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TMI Blog2020 (8) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... t permissible in law. See AMITKUMAR AMBALAL (HUF) VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-10, AHMEDABAD [ 2017 (11) TMI 1904 - ITAT AHMEDABAD ] - We delete the addition made thereof. Hence, assessee s appeal is allowed. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ] - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Parin Shah, AR For the Respondent : Shri Dilip Kumar, Sr. D.R. ORDER PER MS. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 16.10.2017 passed by the Commissioner of Income Tax (Appeals) 6, Ahmedabad, arising out of the order dated 13.12.2016 passed by the ITO, Ward 6(1)(3), Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to the Act ) for Assessment Year 2011-12. 2. The brief facts relating to the case is this that the assessee has sold immovable property on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted on 06.07.1997. (iv) The Ld. CIT(A) ought to have referred the matter to the DVO for determining the Fair Market Value of the land and ought not relied upon the value determined by stamp duty authority for the purpose of payment of stamp duty on the transfer of immovable property. 6. During the assessment proceeding though the assessee mentioned about the Banakhat (the agreement for sale dated 12.12.1996) and power of attorney executed in favour of the assessee dated 06.07.1996 to act on behalf of the vendors of the property, those documents were not found on record by the Ld. AO and thus finally being not convinced with the plea of the assessee that the original consideration was though of ₹ 2,37,500/- as per the agreement subsequently modified to the extent of ₹ 3,00,000/- on 12.12.1996 and finally which stamp duty of ₹ 2,53,000/- was paid, applying the provision of Sec. 50C determined the value of the property on the basis of Fair Market Value at ₹ 51,63,265/- thereby making addition of the balance amount of ₹ 3,00,000/-. In appeal the Ld. CIT(A) while confirming the addition observed that the appellant became the de-facto owner of the land by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nduct of putting signatures by the vendors in the deed of conveyance is nothing but an assurance of relinquishment of their rights, if any, in the property in question. The basic object behind this is to avoid any sort of further litigation. In this particular case though the original vendors initially executed and power of attorney in favour of the assessee to transfer the property on behalf of those vendors in favour of the purchaser, subsequently signing the instrument as confirming party does not give any scope to draw any inference otherwise as explained hereinabove. Such signature made by the original vendors as confirming parties does not make the instrument either bad in law or questionable in any count. Their status remained same; neither it changes the status of the assessee; so as to raise the question as to whether he has acted as the original owner or on behalf of the original owners. 11. On the other hand, the stamp duty of ₹ 53,33,000/- was paid as per valuation made by the registration authority but the same cannot be considered as the final valuation of the property in terms of the specific rules laid down by the amended provision of the 50C of the Act. Unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption, 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 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 . The trouble, however, is that while the sale consideration is fixed at the point of time when agreement to sell is entered into, there is sometimes considerable gap in parties agreeing to a transaction (i.e. agreement to sell) and the actual execution of the transaction (i.e. sale deed), and yet, it is the value as on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso 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. 6.2 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 registration of the transfer of the asset are not same, the value referred to in sub- section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement. (5) The provisions of sub-section (4) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before a date of agreement for transfer of the asset. [5] True to the work ethos of the current Government, it was the first time that within four months of the Tax Simpli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 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 to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years. [7] While the Government has thus recognized the genuine and intended hardship in the cases in which the date of agreement to sell is prior to the date of sale, and introduced welcome amendments to the statue to take the remedial measures, this brings no relief to the assessee before me as the amendment is introduced only with prospective effect from 1st April 2017. There cannot be any dispute that this amendment in the scheme of Section 50C has been made to remove an incongruity, resulting in undue hardship to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) was inserted by the Finance (No. 2) Act, 2004 [8] Their Lordships were pleased to hold that this reasoning and rationale of this decision merits acceptance . The same principle, when applied in the present context, leads to the conclusion that the present amendment, being an amendment to remove an apparent incongruity which resulted in undue hardships to the taxpayers, should be treated as retrospective in effect. Quite clearly therefore, even when the statute does not specifically state so, such amendments, in the light of the detailed discussions above, can only be treated as retrospective and effective from the date related statutory provisions was introduced. Viewed thus, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the section a reasonable interpretation, it could be read retrospective in operation, particularly to give effect to the section as a whole. Accordingly, this Court, in Allied Motors (P) Ltd. Etc. (supra), held that the first proviso was curative in nature, hence, retrospective in operation w.e.f. 1st April, 1988. It is important to note once again that, by Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003, is retrospective in operation. Moreo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a registered agreement to sell, as claimed by the assessee, was actually executed on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C, he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29.6.2005, of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g. the conversion of use of land) are to be ignored. It is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer for adjudication de novo, after giving an opportunity of hearing to the assessee and by way of a speaking order. I order so. 4. Learned counsel then also invites our attention to a decision of Hon ble Allahabad High Court in the case of CIT vs Shimbhu Mehra, [2016] 65 taxmann.com 142 (Allahabad), in support of the same proposition. Learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper to remit the issue to the file of the Assessing Officer for adjudication de novo in the light of observations above and the legal position set out in Dharamshibhai Sonani (supra). Ordered, accordingly. 8. In the result, appeal is allowed for statistical purposes. Pronounced in the open Court today on this 30th day of November, 2017. Thus, it appears from the Act as well as from the judgment as above that when the date of agreement fixing the amount of consideration and the date of registration of the property being the capital asset is different, the matter should be referred to the DVO by the Ld. AO for determination of the valuation as on the date of agreement keeping in view the provision of Sec.50C of the Act instead of that as we find in the case in hand the Revenue has assessed the valuation of the property on the basis of the valuation so assessed by the Stamp Duty Authority and the difference amount has been added to the total income of the assessee which in our considered view is not permissible in law. We, therefore, following the ratio laid down of the above judgment do not hesitate to quash the order impugned and we delete the addition made thereof. Hence, assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] wherein Their Lordships had, inter alia, directed that We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the Benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile(emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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