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TMI Blog2017 (5) TMI 1807X X X X Extracts X X X X X X X X Extracts X X X X ..... issible to sell the same property to someone else as per the provisions of Transfer of Property Act. Amendment inserted by way of Finance Act, 2016 w.e.f. 1.4.2017 to the said provision for full valuation of consideration in certain cases u/s 50C - The mandate of the legislature is that where the date of agreement fixing the amount of consideration and the date of registration for the transfer of capital asset are not the same, the value adopted or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing the full value of consideration for such transfer. This amendment is applicable w.e.f. 1.4.2017 as per the amendment itself. In our considered opinion, this amendment is not a substantial amendment but the same is clarificatory, therefore, if this amendment is taken into consideration in the light of the dicta laid down in the case of Sanjeev Lal [ 2014 (7) TMI 99 - SUPREME COURT] then it has to be held that the date of agreement of sale is relevant for the purpose of computing full value of consideration of such transfer and hence the conclusion drawn by the CIT (Appeals) is quite reasonable and meaningful. CIT (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Stamp Valuation Authority within the meaning of section 50C (Rs.1,37,94,000/-) and the sale consideration (Rs.68,95,800/-) for sale of properties should not be added to the income of the assessee. In its reply dated 28.01.2015 the assessee submitted as under :- A show cause notice dated 23.01.2015 has been issued in the name of the above assessee company for the Assessment Year 2012-13 wherein you have asked from the assessee to explain as to why the difference of Rs.68,98,200/- in the amount of sale consideration of Rs.68,95,800/- and stamp duty value of Rs.1,37,94,000/- should not be added to the total income of the assessee company . In reply to the said show cause notice we have been directed by the assessee to submit as under - 1.1] That during the year under consideration the assessee company had sold an Industrial Land admeasuring 1.881 Hectare located at Village Sejavaya Tehsil, District Dhar to 8 parties for Rs.68,95,800/- . Xerox copy of the registered sale deeds were already filed and available on pages 67 to 210 of the submission dated 10.12.2014. A statement giving party wise details of the same is enclosed. 1.2] That the value as adopted by the Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale of said Diverted Land to the proposed buyers. Copy of Order as passed by the Ld. Collector Dhar on 22.03.2012 is enclosed for your kind reference. 1.7] That as per the said order the Collector has directed the Dy. Registrar Dhar to do the registry of said Land on Value as per the Prevailing Guideline or Actual Valuation or Transaction value whichever is higher. 1.8] That assessee submits that since the agreement for Sale of said Land was entered into by it in the A.Y. 2011-12 and advance was also received by the assessee through Account Payee cheques in that case the stamp duty value for the Asst Year 2011-12 is required to be considered for the purpose of section 50C of the Act. That since the permission to sale the said Land was received by it hi on 22.03.2012 the said land has been registered on 31.03.2012 i.e. in A.Y. 2012-13. 1.9] It is therefore submitted that in the Guideline value of said Land for applicability of Provision of Sec. 50C has to be adopted as per the value prevailing, in the A.Y. 2011-12 which was calculated at Rs.34,47,873/- only whereas the assessee had sold the said land at Rs.68,95,800/- which is more than that figure. 02] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by assessee in F.Y. 2011- 12 only. 2. Even the language of agreement is very clear from which it can be ascertained that the relevant transfer was subject to the permission of sale by collector. Thus only the agreement does not ascertain the transfer of this property, but permission of collector was a must condition which was to be obtained in order to transfer the property. In all sale deeds it is mentioned that the permission to sale is obtained from collector-Dhar on 22.03.2012. 3. From Point No. 3 and 6 on page No. 280 it is clear that if registration is not ensured by the purchaser seller would be free to sell the property to any third party. 4. Also the possession was not handed over to the purchaser, party as per the agreement in F.Y. 2010- 11. Infact it could not be handed over till certain conditions in the agreement like approval of collector for sale of land, registration of sale etc were to be met. In a latest decision of ITAT- Hyderabad bench in case of Smt. Bhavya Anant Udeshi vs. ITO (International taxation)[2014] 51 taxmann.com415(Hyderabad Trib.), it was determined that possession of property is one of the must conditions in order to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh application for the same was made. Appellant has placed reliance on the decision in the case of ITO Vs Modipon Ltd. 168 TTJ 480 (ITAT Delhi) in support of the contention that the circle rate prevailing on date of registration of agreement to sell and not circle rate as on the date of execution of sale deed should be adopted as sale consideration for computation u/s 50C. 5.2 The contention of the appellant that the circle rate as on the date of agreement should have been adopted in the computation of LTCG u/s 50C of The Act is found to be covered in its favour by the decision of the Supreme Court in the case of Sanjeev Lal Etc. Vs ACIT wherein the court has held as under: The question to be considered by this Court is whether the agreement to sell which had been executed on 27th December, 2002 can be considered as a date on which the property i.e. the residential house had been transferred. In normal circumstances by executing an agreement to sell in respect of an immoveable property, a right in personam is created in favour of the transferee/vendee. When such a right is created in favour of the vendee, the vendor is restrained from selling the said property to some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been registered only on 24th September, 2004, after the suit filed by Shri Ranjeet Lal, challenging the validity of the Will, had been dismissed. In the light of the aforestated facts and in view of the definition of the term transfer , one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and therefore, some right which the appellants had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the appellants to sell the property to someone else in accordance with law. A right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed and who had also paid Rs.15 lakhs by way of earnest money. No doubt, such contractual right can be surrendered or neutralized by the parties through subsequent contract or conduct leading to no transfer of the property to the proposed vendee but that is not the case at hand. 5.3 The appellant has received part of the sale consideration in the year in which the agreement was made and due to reasons beyond the control of the appellant (p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided that the date of agreement will be effective from 1.4.2017. The learned DR submitted that in the present case the transfer of land took place before 14.2017, therefore, the Assessing Officer rightly considered the date of registration and determined the value as per stamp valuation authority. The learned D R submitted that the Commissioner of Income Tax (Appeals) was not justified in allowing the appeal of the assessee relying upon the decision of the Hon'ble Apex Court in the case of Sanjeev Lal and Smt. Shantilal Motilal (supra) Lal as the facts and circumstances of the present case are quite dis-similar and distinct from that case. 7. Replying to the above, the learned counsel for the assessee drew our attention to the assessee s paper book pages 77 to 83 i.e. registered agreement to sell dated 29.11.2010 and submitted that execution of registered sale deed could not be done during the assessment year 2011-12 as the permission of the Collector could not be obtained during that period. The learned counsel for the assessee drew our attention to clauses (v) and (vi) of the said agreement and submitted that it was the duty of the seller assessee to obtain permission to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll valuation of consideration in certain cases u/s 50C of the Act is concerned, the mandate of the legislature is that where the date of agreement fixing the amount of consideration and the date of registration for the transfer of capital asset are not the same, the value adopted or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing the full value of consideration for such transfer. This amendment is applicable w.e.f. 1.4.2017 as per the amendment itself. Be that it may, in our considered opinion, this amendment is not a substantial amendment but the same is clarificatory, therefore, if this amendment is taken into consideration in the light of the dicta laid down by the Hon'ble Supreme Court in the case of Sanjeev Lal (supra) then it has to be held that the date of agreement of sale is relevant for the purpose of computing full value of consideration of such transfer and hence the conclusion drawn by the Commissioner of Income Tax (Appeals) is quite reasonable and meaningful. We may point out that the facts and circumstances of the present case are identical and similar to the facts of the case of Sanjeev Lal (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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