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TMI Blog2021 (4) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... er sale deed. 3. That the resulting addition of Rs. 11,63,168/- (Rs. 8,89,63,168 - 8,78,00,000) in the computation of taxable capital gain in pursuance of direction of Ld CIT (A) being unwarranted and uncalled for under the facts and circumstances of the case be kindly deleted. 4. That the objections raised by the assessee vide its submissions dt 18-11-2016 with reference to valuation report of the DVO vis-a-vis valuation report of the Government approved valuer have not been properly appreciated by the Ld CIT (A) and which have been ignored by him by holding them to be of general nature." 2. The only effective ground is against the valuation of property u/s 50C of the Income Tax Act, 1961 ("the Act") by adopting the value as assessed by the DVO before the Ld.CIT(A). 3. Facts giving rise to the present appeal are that case of the assessee was selected for scrutiny assessment and assessment u/s 143(3) of the Act was framed vide order dated 31.10.2014. While framing the assessment, the Assessing Officer observed that the assessee had discontinued its business of cinema hall with the name of Amrapali Cinema at Garh Road and sold the entire immovable property. It was further obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal rendered in the case of Maria Fernandes Cheryl vs ITO [2021] 123 taxmann.com 252 (Mum.-Trib.). 7. On the contrary, Ld. Sr. DR, Sh. Ashok Gautam vehemently opposed these submissions and supported the order of the authorities below. 8. We have heard the rival contentions and perused the material available on record. We find that there is no dispute with regard to fact that fair market value determined by the DVO at Rs. 8,89,63,168/- against the actual sale consideration of Rs. 8,78,00,000/- as disclosed in Sale Deed. The resulting difference is Rs. 11,63,168/- which is 1.02%. The Co-ordinate Bench of this Tribunal in the case of Maria Fernandes Cheryl vs ITO (supra) has held as under:- 7. "These submissions, however, do not impress us. As noted by the Central Board of Direct Taxes circular # 8 of 2018, explaining the reason for the insertion of the third proviso to Section 50C(1), has observed that "It has been pointed out that the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including the shape of the plot or location". Once the CBDT itself accepts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by another bench of this Tribunal in the case of Dharmashibhai Sonani Vs ACIT [(2016) 161 ITD 627 (Ahd)] which has been approved by Hon'ble Madras High Court in the judgment reported as CIT Vs Vummudi Amarendran [(2020) 429 ITR 97 (Mad)]. The question that we must take a call on, therefore, is as to what is the rationale behind the insertion of the third proviso to Section 50C(1), and if that rationale is to provide a remedy for unintended consequences of the main provision, we must hold that the third proviso to Section 50C(1) comes into force with effect from the same date on which the main provision, unintended provisions of which are sought to be nullified, itself was brought into effect. Let us understand what the nature of the provisions of Section 50C is. In terms of this provision, if the property is sold below the stamp duty valuation rate, which is often called circle rate, this stamp duty valuation report is assumed as sale consideration for the property in question, and, accordingly, capital gains tax is levied. This deeming fiction to substitute apparent sale considerations by notional consideration computed on the basis of a stamp duty valuation rate, was thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual sale consideration, for the purpose of computing capital gains, and adopting a notional figure, for that purpose, will not be justified in such cases. On a conceptual note, an estimation of market price is an estimation nevertheless, even if by a statutory authority like the stamp duty valuation authority, and such a valuation can never be elevated to the status of such a precise computation which admits no variations. The rigour of Section 50C(1) was thus relaxed, and very thoughtfully so, to take these bonafide cases of small variations between the stated sale consideration vis-à-vis stamp duty valuation, out of the scope of adjustments contemplated in the computation of capital gains under this anti-avoidance provision. In our humble understanding, it is a case of a curative amendment to take care of unintended consequences of the scheme of Section 50C. It makes perfect sense, and truly reflects a very pragmatic approach full of compassion and fairness, that just because there is a small variation between the stated sale consideration of a property and stamp duty valuation of the same property, one cannot proceed to draw an inference against the assessee, and subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. 8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of Section 50 C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti-avoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with effect from the date on which the related provision, i.e., Section 50C, itself was introduced. These amendments are thus held to be retrospective in effect. In our considered view, therefore, the provisions of the third proviso to Section 50C (1), as they stand now, must be held to be effective with effect from 1st April 2003. We order accordingly. Learned Departmental Representative, however, does not give up. Learned Departmental Representative has suggested that we may me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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