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TMI Blog2021 (12) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... cash of 50,000/- also and the subsequent payments received through cheques only. Therefore, the proviso of section 50C(1) will clearly apply here. Therefore, the assessee s net sale consideration shall be considered as 25,25,000/- for the computation of capital gains as it is immaterial that whether reference of the agreement is included in the sale deed or not because it is evident from the payments received by the assessee by way of cheques, which proves that there was genuine agreement made for the sale/purchase of the property. As decided in SHRI VUMMUDI AMARENDRAN [ 2020 (10) TMI 517 - MADRAS HIGH COURT] AO could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance - AO could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance - Decided in favour of assessee. Exemption u/s 54F on the construction of new asset - AO has accepted construction value of 16,26, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedents, which have upheld the law that several units of houses constructed near to each other would constitute a single residential house for the purpose of section 54F. 5. Any other ground, if any, will be submitted at the time of hearing with the kind permission of the Hon'ble Income Tax Appellate Tribunal." 2. Briefly the facts of the case are that there was a search u/s 132 of the Act in the case of M/s M.G. Brothers Automobiles Pvt. Ltd. on 25/07/2008, in which documents related to the assessee with reference to the purchase and ale of land was found and seized. The Assessing Officer had issued notice u/s.153C of the Act on 24.09.2009 for the Asst. Year 2007-08. The return of income was filed in response to the notice issued u/s.153C admitting income of ₹ 4,87,403/- on long term capital gains. 2.1 The appellant had sold a land admeasuring 5409 sq. yds. in "Santosh Gardens" sale deed executed on 29.01.2007 for ₹ 25,25,000/-. The Assessing Officer had noticed that the value of the property as per Section 50C of the Act is ₹ 41,91,000/-. The appellant was asked to explain the discrepancy. The appellant contended that Section 5OC came into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcle, Tirupati. The appellant had filed his Return of Income with a Total Income of ₹ 4,87,403/- and had paid a tax of ₹ 90,686/-. A copy of the Return of Income along with the Statement of Computation of total Income is herewith enclosed in the paper book (Pg 11 & 12) 4. The Total Income of the appellant consisted entirely of the capital gains arising on sale of agricultural land at Survey No. 523, Pudipatla Village, Chittoor District with an extent of 1.11 acres. The appellant had offered a sale consideration of ₹ 25,25,000 and reduced ₹ 4,25,410 towards indexed cost of acquisition and ₹ 16,12,187/- towards exemption under Sec 54F. 5. The appellant had entered into an unregistered agreement on 6th August 2006 for sale of his agricultural land to Mis M.G. Brothers Automobiles Private Limited for a consideration of ₹ 25,25,0001-. A copy of the Sale agreement is herewith enclosed in the paper book (Pg 13-15). 6. In pursuance with the above agreement, the appellant received the following amounts in the following manner. A copy of the Bank account of the appellant evidencing the receipt of the consideration is herewith enclosed in the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 757/- and raised a demand of ₹ 9,43,630/-. 12. The appellant filed an appeal before the Ld. CIT(Appeals), Vishakapatnam. The Ld. CIT(Appeals), Vishakapatnam upheld the Order of the Ld. AO and issued his order on 21st March 2018. For Ground No.2: 13. The Ld. AO and the Ld. CIT(Appeals) have erred in adopting the SRO value on the date of Sale deed. They also erred in disregarding the existence of Sale agreement because of the reason that the same was not mentioned in the Sale Deed. Further the Ld. CIT(Appeals) has also erred in stating that the appellant claims that the Sec 50C came into operation from 01/10/2009. 14. The appellant only claimed that the word "assessable" came into Sec 50C with effect from 1 st October 2009 and not the entire Sec 50C. 15. The Ld. CIT(Appeals) has nowhere refuted the fact that the possession was transferred by the appellant to the seller along with the agreement of sale. Even the Ld. AO never disputed the fact that possession was handed over along with the sale agreement. Without invalidating the above fact, the Ld. AO and the CIT(Appeals) erred in stating that the date for the purpose of Sec 50C is the date of the Sale and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook (Pg 30-56). 