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TMI Blog2023 (11) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... h internal roads etc. The final agreement and the receipt dated 28.03.2014 did not alter the nature of land in the hands of the assessee nor did it alter the sale value fixed in the agreement. Assessee cannot be fastened with liability by adopting higher rate of valuation of the land which was developed by Developers in the year 2014 since the assessee had given up all her rights in land on 10.01.2013 itself when the Registered GPA was given to Developers and the guideline value on that date was Rs. 90 lakhs per acres. Under these circumstances when the assessee has sold the land at Rs. 1.05 crores as against the guideline value of Rs. 90 lakhs per acres, therefore, we are of the considered opinion that the Assessing Officer is not justified in applying the rate of Rs. 1200 per sft which in our opinion is the rate applicable for developed land. Under these circumstances we are of the considered opinion that in view of the proviso to section 50C where the date of agreement fixing the consideration and date of registration and transfer of capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on date of agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs. 50,000/-. The said return was processed under section 143 (1) of the I.T. Act, 1961 and subsequently, the case was selected for scrutiny under CASS. The Assessing Officer thereafter vide order dated 28.9.2016 passed the order u/s 143(3) of the Act accepting the returned income. 4. Subsequently, it was noticed that the assessee offered Long Term Capital Gain (LTCG) from the sale proceeds of 2.92 acres of land in Sy. No.83/1B to 83/3H in Varadarajapuram, Kanchipuram Distt Chennai which was sold on 28.03.2014 and the same was accepted during the scrutiny assessment. It was noticed from the sale deed that an amount of Rs. 3.10 crore was received towards sale proceeds of the said land and the SRO value of the said land was not placed on record. However, the SRO value of the said Survey Numbers was viewed from the Website of the Registration Department of Chennai and it was noticed that the SRO value of the said land was Rs. 1005/- per sq.ft. Hence the SRO value of 2.092 acres worked out to Rs. 12,78,31,176/-. The Assessing Officer, therefore, issued a letter u/s 133(6) of the Act to the SRO, Padappal, Tamil Nadu requesting for the guideline value for the Varadharajapuram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent u/s 143(1) of the Act. 8. For the remaining extent of 2.92 acres (Survey No. 83/1B to 83/3H), a GPA was executed on 10.01.2013 between the assessee and M/s Tatia Developer Pvt. Ltd. and the property was finally handed over to M/s Tatia Developer Pvt. Ltd. on 28.03.2014 on receipt of sale consideration of Rs. 3,10,00,000. 9. During the re-assessment proceedings, the assessee submitted that since the MoU was signed on 16.12.2011 for sale of the property, the said value should be taken as sale consideration. For this purpose, the assessee submitted a letter from the SRO dated 26.03.2018 showing that the guideline value is Rs. 3,90,500 per acre for the year 2011. The assessee also submitted a letter from the SRO dated 28.11.2019 showing that the guideline value is Rs. 90,000 per cent as on 31.03.2013. 10. The assessee has also submitted that the sale of the land was completed in all respects including issue of GPA before 31.03.2013 and accordingly, the rate applicable for the transaction is the guideline value issued as on 31.03.2013. It was argued that the guideline value issued by the Registration department as on 28.03.2014 @Rs.1200 per sft is applicable for the develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was approved as layout on 21.09.2012. 9.4 Out of the above extent of 66,591 sq.mts 43,099 sq.mts constituted plotted area where as 19,726 sq.mts constituted roads and 4766 sq.mts constituted park area. The road and park areas are pledged to the Government, prior to plan approval and they cannot be sold. Thus, when I transferred the land in March 2014 it was only 64.72% of 2.92 acres of land which was actually transferred to the buyer and not entire 2.92 acres. Thus, accepting for a while the Sub registrar's valuation the capital gain works out as under: Total Area sold 2.92 acres which is equal to 14,132 sq.yds which is equal to 1,27,195 sq. ft. Actual plotted area available for sale, after providing roads etc being 64.72 % of 2.92 acres or 1,27,195 sq. yds. as on 1/04/2014 82320 sq. ft. Value as per Sub-registrar's valuation in March 2014 21200 82320X1200 = Rs. 9,87,84,000/ Value adopted by the Assessing officer for 1,27,195 sq. ft.=1,27195X1200 Rs. 15,2634,240/- EXcess capital gain arrived at by the assessing officer (15,26,34,240 9,87,84,000) Rs. 5,38,50,240/-. 9.5 It is a matter of universal fact that when a plotted land is transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and without there being any nexus between the reasons recorded and income escaping assessment the entire reassessment proceedings are totally invalid, bad in law, without jurisdiction and therefore the entire reassessment proceedings U/s. 143(3) r.w.s 147 of the Income Tax Act, 1961 (Act) passed on 30/12/2019 must be quashed. 