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TMI Blog2022 (6) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... er sq.mtr instead of Rs.825 per sq.mtr claimed by the assessee." 3. The appeal filed by assessee for Assessment Year 2013-14, is barred by limitation by 1457 days. The assessee has moved a petition requesting the Bench to condone the delay. The assessee has filed an affidavit explaining the reasons of delay, which is reproduced below: "1) The assessee begs to prefer this application for condonation of delay in relation to appeal filed against the order of the Commissioner of Income Tax (Appeals) which is received by the assessee on 05.04.2017. There is a delay of 1457 days in filing the appeal before Honnorable Tribunal against the order passed by CIT(A)-I, Surat. 2) The assessee's brother namely Shri Dharmendra Bhaichand Patel, who is the co-owner of the land sold; filed the appeal bearing ITA No.55/SRT/2018 before the Honorable Tribunal on the same issue. The assessee was under the honest belief that his appeal was also filed. 3) However, at the time of conducting the appeal of assessee's brother Shri Dharmendra Bhaichand Patel, it was found by assessee's AR CA Mehul Shah that the appeal in the case of assessee was not filed involving same facts and same quantum through in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on 31.05.2021. However, the decision in case of assessee`s brother, Shri Dharmendra Bhaichand Patel, in ITA No.55/SRT/2018 was pronounced by the Tribunal on 30.06.2021, therefore, we note that there was no information before the assessee that his co-owner has won the case, therefore, we do not find merit in the arguments of ld DR to the effect that assessee`s co-owner has won the case therefore assessee has filed the appeal to take the advantage of assessee`s co-owner case. 7. To condone the delay, we have to examine whether sufficient ground had been made out by the assessee entitling him to condonation of delay. We note that the words 'sufficient cause' should receive a liberal construction so as to advance substantial justice where no negligence nor inaction nor want of bona fides is imputable to the assessee. [Bharat Auto Center v. CIT 282 ITR 366]. The mistake of the lawyer or accountant may be a good reason for condoning delay. 8. In considering the condonation petition, it is to be remembered that statutes conferring a right of appeal must be construed in furtherance of justice and the provision limiting the time for bringing an appeal must be liberally interpreted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 5 of the Limitation Act the courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause", the principle of advancing substantial justice is of prime importance. (VideVedabai alias Vaijaya-natabai Baburao Patil v. Shanta-ram Baburao Patil [2002] 253 ITR 798 (SC.)) 6. A Division Bench of this court in which one of us was a party (P. D. Dinakaran J.) in Sreenivas Charitable Trust v. Deputy CIT [2006] 280 ITR 357 has also held that no hard and fast rule can be laid down in the matter of condonation of delay and the courts should adopt a pragmatic approach and the courts should exercise their discretion on the facts of each case keeping in mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved valuer has taken the fair market value of the land in question as on 1.4.1981 at Rs. 825/- per sq. mtr. which was found on higher side, as compared to the sale instances obtained from Sub-Registrar in the same/nearby area i.e. @ Rs.2.85 to 6.45 per sq. mtr. In view of the huge variance found in the fair market value shown by the assessee and obtained by the Department, the matter has been referred to the Valuation Officer to determine the correct value as on 1.4.1981 vide reference dated 03.10.2015. In response to the above reference, the Valuation Officer, has submitted valuation report vide No.6(49)/VOS/15-16 dated 15.03.2016 in which he has valued the fair market value of the entire land as on 01.04.21981 at Rs.5,08,750/- i.e. @ Rs.114.30 per sq. mtr. Instead of the declared value by the approved valuer at Rs.36,72,000/- @ Rs.825/- per sq.mtr.). The assessing officer, after considering the assessee`s submission, worked out the long term capital gain, on the basis of the report of the Valuation Officer, as under:- Area of land 4451 sq.mtr. Assessee's share 44.87% Value determined by the DVO as on 1.4.1981 For entire land Rs.5,08,750/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has sold an immovable property along with two other co-owners for sale consideration of Rs.4,00,00,000/- on 2.11.2012 and the assessee had received Rs.1,79,50000/- being 44.87% share. The Stamp Valuation Authority, had valued the property at Rs.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 co-owners of the land and the DVO has calculated the value of the property at Rs.4,77,32,590/-. The AO adopted the value as per the DVO's report and recalculated the long term capital gain (LTCG) at Rs.1,55,65,753/- and made addition. 10. In the return of income filed, the assessee had shown his share in the sales consideration at Rs.1,79,50,000/- and after deducting the cost of indexation and deduction u/s 54B of the Act, the net long term capital gain (LTCG) was shown at Rs. nil. We note that AO has taken fair market value (FMV) as on 01/04/1981, at Rs.5,08,750/- @ Rs.114.30 per sq.meter. The Ld Counsel submitted that the AO has erroneously adopted the report of the Valuation Officer though he had relied on the report of the government approved valuer who is an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs.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 Rs.34,70,000/- u/s 50C of the Act can be tabulated as below: Particulars Amount (In Rs) Share of value of deemed sale consideration of the assessee as per the valuation report of the DVO, Surat.(Rs.4,77,32,590/- * 44.875%) (A) 2,14,20,000/- Less: Sale Consideration as per computation of Income filed by the assessee (Rs.4,00,00,000/- * 44.875%) (B) 1,79,50,000/- Addition u/s 50C (A-B) 34,70,000/- It is the contention of the Ld.Counsel that assessee has entered into an agreement of sale for land not during A.Y. 2013-14 but during F.Y. 2010-2011 relevant to A.Y. 2011-12 by executing "Agreement to Sell" made on 29.09.2010. The substantial payment for the said sale of land was received by the assessee in the year FY 2010-11 i.e. approx. 