21. Also, the issue of Sec 50C cannot be invoked for transfer of immovable property taking place in pursuance of an un-registered agreement has been upheld in the following cases. Navneet Kumar Thakkar Vs ITO 298 ITR AT 42 (Jodhpur) Asst CIT Vs Mrs N. Meenakshi 319 ITR AT 262 (Madhas) (2009) 22. Hence the appellant prays the hon'ble Tribunal to delete the addition made under Sec 50C by adopting the SRO value on the date of Sale as sale consideration value under Sec 48 read with section 50C. The appellant prays the hon'ble Tribunal to consider the SRO value on the date of the sale agreement and not on the date of the sale. For Ground No.3: 23. The Ld. AO erred in not referring the matter to the valuation officer when the appellant disputed the adoption of value as per Sec 50C. Further, the Ld. CIT (Appeals), Vishakapatnam also ought to have directed the Ld. AO to refer the matter to the valuation department. However, the Ld. CIT(Appeals) erred in stating that Assessing officer is duty bound to accept the SRO value on the date of registration. 24. The appellant vide his letter dt 15th November 2010 clearly stated the reasons for adoption of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to claim the SRO value on the date of the agreement. 33. Several judicial pronouncements stated that the first and second proviso to Sec 50C are curative in nature and hence have to be applied retrospectively with effect from l " April 2003. Some of the decisions are given below. a) Chalasani Naga Ratna Kumar Vs ITO - ITA No. 639Nizag/2013 b) Dharamshibhai Son ani Vs ACIT 57 ITR 669 (Ahmd Trib) (2017) c) Rahul G Patel Vs DCIT 67 ITR 280 (Ahmd Trib) (2018) d) Amit Bansal Vs ACIT 174 lTD 349 (Delhi Trib) (2018) 34. In view of the above decisions and in view of the compliance made by the appellant, the appellant prays the hon'ble Tribunal to consider the date of agreement as the date for reckoning the SRO value for the purpose of Sec 50C and not the date of registered sale deed. For Ground No.5: 35. The Ld. CIT(Appeals), Visakhapatam and the Ld. DCIT erred in disallowing the claim of the appellant for 2 residential blocks. 36. The appellant is an aged person and has been bed-ridden for several years. To avoid disputes in the family, the appellant constructed his house into three residential blocks. 37. The Ld. DCIT has grossly erred in establishing cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in one residential house and consequently the assessee would be entitled to exemption. 46. In several judicial pronouncements given below, it was held that Sec 54 or Sec 54F intend to give exemption to various residential blocks constituting one residential house. a) CIT Vs Syed Ali Adil 352 ITR 418 (2013) (AP HC) b) Vittal Krishna Conjeevaram Vs ITO 144 lTD 325 (Hyd IT AT) c) Smt Hansabai Singhji Vs ITO 89 lTD 239 d) K.G. Vyas Vs ITO 16 lTD 195 (Born Trib) e) CIT Vs Kodandas Chanchlomal (1985) 155 ITR 273 (Guj HC) f) Shivnarain Chowdhury Vs CWT (1977) 108 ITR 104 (All HC) d) K.G. Vyas Vs ITO 16 lTD 195 (Born Trib) e) CIT Vs Kodandas Chanchlornal (1985) 155 ITR 273 (Guj HC) t) Shivnarain Chowdhury Vs CWT (1977) 108 ITR 104 (All HC) g) CIT & Anr Vs Srnt. K.G. Rukrniniarnrna 331 ITR 211 (Kar HC) h) Mr. Gulshanbanoo R. Mukhi Vs JCIT 83 lTD 0649 (Born Trib) 47. It is only in view of the above decisions and to provide adequate clarity, the hon'ble Legislature changed the wording from "a" to "one" residential house in Sec 54 and Sec 54F prospectively with effect from I" April 2015. The above submission has been upheld by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of the property. The said agreement is placed at page no. 13 to 15 of the paper book. In support of our decision, we rely on the judgment of the Hon'ble Madras High Courtin the case of Commissioner of Income Tax, Chennai v. Vummudi Amarendran, [2020] 120 taxmann.com 171 (Madras) wherein the Hon'ble High Court has held as under: "4. We have elaborately heard Mr. T. Ravikumar, learned Senior Standing Counsel for the Revenue. 5. It is the submission of Mr. T. Ravikumar, learned Senior Standing counsel that the amendment to section 50(C) of the Act introduced by the Finance Act 2016 is effective only from 1-4-2017, prospectively. In this regard, the learned Senior Counsel referred to the legal maxim 'lex prospicit non respicit' which means law look forward and not backwards. The learned Senior Counsel referred to the Circular issued by the Central Board of Direct Taxes ('CBDT') in Circular No. 3/2017 dated 20- 1-2017 and has drawn the attention of this Court to the paragraph no. 29 which deals with the Rationalization of section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property. It is submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pective, we need to point out that the Assessing Officer did not doubt the bona fides of the transaction done by the assessee, since the Assessing Officer accepted the fact that the assessee had entered into an Agreement for Sale of the property in question vide Agreement for Sale dated 4-8-2012, wherein agreed sale consideration was ₹ 19 Crores and the assessee had received ₹ 6 Crores by way of account payee cheque on the date of signing the Agreement. This fact was noted