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TMI Blog2021 (9) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided in the later three provisions have to be read into section 56(2)(vii)(b)(ii) to provide true meaning to the intention of the legislature. This, according to us, clearly answers submissions of learned departmental representative regarding absence of a provision identical to third proviso to section 50C(1) in section 56(2)(vii)(b)(ii). In our considered opinion, the assessee would be eligible to get the benefit of ten per cent margin difference in the valuation between the value determined by the stamp duty authority and the declared sale consideration. Thus, if the variation between the aforesaid two values falls within the range of ten per cent, no addition can be made. A benefit given to a seller of the property in respect of marginal variation cannot be denied to the buyer of the property, since, they stand on the same footing. This aspect of the issue has also been considered by the co-ordinate bench in case of Shri Sandip Patil vs ITO (supra), wherein, the co-ordinate bench has held that there cannot be two different fair market value in respect of the very same property, i.e. one at the hands of the seller and the other at the hands of the buyer. Thus, in our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Learned CIT(A) has erred in disallowing ₹ 150000/ being development charges paid to builders for 4 flats bank interest of ₹ 173308/- paid during construction period while calculating long term capital gain, ignoring the fact that these cost were capitalized in the books, thereby increasing the long term capital gain by ₹ 569723/-. 3. The Learned CIT(A) erred in charging interest U/s 234A, 234B, 234C of the I.T.Act, 1961. 3. In ground 1 assessee has challenged the addition of ₹ 23,30,694/- under section 56(2)(vii)(b) of the Income Tax Act, 1961. 4. Briefly the facts are, the assessee, an individual, is stated to be engaged in the business of trading in imitation jewellery. For the assessment year under dispute, assessee filed his return of income on 30-09-2015 declaring total income of ₹ 6,28,420/-. The assessee also declared current year loss of ₹ 76,18,500/-. Subsequently, on 30-09-2016 assessee filed a revised return of income declaring total income of ₹ 6,20,650/- and current year s loss of ₹ 79,43,584/-. In course of assessment proceedings, the assessing officer, based on information available on record, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not only apply retrospectively, but would even apply to section 56(2)(vii)(b)(ii). In support of such contention, he relied upon the following decisions:- 1. Maria Fernandes Cheryl vs ITO ITA 4850/Mum/2019 Dt 15-01-2021 2. Shri Sandip Patil vs ITO ITA 924/Bang/2019 dt 09-09-2020 3. M/s John Flower (India) Pvt Ltd vs DCIT ITA 7545/Mum/2014 4. Pankaj Anilkumar Pitale vs ACIT ITA 6813/Mum/2017 dt 19-03-2019 6. Strongly relying upon the observations of learned Commissioner (Appeals), the learned departmental representative submitted, unlike the third proviso to section 50C(1) of the Act, there is no such provision in section 56(2)(vii)(b)(ii) of the Act. Therefore, the assessee cannot be allowed the benefit of the less than 10% difference in value between the stamp duty authority and declared sale consideration. In any case of the matter, she submitted, even assuming that the third proviso to section 50C(1) of the Act would be applicable; however, it cannot apply retrospectively and particularly to the impugned assessment year. 7. We have considered rival submissions in the light of decisions relied upon and perused materials on record. The undispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso to section 50C(1) and the provisions of section 56(2)(x) of the Act. Apparently, learned Commissioner (Appeals) has rejected the aforesaid contention of the assessee for two reasons. Firstly, the provisions of section 56(2)(x) would be applicable from assessment year 2019-20; and secondly, in respect of one of the properties, the difference in value works out to more than 5%. Thus, keeping in perspective the aforesaid factual position, we proceed to decide the validity of the addition made. 9. Before dealing with the substantive issue, it is necessary to look into the relevant statutory provisions. By the Finance (No.2) Act, 2009 section 50C was introduced in the statute with effect from 01-04-2010. As per the provision of section 50C(1) of the Act, where the consideration received on sale of an immovable asset by an assessee is less than the value determined by the stamp valuation authority, the value so determined would be deemed to be the full value of consideration received or accruing as a result of such transfer, for computing capital gain. By Finance Act, 2018, the third proviso to section 50C(1) of the Act was introduced to the statute with effect from 01-04-2019, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the declared sale consideration. However, the crucial issue which needs to be considered is, whether the third proviso to section 50C(1) of the Act providing exception in case the difference in value is less than 10%, would be applicable to section 56(2)(vii)(b)(ii) of the Act. In this context, the argument of the learned departmental representative is, firstly, there is no provision like third proviso to section 50C(1) of the Act in section 56(2)(vii)(b)(ii) of the Act and secondly, even if there is one, it will apply prospectively. 12. As could be seen, section 56(2)(vii) in its original form was introduced by Finance Act, 2009 with effect from 01-10-2009. However, by Finance Act, 2017 it was provided that section 56(2)(vii)(2) would be applicable in respect of the specified transaction undertaken between 1st day of October, 2009 and before 1st day of April, 2017. This amendment was effective from 01-04-2017. Simultaneously with the aforesaid amendment made to section 56(2)(vii), the Finance Act, 2017 also introduced clause (x) to section 56(2) to bring within its ambit the transactions referred to in section 56(2)(vii) undertaken after 1st day of April, 2017. Clause (x) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the value determined by the stamp valuation authority as the deemed sale consideration, in case, it exceeds declared sale consideration, exceptions have also been provided not to adopt the market value if the difference between the value declared by the assessee and determined by the stamp duty authority is within a permissible limit. 15. The reason for not providing such an exception in section 56(2)(vii)(b)(ii) is patent and obvious. As could be seen, the amendments to sections 50C, 56(2)(x) and 43CA providing for exception in case of marginal difference between the declared sale consideration and value determined by the stamp valuation authority were introduced to the statute by Finance Act, 2018 with effect from 01-04-2019. Meaning thereby, the legislature did not felt the necessity of introducing such an exception to section 56(2)(vii)(b)(ii) simply for the reason that such provision was applicable for a period between 1st October, 2009 to 1st April, 2017. Therefore, non-introduction of similar exception to section 56(2)(vii(b)(ii) cannot be held against the assessee. Rather, section 56(2)(vii)(b)(ii) has to be harmoniously construed along with sections 50C, 56(2)(x) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maria Fernandes Cheryl vs ITO (supra) 19. Thus, keeping in view the discussions hereinabove, we delete the addition of ₹ 23,30,694/-. This ground is allowed. 20. In ground 2 assessee has challenged the disallowance of ₹ 1,50,000/- and ₹ 1,73,308/- being deduction claimed towards cost of acquisition/improvement. 21. Briefly the facts are, while computing long term capital gain the assessee claimed deduction of ₹ 1,50,000/- towards other charges paid to builder and bank interest of ₹ 1,73,308/-. The assessing officer disallowed the deduction claimed on the reasoning that they are not allowable under section 48 of the Act. Learned Commissioner (Appeals) also upheld such disallowance. 22. Before us, learned authorized representative submitted that the assessee has paid certain amount to builder which would go to increase the cost of acquisition. Further, he submitted, interest paid has also been capitalized in the books of account which will enhance the cost of acquisition. Thus, he submitted, deductions claimed have to be allowed. In support, he relied upon a decision of the Tribunal in the case of Parvati Devi Totlani vs ITO, ITA No. 120/JP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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