.00 lac as the full value of consideration. We have seen the entire gamut of the factual panorama above, from which it transpired that Shri Shinde was having some occupancy rights in flat no. 5A of 'Sai Chhaya' and eventually his claim was settled by allotting him a 405 sq. ft. flat in the new building. It is in this light of the facts that we need to decide whether the assessee transferred flat no. 5 and 5A in 'Sai Chhaya' or only flat no. 5. Whereas the assessee is contending that he transferred only one flat, the Department has opined that he transferred both the flats. 20. We find from the nature of litigation between the assessee and Sh, Shinde that the latter was having only occupancy right in respect of flat no. 5A. The ownership right in it vested only in the assessee. No material has been brought on record to establish the ownership right of Sh, Shinde in flat no.5A. As such, it is held that as the assessee was legal owner of both the flats, 5 and 5A, in 'Sai Chhaya', it was he alon ..... 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