by the CIT(A) and held that the Agreement cannot be treated to be ante-dated as the assessee had received ₹ 6 crores as advance on the date of Agreement through banking channel. The only reason for the Assessing Officer to adopt higher value is based upon the guideline value fixed by the State Government. The question would be as to what is the effect of the guideline value fixed by the Government and the purpose behind fixing the same. This aspect was clearly explained in the case of J. Jayalalitha. It has been pointed out that the guideline value has relevance only in the context of section 47A of the Indian Stamp Act (as amended by Tamil Nadu Act 24 of 1967) which provides for dealing with in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Deed of conveyance. Having observed so we need to take note of the next issue would be as to whether the proviso to Section 50C could be read to be prospective or retrospective. Section 50C(1) proviso reads as follows: "Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capita asset are not the same, 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.'' 10. Reading of the above proviso would show that the legislature took note of the fact that there are several occasions where the Agreements are entered into between a willing vendor and willing purchaser on an agreed sale consideration, the Agreement is reduced into writing and in many a cases a substantive portion of the sale consideration is given to the vendor as advance on the date of execution of the Agreement. There are other types of transaction where the vendor executes Power of Attorney in favour of the intending purchaser empowering him to sell the property at any time he proposes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of the fact that the statutory amendment was being made to remove undue hardship to the assessee or held to be retrospective. 12. The Honble Supreme Court in Kolkata Export Company took note of the earlier decisions on the same issue in the case of Allied Motors (P.) Ltd. v. CIT [1997] 91 Taxman 205/224 ITR 677, Whirlpool of India Ltd. v. CIT [2000] 245 ITR 3, CIT v. Amrit Banaspati Co. Ltd. [2002] 123 Taxman 74/255 ITR 117 (SC) and CIT v. Alom Enterprises [2009] 185 Taxman 416/319 ITR 306 and held that the new proviso should be given retrospective effect from the insertion on the ground that the proviso was added to remedy unintended consequences and supply an obvious omission. The proviso ensured reasonable interpretation and retrospective effect would serve the object behind the enactment. Thus by taking note of the above decisions, we have no hesitation to hold that the proviso to Section 50C(1) of the Act should be taken to be retrospective from the date when the proviso exists. The CIT(A) while allowing the assessee's appeal vide order dated 25-7-2019, took note of the submissions made by the assessee wherein they placed reliance on the decision of the Ahmadabad B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 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.'' 15. Taking note of the above Memorandum, it was pointed out that once 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 effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. The report also referred to the decision in the case of Alom Enterprises (supra). 16. Reverting back to the decisions relied on by the Revenue, the decision in Bagri Impex (P.) Ltd. (supra) is distinguishable on facts as the assessee therein contended that the date of agreement should be taken as date on which the property was transferred by bringing the same within the ambit of section 2(47) of the Act, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ratio laid down in the above judgment, we allow the ground Nos. 1 to 4 raised by the assessee on this issue. 7.1 As regards ground No. 5 relating to the assessee's claim of exemption u/s 54F on the construction of new asset, the AO has accepted construction value of ₹ 16,26,000/- for three individual houses, but, had denied for remaining houses the claim of exemption u/s 54F. This issue has been settled by various High Courts and the issue relates to prior to the amendment in the Act. Therefore, the assessee is eligible for claiming exemption u/s 54F for remaining two houses also. In support of our decision, we rely on the following judgments: 1. CIT Vs. Vittal Krishna Conjeevaram, ITTA No. 588 of 2013, dated 06/12/2013 2. Vittal Kirshna Conjeevaram Vs. ITO, 144 ITD 325 (ITAT, Hyd.) 3. CIT Vs. Syed Ali Adil, 352 ITR 418 (AP - HC) 4. CIT Vs. D. Ananda Basappa, 309 ITR 329 5. CIT Vs. Gita Duggal, 357 ITR 153 6. Arun K. Thiagarajan Vs. CIT, 193 DTR 153) 7. CIT Vs. Gumanmal Jain, 394 ITR 666 8. Tilokchand and Sons Vs. ITO, 413 ITR 189 9. K. Jaipal & Others, ITA NO. 1188/Hyd/2015 and others, dated 19/11/2015. 7.2 Respectfully following the above judgements, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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