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TMI Blog2022 (10) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Therefore we have no hesitation to hold that the benefit of the first proviso to Section 50C(1) of the Act has to be extended to the assessee and the rate prevailing as on the date of agreement should be considered for the purpose of computing the full value of consideration of such transfer. The Ld. CIT(A) has committed error by not extending the benefit of the proviso to Section 50C (1) of the Act and sustained the addition, which deserves to be deleted. Appeal filed by the assessee is allowed. - I.T.A. No. 218/DEL/2020 - - - Dated:- 18-10-2022 - Dr. B. R. R. Kumar, Accountant Member And Sh. Yogesh Kumar Us, Judicial Member For the Appellant : Ms. Manisha Lahoti, C. A.; For the Respondent : Shri Vivek Vardhan, JCIT; ORDER PER YOGESH KUMAR US, JM This appeal is filed by the assessee for assessment year 2015-16 against the order of the ld. Commissioner of Income Tax (Appeals)-XXV, New Delhi [hereinafter referred to as CIT (Appeals)] dated 13.11.2019. 2. The assessee has raised the following substantive grounds of appeal:- 1. The action of CIT (A) in upholding the addition of Rs.32,19,000/- made under section 143(3) by adopting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee and an assessment order came to be passed under section 143(3) of the Act on 28.12.2017, wherein the Ld. AO substituted selling price of Rs. 35,30,000/- with Rs. 67,49,000/- based on circle rate prevailing in the year of the actual sale and handing over of the possession ie: 2014, which is at Rs. 55,000/- per sq. Mts.. Based on the said calculation, an addition of Rs. 32,19,000/- was made as business income, rejecting the indexation claimed by the assessee. As against the assessment order dated 28.12.2017, the assessee has preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) vide order dated 13.11.2019, dismissed the appeal filed by the assessee by confirming the addition made by the AO. 6. Aggrieved by the order of the Ld. CIT(A) dated 13.11.2019, the present appeal has been preferred by the assessee on the grounds mentioned above. The assessee has also filed an application under section 154 of the Act before the Ld. C1T(A) and a rectification order dated 28.02.2020 has been passed allowing the indexation and thus addition of Rs. 32,19,000/- as business income was reduced to Rs. 7,19,295/- as long term capital gain, which remained as the subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/-. Therefore the Ld. AO by adopting the circle rate prevailing in the year of sale deed, made addition of Rs. 32,19,000/-. 10. The first proviso to Section 50C(1) of the has been inserted by the Finance Act 2016 w.e.f. 01.04.2017 which mandates that the value adopted by the stamp valuation authority on the date of agreement may be taken for the purpose of computing the full value of the consideration of such transfer. Further, the second proviso mandates that the first proviso shall apply only in the case where the amounts 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 or through such other electronic mode as may be prescribed on or before the date of agreement of transfer. 11. In the present case, the assessee has received a sum of Rs. 5,50,000/- by way of RTGS on 17/01/2012 through Punjab National Bank on the date of execution of agreement to sell. Now the only remains for consideration as to whether for the year under consideration i.e: AY 15-16, the assessee is entitled to get benefit of the proviso to Section 50C(1) of the Act or not? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Income Tax officer Vs. Modipon Limited [2015 (57) taxmann.com 360 (Delhi Tribunal)]. 13. On a reading of the order passed by the CIT(A), it is interesting to note the report submitted by the Income Tax Simplification Committee set up in 2015, headed by a Former Judge of the High Court, Delhi. 14. Mr.T.Ravikumar, learned Senior Standing Counsel is right in a submission that this report is not binding or cannot be taken to have a statutory force. Nevertheless Simplification Committee was consisted of experts in the field of taxation and it would be worthwhile and interesting to note as to why they have considered the insertion of the proviso to Section 50(C) of the Act should be held to be retrospective; In the report there is an extract of Memorandum explaining provisions of Finance Bill 2016 which reads 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 autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted the Sale Deed to be released after registration, they had paid stamp duty as per the guideline value which is higher than the sale consideration agreed to be paid on the instruments. This explanation offered by the assessee was found to be factually incorrect and rejected and in the background of the said facts, the Honble Supreme Court observes that the Assessing Officer was justified in treating the value adopted by the stamp valuation authority as the deemed sale consideration, received/ accruing as a result of transfer. 