2. The Ld. CIT (A) failed to note that the reopening of the assessment was on the basis of an Audit objection and the Assessing Officer merely on the basis of the objection without the assessment and proper application of mind reopened the assessment and therefore the entire reassessment proceedings being on borrowed satisfaction has no legs to stand and therefore the entire assessment order passed U/s. 143(3) r.w.s 147 on 30/12/2019 must be quashed. 3. The Ld. CIT(A) while admitting at paragraph 8.10 that the MoU's were valid in respect of sale of land admeasuring 2.92 Acres situated at 111, Varadarajapuram, Sriperumbadur Taluk, Kanchipuram District, Tamil Nadu failed to note that the provisions of section 50C of the Act has to be applied on the basis of Assessed or Assessable values involving immovable properties thus bringing into play ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents and receipts and that there was no evidence to adopt any figure to the contrary. 9. The Ld. CIT (A) failed to note that on 10/1 1/2012 relevant to the Assessment Year 2013-14 land admeasuring 5.74 Acres belong1ng Rs. to the appellant in the same area was transferred for Rs. to 6,05,00,000/- which gives a rate of Rs. 1,05,40,069/- per Acre which was accepted in an intimation passed U/s. 143(1). 10. Any other ground or grounds that may be urged at the time of hearing . 15. The learned Counsel for the assessee did not press grounds of appeal No. 1 2 challenging the validity of reopening for which the learned DR has no objection. Accordingly, grounds of appeal No. 1 2 are dismissed as not pressed. 16. So far as the other grounds are concerned, the learned Counsel for the assessee strongly challenged the order of the learned CIT (A) in giving only part relief to the assessee. He submitted that neither the Assessing Officer nor the learned CIT (A) has expressed any doubt about the genuineness of the MOUs dated 28.05.2010 and 16.12.2011 or the registered GPA dated 10.01.2013. Further, the Department did not question the sale of part of the land of 5.74 acres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page No.39 to 65 of the paper book, he submitted that the assessee had no role in development and it is the buyer who has obtained approvals of layout from CDMA and taken up for plotting and development. He submitted that it is also incorrect to take Rs. 2,89,400/- as development cost of the layout as incurred by the assessee while the amount is petty and spent for fencing etc., 19. The learned Counsel for the assessee submitted that it is the guideline value applicable to the GPA (Deed No.167/2013 dated 10.01.2013) that needs to be adopted in the present case as value u/s 50C because the GPA is the basis on which further sales are effected by the buyer on square foot basis as per the guideline valuation. He submitted that even after the guideline valuation as per communication of SRO dated 19.07.2018, the acreage value is Rs. 0.9 crore only for the large survey number 83 (of which Survey No.83/1B to 83/H are only parts). He submitted that when the sale of land is part of series of transactions, the total land being 8.66 acres and the present sale is only for balance of 2.92 acres, there is no rationale in adopting valuation in the hands of the assessee in square foot basis when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of proviso to section 50C, stamp duty valuation of property for purpose of stamp duty payment on date of agreement can be deemed as full consideration of capital asset. 24. Referring to the decision of the Allahabad Bech of the Tribunal in the case of Hari Mohan Das Tandon (HUF) vs. PCIT, reported in 169 ITD 639, he submitted the Tribunal in the said case has held that for sale of property in September, 1966, agreement to sell of September 1966 though registered on 29.11.2010 would have to be considered. 25. Referring to the Delhi Bench of the Tribunal in the case of Amit Bansal vs. ACIT, reported in 174 ITD 349, he submitted that the Tribunal has observed that in view of proviso to section 50C, where date of agreement fixing amount of consideration and date of registration regarding transfer of capital asset in question are not same, value adopted or assessed or assessable by stamp valuation authority on date of agreement is to be taken for purpose of full value of consideration. 