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TMI Blog2022 (9) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... - Similarly, the assessee having produced details of expenses incurred in the construction of house for availing benefit under section 54F of the Act, the ld.AO is directed to consider supporting evidences filed by the assessee and also examine the evidences for claiming improvement expenses incurred by the assessee, while computing capital gains and granting exemption u/s. 54F - we allow grounds of appeal of the assessee for statistical purpose - Appeal of the assessee is allowed for statistical purpose. - ITA No. : 490 to 494/Ahd/2019 - - - Dated:- 16-9-2022 - Smt.Annapurna Gupta, Accountant Member And T.R. Senthil Kumar, Judicial Member For the Assessee : Shri Manish J. Shah, AR with Shri Rushin Patel, AR For the Revenue : Shri Alpesh Parmar, Sr.DR ORDER PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER This bunch of five appeals are filed by the different assessees (but co-owners of a piece of land and dispute on the capital gain) against respective orders of even dated 18.1.2019 passed by the Commissioner of Income-tax (Appeals)-3, Ahmedabad relating to the Asst.Year 2012-13. Since common issues are raised in all these appeals and the grounds are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02,000/9 ) by way of cash; Rs.9,01,388/- by way of cheque dated 22.3.2011 and Rs.7,33,333/- by cheque dated 26.3.2011 and Rs. 2,50,000/- by cheque dated 21.09.2011 drawn on Bank of India, Anand Nagar Branch. Thus, the assessee received a sum of Rs.18,96,054/- as his 1/9th share in the total consideration of the property at Rs.1,70,64,489/-. 4.1. For the Asst.Year 2013-14, the assessee filed return of income on 14.3.2015 declaring total income at Rs.1,96,830/-. The assessee claimed his share of income on sale of the property at Rs.18,96,054/-. After claiming indexed cost, improvement cost, the assessee has claimed long term capital gain at Rs.NIL and also claimed exemption under section 54F of the Act. The AO reopened assessment on the ground that 50C valuation of the above property was Rs.44,51,333/- i.e. (Rs.4,00,62,000/9) and not Rs.18,96,054/- as declared by the assessee. Since the new jantri price of the Govt. of Gujarat for the above piece of land was Rs.16,500/- per sq.meter and thus market value of the property as per the valuation authority was of Rs.4,00,62,000/-. 4.2. In the reassessment proceedings the assessee has not cooperated, therefore, the AO was compelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon in terms of the agreement, and therefore, there was no question of invoking provision of section 50C of the Act. In fact the sale value was determined on the basis of jantri rate of Rs.7000/- per sq.meter prevailing at the time of execution of agreement to sell on 31.12.2010, therefore also there is no violation of provision of section 50C. To support the same, the assessee relied upon the decision of Vishakpatnam Bench of the ITAT in the case of M/s.Lahiri Promoters Vs. ACIT, in ITA No.12/Viz/2009. Before the ld.CIT(A) the assessee has filed certain additional evidences which were not filed before the AO and requested for admission of the same under Rule 46A of the IT Rules. The ld.CIT(A) has rejected the appeal of the assessee by a detailed order and relevant paras of the impugned order are reproduced as below: 2.8.1. Applicability of stamp duty value concept while selling agriculture land not covered by the definition of section 2(14)(iiii) of the Act under section 50C: The capital gain tax will arise on sale of agriculture land situated in Rural Area as per the definition of section 2(14) (Hi) of the Act as discussed herein above. However, if the agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration 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 account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer. For incorporating the above provisions the following rationale has been given in the memorandum explaining the Finance Bill 2016 on page 29 and 30: - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art payment in cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer(as has been discussed in forgoing Para). The appellant has received the payment in cash which is not negated by the appellant at the time of appellate proceedings. In view of the above, the sale consideration has to be taken as on 01.12.2012 which is a total of Rs.4,00,62,000/- and not of 31-12-2010 which is at Rs.1,70,64,489/-. The capital gain which is to be calculated on the sale consideration, has to be taken as on 01.12.2012 which is a total of Rs. 4,00,62,000/-. This is also important to note that the provisions of section 50C as amended by Finance Act, 2016 to consider Jantri Rates on the date of Agreement to sale and not the date of sale deed has to be given retrospective effect in view of following Judicial Pronouncements: (i) Hon'ble Ahmedabad ITAT in case of Dharamshibhai Sonani in ITA No. 1237/Ahd/2013 dated 30tn September, 2016: (ii) Decision of Vizag Tribunal in case of Chalasani Naga Ratna Kumari vs. ITO vide ITA No: 639/Vizag/2013 dated 23/12/2016 wherein it was held that the proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Per contra, the ld.DR appearing for the Revenue strongly supported orders of the lower authorities and pleaded that the findings of the lower authorities do not require any interference. He further submitted that amendment in section 50C will not be applicable to the assessee as part of the consideration was received by the assessee in cash and therefore pleaded to sustain the orders passed by the Lower Authorities. 