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TMI Blog2021 (7) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... uity and hence it can be applied even in the pending matters and treated as retrospective in nature. 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 assessee, as is evident from the observation in Easwar Committee report that The (then prevailing) 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 . Recognizing the incongruity that the date of agreement of sale has been ignored in the statute even though it was crucial as it was at this point of time that the sale consideration is finalized. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as retrospective, effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. As relying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows: 1. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming the action of assessing officer in making addition of ₹ 34,70,000/- u/s. 50C of the Act on account of difference in the value adopted by the DVO and the sale consideration taken by the assessee in his return of income. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming the action of assessing officer in making addition of ₹ 1,20,95,753/- on account of cost of indexation claimed by the assessee by adopting cost of indexation at ₹ 19,45,130/- instead of ₹ 1,40,40,883/- claimed by the assessee. 3. It is therefore prayed that the additions made by Assessing Officer and confirmed by CIT(Appeals) may please be deleted. 4. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 3. The relevant material facts, as culled out from the material on record, are as follows. The return of income for the A.Y 2013-14 was filed by assessee on 30.03.2014 showing total income at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l value of consideration should not be taken at ₹ 5,29,72,000/-, i.e., at par with the valuation adopted by the Stamp Valuation Authority, viz., Sub-Registrar, Rander, Surat. In reply to the same, your authorized representative has submitted the valuation, report dated 11/03/2016 of Valuation Officer, Income-tax Department, Surat for which reference was made by the Income tax Officer, Ward 2(3)(3), Surat in the case of Shri Prafulchand Baichandbhai Patel who was one of the co-sellers of the land in question. In the said report, the valuation of the property has been made as under: Valuation as on 01.11.2012 ₹ 4,77,32,590/- Valuation as on 01.04.1981 ₹ 5,08,750/- Considering the above, I do propose to recalculate the Long Term Capital Gain for the AY under consideration as under: Particulars Total Consideration Assessee s share Full value of consideration ₹ 4,77,32,500/- ₹ 2,14,20,000/- L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng preceding year. Although in meanwhile, the jantri rate has increased indicating the notional increase in the market price but the assessee was bound by the previous agreements which were duly registered in the preceding year when the land was agreed to sale. As per the Transfer of Property Act, the transfer of the property was effected by the assessee not during F. Y. relevant to A. Y. 2013-14 but during the F. Y. relevant to A. Y. 2011-12 where the jantri rate was ₹ 12,000/- per sq. meter. However, the capital gain was shown in the present A.Y. i.e. A.Y. 2013-14 when the possession was given and sale deed was executed. For the purpose of the determination of stamp duty valuation, the transfer should be considered to have been made in the year relevant to A.Y. 2011-12 when the agreement to sale was executed. There is no change in Sale consideration as per Sale agreement dated 29.09.2010 and Sale deed dated 07.11.2012. It is pertinent to note that the sellers have also received ₹ 50,00,000/- at the time of Sale agreement through Account payee cheques and hence as a matter of fact, it is never possible by any law for the assessee to demand more Sale consideration from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. Before us, assessee has raised two issues stating that assessing officer has erred in making addition of ₹ 34,70,000/- u/s 50C of the Act on account of difference in the value adopted by the DVO and the sale consideration taken by the assessee in his return of income. The assessing officer also has erred in making addition of ₹ 1,20,95,753/- on account of cost of indexation claimed by the assessee by adopting cost of indexation at ₹ 19,45,130/- instead of ₹ 1,40,40,883/- claimed by the assessee. During the year, the assessee has sold an immovable property along with two other co-owners for sale consideration of ₹ 4,00,00,000/- on 2.11.2012 and the assessee had received ₹ 1,79,50000/- being 44.87% share. The Stamp Valuation Authority, had valued the property at ₹ 5,29,72,000/-. The assessee submitted before the A.O. that the property was referred to the DVO by ITO, Ward-2(3)(3), Surat in the case of Prafulchand B. Patel, one of the coowners of the land and the DVO has calculated the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically taken into consideration and commented upon. While in the valuation report of DVO such important aspects concerning valuation of agricultural land are not at all discussed. This clearly manifest that valuation report submitted by DVO cannot be considered whereas, valuation report of registered valuer is required to be considered as he is technically qualified to value agricultural land and has considered special features relating to impugned land. 11. We note that both the grounds relate to the solitary transaction for sale of property located at R.S.No.18/1+19/4, Block No. 59, TP No.13, FP No.36, Moje Bharthana Vesu, Surat, which was sold on 02/11/2012 along with two other co-owners for the sale consideration of ₹ 4,00,00,000/- wherein the assessee s share is of 44.875% i.e. 1,79,50,000/-. The first grievance of the assessee is that assessing officer has erred in making addition of ₹ 34,70,000/- under section 50C of the Act on account of difference in the value adopted by the DVO and the sale consideration taken by the assessee in his return of income. The working of addition of ₹ 34,70,000/- u/s 50C of the Act can be tabulated as below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pg No 64 wherein the penultimate entry shows that the cheque is cleared on 01. 