54.20% and the sale deed was executed during A.Y. 2013-2014 i.e. durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of Sale agreement dated 29.9.2010 through account payee cheques i.e through mode other than cash and hence as a matter of fact, the total sale consideration is always fixed at the time of receipt of advance and hence it is never possible by any law for the assessee to demand more sale consideration from the buyer subsequent to sale Agreement and receipt of substantial advance of Rs. 50,00,000/- just because the Jantri rate has increased and hence the assessee is abide by the law to carry his performance of contract by the terms of Sale Agreement and even as per the Indian Contract Act, 1872. Thus, by executing the Sale Deed, the assessee has only completed the contractual obligation imposed upon it by virtue of the Sale Agreement. Since the process of sale has been initiated from the date of Sale Agreement, the character of the transaction vis-a-vis Section 50C of the Income tax Act should also be determined on the basis of the conditions that prevailed on the date the transaction was initially entered into. Accordingly, the applicability of the provisions of section 50C should be looked at only on the date of Agreement to Sell i.e. 29.09.2010. According to the Jantri rate on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose 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 of execution of sale deed which is recognized by Section 50C for the purpose of computing the capital gain because that is w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. [6] True to the work ethos of the current Government, it was the first time that within four months of the Tax Simplification Committee being notified, not only the first report of the Committee was submitted, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puting 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 assessee, as is evident from the observation in Easwar Committee report to the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proviso to Section 50 C should also be treated as curative in nature and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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. Moreover, the judgment in Allied Motors (P) Ltd. Etc. (supra) is delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally 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 [10] As I part with the matter, I may make one more observation. The amendment in Section 50C was brought in to provide relief to the assessee in a situation in which the stamp duty valuation of a property has risen between the date of execution of agreement to sell and execution of sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually executed on 29.09.2010 and the partial sale consideration was received through banking channels, the assessing officer should adopt stamp duty valuation as on 29.09.2010 to compute capital gains. 14. So far Ground No.2 raised by the assessee is concerned, the working of addition of Rs.1,20,95,753/- on account of disallowance of cost of indexation claimed by the assesse is tabulated as under: Particulars Amount in Rs Indexed Cost of acquisition as considered by the AO: 19,45,130/- Total Value as on 01.04.1981 (as per DVO's valuation) Rs 5,08,750/- Total Indexed Cost of (Rs. 5,08,750*852/100)=Rs 43,34,550/- (assessee's share 44.875% Rs. 19,45,130/-) (A) Indexed Cost as claimed by the assessee : (Rs 16,47,991*852/100) (B) 1,40,40,883/- Addition(A-B) 1,20,95,753/- Learned Counsel submitted that the land for comparable sale instance relied by the DVO in his report were of such land which were far from the assessee's land and the land of the assessee was in much better locational advantage having approach roads from the main road and even the DVO has accepted the said fact. The land is approachable by all the types of surface transport faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We note that in the present case also, the Govt Registered Valuation report is simply brushed aside by DVO as well as AO without pointing out any cogent defects in the same. 16. The Ld. Counsel submitted before us that the provisions of Section 55 of the income Act, 1961 gives an option to the assessee to substitute the fair market value as on 01.04.1981 for cost of acquisition. Now section 2(22B) of the Income tax Act,1961 defines "Fair Market Value", in relation to a capital asset as "the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date" In the present case, the DVO as well as the AO has compared some few sale instances which may be construed to be the "transaction value" at that time which is entirely different from the "fair market value" required as per law because fair market value is considered from factors like location, utility & frontage, future NA potential, surrounding development and prevailing market rate etc. which is not the transaction value. Further, it is submitted that in a well regulated market as present in 2021, the "fair market value" can be reasonably be near around "transaction value" in few sale insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about 10% per annum is allowed for arriving at future value. Hence by adopting current rate and apply this method in reverse by calculating a decrease 10%(.09089 correction factor) per year rate applicable for the year 01.04.1981 can be worked out. During 2006 according to sale deed Rs. 2500 comes to one Sq Meter and applying above method Rs. 226.70 per Sq. Mtr as on 01.04.1981 Form the above it is obvious that the Valuation Officer has only relied upon the instances of sale price prevalent in the neighborhood in the near about dates of 01.04.1981. No other factors were considered to determine the value of the asset as on 01.04.1981. While as the registered valuer has examined the following relevant facts, which is important to estimate the market value of the land. (i) The land has close proximity to Ahmedabad City and is within the limits of Ahmedabad Urban Development Authority. (ii) The area is a fast developing area surrounded by various housing societies. (iii) Amenities like roads, water supply, drainage and electricity etc were existing. (iv) The area was well connected with transport facilities. 13. Considering the facts and the circumstances of this case we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of valuation being carried out by the DVO on which he had made his comments for not accepting same. Therefore, we are of the considered opinion that these were not additional evidence under Rule 46A, hence, the ld. CIT (A) ought to have given weightage of Registered Valuer report of B. H. Patel. We find that there are three methods of valuation of land first one relates to sale instances multiplied by 11.94 factors, which is based on Hon`ble Supreme Court and Hon`ble High Court judgements. Second method is to consider increase in agricultural land price per month one percent. Third method is based on reverse method per year reduction of 10% of Jantri rate/Circle rates. The Government Registered Valuer of the assessee has based his valuation report on the average out of these three method for valuation of land, which in our opinion is correct method to be considered, in the case, where no specific sale instances of relevant period are available. The DVO has considered at Rs.600 per sq. meter land price as on 01.04.1981 as against the average of three method at Rs.833 per sq. meter. Therefore, we are of the view that the Registered Valuer has quite considerate in taking ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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