8. We have given our thoughtful consideration; perused material available on records including the Paper Book filed by the assessee. It is an admitted fact that on entering into an Agreement of Sale on 31.12.2010 the assessee and other co-owners; each received a sum of Rs.11,334/- (Rs.1,02,000/- in all) by way of cash as token advance amount. Clause-1 of the terms and conditions of the sale agreement read are as follows: 1. The Tenure of this Agreement for Sale will be from today i.e. 31- 12-2010 to 1-1-2013 i.e. during the above mentioned Tenure, upon the Party of the First Part Intending Purchaser paying up the rest of the total sales price of the said land, the Party of the Second Part Sellers are duty bound to execute the Registered Sale Deed in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on dated 18-4-2011, the new Jantri [Index] price by the Government of Gujarat came into effect being Rs.16,500 [Rupees sixteen thousand five hundred only) pre one sq. meter and in this manner, the market price of the said land had increased and hence, the new sales price of the said land is mentioned in this Registered Sale Deed executed between the First Party Purchaser and the Second Party Sellers and the stamp duty on this Registered Sale Deed has also been affixed as per the new/present market price of the said land. 8.2. Thus it is categorically mentioned that the sale consideration shall be as per the old jantri rate of Rs.7,000/- per sq.meter as agreed in the agreement of sale, and though new jantri rate of Rs.16,500/- per sq.meter the stamp duty on this sale deed was being adopted. Further perusal of the sale deed confirms filing of Form No.60 being declaration made by the assessee and other co-owners, who do not have PAN as mandated by 3rd proviso to Rule 114B of the I.T. Rules. That is where an assessee who makes transaction above 50,000/- and do not have PAN on his own, makes such a declaration in Form No.60 before the competent authority. We find that nine co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the Assessing Officer. In case he finds that a registered agreement to sell, as claimed by the assessee, was actually 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. 8.5. In the instant case before us, the ld.CIT(A) denied benefit of amended proviso to section 50C of the Act on the ground that cash payments of Rs.11,334/- w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the true interpretation of s.52, sub-s.(2). The argument of the Revenue was, and this argument found favour with the majority judges of the Full Bench, that on a plain and natural construction of the language of s.52, sub-s.(2), the only condition for attracting the applicability of that provision was that the fair market value of the capital asset transferred by the assessee as on the date of the transfer exceeded the full value of the consideration declared by the assessee in respect of the transfer by an amount of not less than 15% of the value so declared. Once the ITO is satisfied that this condition exists, he can proceed to invoke the provision in s.52, sub-s.(2), and take the fair market value of the capital asset transferred by the assessee as on the date of the transfer as representing the full value of the consideration for the transfer of the capital asset and compute the capital gains on that basis. No more is necessary to be proved, contended the Revenue. To introduce any further condition such as under-statement of consideration in respect of the transfer would be to read into the statutory provision something which is not there; indeed, it would amount to re-wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a suggested construction cannot alter the meaning of a statutory provision but it can certainly help to fix its meaning. It is a well recognized rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement - and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement -the market price shoots up with the result that the market price prevailing on the date of sale exceeds the agreed price, at which the property is sold, by more than 15% of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... never have been intended by the legislature, the Court may modify the language used by the legislature or even do some violence to it, so as to achieve the obvious intention of the legislature and produce a rational construction; Vide Luke vs. IRC (1963) AC 557 : (964) 54 ITR 692(HL). The Court may also in such a case read into the statutory provision a condition which, though not expressed, is implicit as constituting the basic assumption underlying the statutory provision. We think that, having regard to this well recognized rule of interpretation, a fair and reasonable construction of s.52, sub-s (2), would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in the case of a bonafide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. There are several important considerations which incline us to accept this construction of s.52, sub-s. (2). The Hon'ble Supreme Court also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carried out such a contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income, which has neither arisen to the assessee nor has been received by him. 8.8. The Hon'ble Apex court in the case of K.P. Verghese, supra has held that the provisions of section 52(2) that was existing at the relevant point of time was not applicable to a honest and bona fide transaction where the consideration received by the assessee was correctly declared or disclosed by him and there was no concealment or suppression of the consideration. 8.9. Thus the bonafideness of the transaction is to be seen in the assessees case. The assessees entered into the Agreement of Sale on 31/12/2010 and received Rs. 16.34 lacs by two cheques in March 2011 and balance amount of Rs. 2.50 lacs on 21/09/2011, thus the entire sale consideration was received 14 months before execution of the Sale Deed. It is further seen more than 99% of the payment was received by cheque mode by the assessees. Thus the genuineness of the transaction namely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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