10.2010 bearing Cheque No. 191103 with amount of ₹ 25,00,000/-, it is not the case of the Department that the said amount of ₹ 25,00,000/- is received for the purpose other than sale of land and hence the first proviso of sub-section 1 of section 50C are clearly applicable which are reproduced below: Provided that where the date of an agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer.... Provided further that the first proviso shall apply only in a case where the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account (or through such other electronic mode as may be prescribed) on or before the date of agreement for transfer. 12. Thus, we note that both the conditions of the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crucial as it was at this point of time that the sale consideration is finalized. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as retrospective, effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. In this regard, reliance can be placed on the judgment of ITAT, Ahmedabad Bench, in the case of Dharmshibhai Sonani Vs. ACIT[ ITA No. 1237/Ahd/2013] dated 30.09.2016, wherein it was held as follows: [3]I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. [4]The fundamental purpose of introducing section 50C was to counter suppression of sale consideration on sale of immovable properties, and this section was introduced in the light of widespread belief that sale transactions of land and building are often undervalued resulting in leakage of legitimate tax revenues. This Section provides for a presumption, a rebu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of this Tribunal, took note of this incongruity and, in its very first report (http://taxsimplification.in/REPORT.pdf), observed as follows: 6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIEF WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TOSELL Section 50C makes a special provision for determining the full value of consideration in cases of transfer of immovable property. It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (i.e. 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 be deemed to be the full value of the consideration, and capital gains shall be computed on the basis of such consideration under section 48 of the Income-tax Act. The scope of section 50C was extended w.e.f. A.Y. 2010-11 to the transaction which were executed through agreement to sell or power of attorney by inserting the word assessable alongwith words the value so adopted or assessed . Hence, section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the Provisions of Finance Bill 2016 (http://indiabudget.nic.in/ub2016-17/memo/mem1.pdf), as follows: Rationalization of Section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property Under the existing provisions contained in Section 50C, in case of transfer of a capital asset being land or building on both, the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty shall be taken as the full value of consideration for the purposes of computation of capital gains. The Income Tax Simplification Committee (Easwar Committee) has in its first report, pointed out that this provision does not provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property and the sale consideration is fixed in such agreement, whereas similar provision exists in section 43CA of the Act i.e. when an immovable property is sold as a stock-in-trade. It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the reasoning adopted an order authored by me during my tenure at Agra bench [i..e Rajeev Kumar Agarwal Vs ACIT (2014) 149 ITD 363 (Agra)] which centred on the principle that when legislature is reasonable and compassionate enough to undo the undue hardship caused by the statute such an amendment 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 . In this case, it was specifically observed, and it was this observation which was reproduced with approval by Their Lordships, as follows: Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment 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 provision was introduced. In view of these discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely w.e.f. 1st April, 1988 (i.e. the date on which the related legal provision was introduced). Secondly, it may be noted that, in the case of Allied Motors (P) Ltd. Etc. vs. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), the scheme of s. 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales-tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales-tax law should be disallowed under s. 43B of the Act while computing the business income of the previous year? That was a case which related to asst. yr. 1984-85. The relevant accounting period ended on 30th June, 1983. The ITO disallowed the deduction claimed by the assessee which was on account of sales-tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under s. 43B which, as stated above, was inserted w.e.f. 1st April, 1984. It is also relevant to note that the first proviso which came into force w.e.f. 1st April, 1988 was not on the statute book when the assessments were made in the case of Allied Motors (P) Ltd. Etc. (supra). Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under s. 43B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate w.e.f. 1st April, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003. [9] So far as the amendment to Section 50C being retrospective in effect is concerned, there is no doubt about the legal position. I hold the provisos to Section 50C being effective from 1st April 2003. This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fact that this proviso states that 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 (emphasis supplied) making it clearly optional to the assessee, and that, in any event, what has been brought by the lawmakers as a measure of relief to the taxpayers cannot be construed as resulting in a higher tax burden on the taxpayers. Of course, assuming that my understanding of this statutory provision is in harmony with the legislative intention, insertion of words at the option of the assessee between stamp valuation authority on the date of agreement may and be taken for the purposes of computing full value of consideration for such transfer , in first provisio to Section 50C(1), could have made the legal provision even more unambiguous. [11] In the result, the appeal is allowed in the terms indicated above. 13. We note that said decision of Dharmshibhai Sonani (supra) has been subsequently relied by the Coordinate Bench of Surat in the case of Ramubhai S.Ahir, in ITA No.2160/Ahd/2016, order dated 10.05.2019. Therefore, ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is having better location advantage. Further, the reason stated by DVO to discredit the report of the Registered Valuer is that the rate adopted by the Registered Valuer @₹ 825/- per sq Meter as on 01.04.1981 is on very much higher side. Thus, it can be seen that no satisfaction is recorded by the DVO or the Ld. AO for rejecting the report of the Registered Valuer and he has simply rejected the said report because the value is on higher side without pointing out any defect in the valuation report, which is bad-in-law. In this regard, Reliance is placed on the aecision of Hon'ble High Court of Karnataka in the case of M. Govindaraju vs. Income Tax Officer AMR [(2015) 377 ITR 0243(Kam)3 wherein it was held as follows: Assessee had provided the reasons for determining ₹ 225/- per Sq.ft as the fair market value of the property by producing the relevant material, including valuation report of a registered valuer, which all have been ignored while arriving at the price of ₹ 84/- per Sq ft. The Assessing Officer assessed the value of the property as on 1.04.1981 on the basis of sale deeds of some nearby properties registered for such price in the year 1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld Counsel relied on the judgment of the Coordinate Bench of ITAT, Surat, in the case of Shri Naranbhas Govindbhai Ahir vs. I.T.O. Ward-2(3)(6) Surat [I.T.A No. 379/SRT/2017(Surat Bench)], wherein it is stated that there was valuation report of P.K. Desai valuing the land at ₹ 380/- per Sq Meter and the said value of ₹ 380/- per sq meter was accepted by the Tribunal, despite of the DVO's value of ₹ 64.30/- per sq. meter, which shows that the value determined by Registered valuer cannot be rejected solely because it seems high. In the said judgment, Tribunal also took cognizance of the method wherein the Government Registered Valuer had valued the land price by taking reverse method of calculation by taking decrease of around 10% per year. 18. This view is further supported by the decision of Ahmedabad Tribunal in the case of Shri Madhusudan P. Patel vs. ITO Ward-3 Gandhinagar dated 05.04.2013, in I.T.A No 2579/Ahd/2010 (A.Y. 2007-08) wherein the Co-ordinate Bench of Tribunal held in para 5.12, that the learned Registered Valuer has categorically stated in his report that the sale instances are not available for the relevant period and for the near about p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 01.04.1981 would be ₹ 27,05,940/- ( ₹ 607.94/- * 4451 sq metres ) and share of the assessee being 44.87% comes to ₹ 12,14,155/- and the indexed cost of acquisition shall be ₹ 1,03,44,600/-. 20. We note that Coordinate Bench of this Tribunal in the case of Tejas Dineshbhai Patel and others in ITA No.12-15 260/SRT/2017 for A.Y. 2014- 15, order dated 06.02.2020 has delivered the decision on the identical facts, wherein the grounds of appeal for adjudication before the Tribunal were as follows: Ground No.1 to 3 of appeal states the ld. CIT (A) has erred upholding longterm capital gain of ₹ 41,03,549 as against Loss of LTCG of ₹ 1,36,590 shown and computed by the assessee in respect of three pieces of land sold which were located are R.S.N. 191 , Block No. 149 at Moje Pal of Surat, by accepting DVO report and taking FMV as on 01.04.1981 at ₹ 60 per sq. meter ignoring the FMV of the assessee at ₹ 600 per sq. meter as on 01.04.1981 duly supported by the Government Approved Registered Valuer report submitted by the assessee and non-admitting the comments on valuation as made by the Registered Valuer Shri B. H. Patel of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mportant to estimate the market value of the land. Considering these factors, we are of the considered opinion that the valuation report of B.H. Patel in the case of the assessee is quite reasonable and therefore, the issue is decide in favour of the assessee. Accordingly, the AO is directed to apply rate of ₹ 600 per sq. meter for calculation if long-term capital gain in the hands of the assessee. Accordingly, Ground No. 1 to 3 of appeal are allowed. 22.Conclusion: We find that the dispute between the assessee and the assessing officer is the rate of ₹ 825/- per square meter, as fair market value as on 01.04.1981, whereas the DVO has estimated the fair market value as on 01.04.1981 at the rate of 114.30 per square meter. We note that the DVO has himself stated in his report that the impugned land was situated at more appropriate location as compared to sale instances considered by him. We also agree with the Ld.Counsel that assessee s land is situated in New City Light Area of Surat, which is costly area and prices of the land in the said area is very higher side. Therefore, considering the entirety of the facts and taking a holistic view the fair market value @ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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