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TMI Blog2019 (8) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... on 21.2.2011. 4.That the ld. CIT(A) ought to have geld that the stamp duty registration value is on 13.2.2011 should have been adopted. 5. That the ld. CIT(A) that the appellant had not objected to the valuation u/s 50 C and no evidence in this regard was furnished is perverse. 6. That the ld.CIT(A) ought to have held that once the appellant had objected to the valuation u/s 50C of the Act, the AO ought to have referred the matter to the valuation officer. 7. That the ld.CIT(A) erred in law and on facts in adopting the stamp duty value in respect of a converted land when the agreement was for sale of agricultural land. 8. That the ld.CIT(A) erred in law and on facts in not considering the further written submissions filed by the appellant on 16.11.2018. Each of the above grounds is without prejudice to one another and the appellant craves leave of the Hon'ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify either all or any of the above grounds either before o at the time of hearing of this appeal". ITA No.2799(B)2018 (Assessment year : 2012-13) "1. The order of the ld. CIT(A) is opposed to law and facts of the case. 2. Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was entered into with the buyer on 21/02/11 at Rs. 4,10,65,000/-, however, subsequently at the time of actual sale deed, land was converted for warehouse purposes and therefore valuation adopted by stamp duty authorities, was as per fair market value, which was higher than value agreed between the parties as per Agreement to Sell. Ld.AO however ignored submissions advanced by assessee and computed difference by invoking provisions of section 50 C and made addition in the hands of assessee to the extent of Rs. 2,18,12,500/-. Ld.AO also made disallowance in the hands of assessee under provisions of section 14 A by computing disallowance at Rs. 2,62,46,296/- under Rule 8D2 (ii) and (iii) of income tax rules 1963. 5. Aggrieved by additions in assessment order, assessee preferred appeal before Ld.CIT(A). Ld.CIT(A) partly allowed claim of assessee by deleting addition under section 14 A of the Act, however, confirmed view of Ld.AO in respect of sale consideration under section 50 C of the act. 6. Aggrieved by order of Ld.CIT(A), both assessee as well as revenue are in appeal before us. 7. ITA No.2799(B)/2018 (Revenue's Appeal) Only issue raised by revenue in their appeal is regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into between parties. It was further submitted by Ld.AR that entire sum of Rs. 4,10,65,000/- was paid by buyers much before 17/11/11 and since buyers could not comply with necessary requirement within stipulated time, continuation agreement to complete requirement of conversion of land was entered into subsequently. It has been submitted that land was converted in piecemeal is on 19/09/11, 05/11/11, 24/10/11. He thus submitted that as time was not the essence of this contract and therefore assessing officer was wrong in adopting 50 C and making addition of differential value between actual price received by assessee as per the Agreement to Sell dated 21/02/11 vis-a-vis price adopted by registration authorities as on date of registration of sale deed on 13/02/12. He submitted that necessary ingredient is, intention of assessee to sell the land which is ascertainable from Agreement to Sell dated 21/02/11. On the contrary, Ld.Sr.DR submitted that assessee sold property, because it was of no use to it being an agricultural plot. However assessee in Agreement to Sell agreed to transfer the property to buyers only on conversion of the land from agricultural use to industrial use, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated by the first party/seller and the second party/purchaser. 4. Both parties affirms and declare that the second party/purchaser has so far paid Rs. 4,80,00,000/-(Rs.Four Crores eighty lakhs only) towards the sale consideration account, in the manner detailed above. 5. According to the first party/seller the balance sale price payable by the second party/purchaser is Rs. 1,16,75,000/- (Rs. One Crore sixteen lakhs seventy five thousand only) 6. According to second party/purchaser, the balance sale price payable to the first p[arty/seller is Rs. 98,37,500/- (Rs.Ninety eight lakhs thirty seven thousand only) According to the second party/purchaser, he has incurred an expenditure of Rs. 4,00,000/- towards phodi and other miscellaneous activities. The first party/seller, has disputed that it has authorized the second party/purchaser to incur the above expenditure, on behalf of the first party/seller. 7. The second party/purchaser, has today paid sum of Rs. 94,37,500/-(Rs.Ninety four lakhs thirty seven thousand and five hundred only) in the following manner; a. Rs. 69,37,500/- (Rs.Sixty nine lakhs thirty seven thousand and five hundred only) paid by means of Rs. 30,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the said land acquired by assessee through its directors was agricultural land, and no sale deed could be executed in favour of buyer without 1st converting land for non-agricultural purposes. And as assessee was unable to convert the land to be used for industrial purposes, it entered into agreement to sell on 21/02/11 which is a registered document. It is also observed that assessee has received entire payment according to agreement to sell dated 21/02/11 prior to date of convergence and what remained was only registration of document, which was subsequently carried out on 13/02/12. From aforestated facts, it is observed that conveyance is executed by way of registered sale deed in favour of buyers after conversion of land to industrial use, which was as per mandate of law applicable under Karnataka Stamp Duty Act. It is also fact that agreement to transfer subject lands and date of registration are not same, though both are registered documents. It is observed that Income tax Act w.e.f. assessment year 2017-18 has been amended, wherein stamp duty value may be taken as on date of 'agreement for transfer' and not as on the date of registration of conveyance deed, pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amendment is prospective, however we place reliance upon decision of Hon'ble Supreme Court in case of KP Verghese vs ITO reported in 131 ITR 597, wherein it has been held that: "It is a well recognized rule of construction that a statutory provision must be so constructed, 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 a wholly unreasonable result which could never have been intended by the legislature." Hon'ble Delhi High Court in case of Ansall Landmark Township (P) Ltd., reported in 234 taxman 825 , wherein Hon'ble Court in respect of 2nd proviso to section 40 (a) (ia) held as under: "Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such n amendments 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 provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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