17. On going through the facts of the case on hand, we find that no such observation was made by the Assessing Officer. The assessee's consistent case was that the sale consideration agreed to be paid to him by the purchaser was Rs.19 crores and Rs.6 crores was received as advance on the date of entering into the Agreement for Sale. However, the Assessing Officer disbelieved the same and applied the guideline value at Rs.27 crores on the date when the Sale Deed was executed and registered. Therefore, in our considered view, the decision in Ambattur Clothing Company Limited cannot be applied with the facts and circumstances of the case on hand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout prejudice to the provisions of sub-section (1), where - (a) the assessee claimed before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed by the stamp valuation authority under sub-section (i) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2) , (3), (4), (5) and (6) of section 16A, clause (i) of subsection (1) and sub-sections (6) and (7) of section 23A subsection (5) of section 24, section 34 A A. section 35 and section 37 of the Wealth-tax, Act, 1967 (27 of 1957) shall, with necessary modifications, apply in relation to such reference as they apply in 12. As far as the first question is concerned, this Court notices that with the amendment to the Act, and insertion of Section 50-C, a presumption can be drawn that property was sold for a higher v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by such authority shall be taken as the full value of the consideration received on accruing as a result of the transfer. 13. It is apparent from the above provision that a presumption that the sale price is higher can be drawn, if the circumstances spelt out in Section 50-C are fulfilled. This provision was challenged before the Madras High Court, in K.R. Palanisamy (supra). The Court repelled the challenge, but nevertheless held that: Sub-sections (2) and (3) of Section 50C provides further safeguard to the assessee, in the sense that if the assessee claims before the assessing officer that the value adopted by the stamp duty authorities exceeds the fair market value and the value so adopted or assessed for the purpose of stamp duty has not been disputed in any appeal or revision before any authority, the Assessing Officer could refer the valuation of the capital asset to the Departmental Valuation Officer. On such reference, if the value determined by the Valuation Officer is more than the value adopted or assessed by the stamp duty authority, the Assessing Officer shall adopt the market value as determined by the Stamp duty authority. Thus, a complete foolproof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understatement of the consideration in respect of the transfer and the burden of showing that there is such understatement is on the revenue. Once it is established by the revenue that the consideration for the transfer has been understated or, to put it differently, the consideration actually received by the assessee is more than what is declared or disclosed by him, sub-section (2) is immediately attracted, subject of course to the fulfilment of the condition of 15% or more difference, and the revenue is then not required to show what is the precise extent of the understatement or in other words, what is the consideration actually received by the assessee. That would in most cases be difficult, if not impossible, to show and hence subsection (2) relieves the revenue of all burden of proof regarding the extent of understatement or concealment and provides a statutory measure of the consideration received in respect of the transfer. It does not create any fictional receipt. It does not deem as receipt something which is not in fact received. It merely provides a statutory best judgment assessment of the consideration actually received by the assessee and brings to tax capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration mentioned in the deed. The compulsion for such higher value, is the mandate of the Stamp Act, and provisions which levy stamp duty at pre-determined or notified dates. In the present case, the revenue did not rely on any objective fact or circumstances; consequently, the Court holds that there is no infirmity in the approach of the lower authorities and the Tribunal, granting relief to the assessee. This question is accordingly answered in favour of the assessee, and against the revenue. 15. In the present case also the assessee had entered into an agreement to sell on 17.01.2012 and received the maximum sale consideration on or before 20.07.2012 itself and also found that the first payment received i.e. on 17/01/2012 was by way of RTGS, thereby the conditions in second proviso of Section 50C(1) has been complied by the assessee. Therefore we have no hesitation to hold that the benefit of the first proviso to Section 50C(1) of the Act has to be extended to the assessee and the rate prevailing as on the date of agreement should be considered for the purpose of computing the full value of consideration of such transfer. The Ld. CIT(A) has committed error by not ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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