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TMI Blog2020 (2) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... perty for stamp duty purposes, by invoking provisions of Section 56(2)(vii) of the 1961 Act. Briefly stated facts of the case are that assessee is in business of hiring/ leasing of heavy duty cranes and other equipment's under a proprietary concern namely M/s.Sundaram Movers. The case of the assessee was selected for framing scrutiny assessment through CASS. During the course of assessment proceedings conducted by AO u/s 143(3) read with Section 143(2) of the 1961 Act, the AO observed that during previous year relevant to impugned assessment year 2016-17, the assessee had purchased vacant lands at Thamal II Village, Kancheepuram Taluk, Kancheepuram District, Tamil Nadu admeasuring 7 acres 98 cents , vide registered sale deed dated 15.07.2015(Doc. No. 1164/205) for total consideration of Rs. 3,51,12,000/-. The AO observed that guideline value of aforesaid property was Rs. 3,64,15,000/-. The AO invoked provisions of Sec.56(2)(vii) of the 1961 Act and observed that guideline value of the said property of Rs. 3,64,15,000/- is required to be adopted as the value for which aforesaid property has been acquired by the assessee and the differential between guideline value and sale considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 01.04.2019 should be treated as retrospective was rejected by Ld.CIT(A) and additions stood confirmed by learned CIT(A) , vide appellate order dated 20.05.2019 passed by learned CIT(A). 3.0 Aggrieved by an appellate order dated 20.05.2019 passed by learned CIT(A), the assessee has filed an appeal before tribunal. The Ld. Counsel for assessee submitted before the Bench that difference in the guideline value as on the date of registration of property and actual sale consideration was Rs. 13,03,000/-, which is less than 5%. It was submitted that Sec. 56(2) was amended by Finance Act, 2018 w.e.f. 01.04.2019, wherein, in the cases where difference between the guideline value and actual sale consideration is upto 5% , the same shall be ignored and no addition can be made to the income of the assessee by invoking deeming fiction created owing to differential between sale consideration and guideline value. It was submitted that this amendment was made to rationalize provisions of Sec.50C of the 1961 Act with a view to reduce hardship to buyers and sellers of real estate , and accordingly no addition should be made in the hands of the assessee. It was submitted that matter was referred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale consideration of immovable property is less than guideline value by more than Rs. 50,000/-, then the guideline value has to be taken as the value of property for bringing to tax income u/s 56(2)(vii) of the 1961 Act under the head 'Income from other sources' in the hand of buyer of the party. Later on with a view to minimize hardship in real estate transactions in the hands of the buyer and seller, amendments were brought in by Finance Act, 2018 w.e.f. 01.04.2019 applicable from ay: 2019-20 in Section 50C and 56(2), wherein in case the differential between guideline value fixed by State Government for stamp duty purposes and actual sale consideration is upto 5% , then the same shall not be deemed to be income for the purposes of Section 56(2) and also for Section 50C of the 1961 Act. No doubt Section 56(2)(vii) is a deeming Section and artificial fiction is created wherein in case of differential between the guideline value and sale consideration exceeding Rs. 50,000, the same shall be deemed to be income in the hands of purchaser and there is no doubt the deeming section has to be given full play but the law cannot be allowed to operate in vaccum de-horse ground realities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration. This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years." "Clause 21 of the Bill seeks to amend section 56 of the Income-tax Act relating to income from other sources. Clause (x) of sub-section (2) of the said section, inter alia, provides that where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017, any immovable property, for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head "Income from other sources". It is proposed to amend the said clause of sub-section (2) of the said section so as to provide that where any person receives any immovable property for a consideration, the stamp duty value of the property as exceeds such consideration, if the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act,2018 in Section 56(2) where in differential upto 5% was allowed and no additions be made under deeming fiction of Section 56(2) of the 1961 Act albeit it is applicable from ay: 2019-20 onwards and fifthly no incriminating evidence is brought on record by Revenue which could evidence that assessee in fact paid higher sale consideration than the actual sale consideration recorded in registered sale document albeit we are aware that Section 56(2) is deeming section and Revenue is not obligated to bring on record any incriminating material in such circumstances to prove that actual sale consideration paid by tax-payer is higher than that recorded in sale document , thus keeping in view cumulative effect of our aforesaid reasonings , we delete the additions as were made by the AO which was later confirmed by learned CIT(A) as we are of the view that law cannot operate in vaccum de-horse ground realities which under the surrounding circumstances in the instant case lead to one and only one irresistible conclusion that the additions as were made by authorities below are not sustainable in the eye of law. We order accordingly. 5. In the result, the appeal filed by assessee in ITA No.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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