26. Referring to the decision of the Ahmedabad Bench of the Tribunal in the case of Ramesh Govindbhai Patel vs. Income Tax Officer, reported in 184 ITD 731, he submitted that the Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty was covered under agreements of various dates and the amounts have been already decided prior to 28.03.2014. It is submitted that the entire land was to be sold for Rs. 9,14,00,000/- out of which an amount of Rs. 6,05,00,000/- was already received in A.Y 2013-14 and offered to tax and the amount of Rs. 3,10,00,000/- was received in A.Y 2014-15. It is also his submission that the return of income for A.Y 2013-14 was accepted wherein the value of the land was shown at Rs. 1,05,00,000/- per acre as against the guideline value of Rs. 90.00 lakhs per acre and the return was processed u/s 143(1) and no proceedings u/s 147 or 263 have been initiated. It is also his submission that when the assessee has sold the land in acres, the adoption of the sft rate given by the SRO, which is applicable to developed land with lay out etc., cannot be applied to the case of the assessee. It is also his submission that the provisions of section 50C are retrospective in nature and therefore, adoption of value @ Rs. 1,05,00,000/- per acre is in accordance with law. 30. We find some force in the above arguments of the learned Counsel for the assessee. A perusal of the various details furnished by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as increased to Rs. 1200 per sft because of development of layout of the land belonging to the Appellant and also lands which were taken from other owners. The property was developed by the Developer in the year 2014. The appellant is not concerned with this development as it had given up all its rights in land on 10.1.2013 itself when the GPA was given to M/s. Tatiya Developers Pvt Ltd and the guideline valuation of Rs. 90 lakhs per acre (Page43 of the paper book). 31. A perusal of the details furnished by the assessee shows that in A.Y 2013-14 the assessee has sold 5.74 acres of land as per sale deed dated 18.12.2012 for a consideration of Rs. 6.05 crores and had declared Long-Term Capital Gain of Rs. 96,61,387/- after deducting the indexed cost of acquisition etc., which has been accepted by the Revenue and no proceedings u/s 147 or 263 have been initiated. We find for the impugned A.Y also, the assessee sold the remaining portion of 2.92 acres of land for a total consideration of Rs. 3.10 crores which comes to Rs. 1,05,00,000/- per acre. However, the Assessing Officer in the instant case on the basis of the SRO s letter dated 17.08.2018, wherein he had given th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified in applying the rate of Rs. 1200 per sft which in our opinion is the rate applicable for developed land. 34. There is one more angle which merits consideration. A perusal of the sale consideration of Rs. 3.10 crores as per the agreement and final receipt dated 28.03.2014 shows that the same was on the basis of earlier agreements which is evident from the agreement and final receipt, copy of which is placed at pages 39 to 44 of the Paper Book. A perusal of the schedule of payment mentioned at Page 40 of the Paper Book shows that the total consideration was paid through Cheque/ RTGS from 10.01.2013 to 28.03.2014 which are as under: 35. The payment of the above amount was on the basis of the MOU agreed upon on 16.12.2011 copy of which is placed at Page Nos.56 to 59 of the Paper Book. The total extent of the land of 8.66 acres was agreed to be sold for Rs. 9,14,00,000/ in two financial years i.e. 2012-13 and 2013-14 respectively. We find the assessee has executed registered GPA on 10th January, 2013 which finds place at Page 43 to 46 of the Paper Book. The consideration of Rs. 3,10,00,000/- is paid on various dates starting from 10.01.2013 to 28.03.2014 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. The proviso to Section 50C(1) of the Act deals with cases where the date of the agreement, fixing the amount of consideration and the date of registration for the transfer of the capital assets 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. Thus, an amendment by insertion of proviso seeks to relieve the assessee from undue hardship. 11. The Hon'ble Supreme Court in Commissioner of Income Tax, Kolkata Vs. Calcutta Export Company [2018 (404) ITR 654(SC)], considered the question as to whether the amendment made by the Finance Act 2010 to Proviso of Section 40(a)(ia) of the Act is curative in nature and it has to be given retrospective operation from the date of insertion of the said proviso i.e., with effect from Assessment Year 2005-06. It was pointed out that the purpose of the amendment made by the Finance Act 2010 is to solve the anomalies with the instrument of Section 40(a)(ia) of the Act, caused to the bona fide tax payer. It was further held that the amendment even if not given any operation retro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration of property is different, value adopted by stamp valuation authority on the date of agreement has to be taken for purposes of computing full value of consideration of such transfer. Since in the instant case, admittedly, the guideline value on the date of agreement is Rs. 90,000/- per cent i.e. Rs. 90 lakh per acre and the assessee has sold the land @ Rs. 1,05,00,000/- per acre, therefore, the Assessing Officer, in our opinion, is not justified in adopting the guideline value as on 31.3.2014 that to in sq. foot. In view of the above discussion, we set aside the order of the learned CIT (A) and direct the Assessing Officer to accept the sale consideration shown by the assessee at Rs. 3,10,00,000/- only. The grounds raised by the assessee are accordingly allowed. 37. Grounds raised by the Revenue in ITA No.3/Hyd/2021 read as under: 1. The learned CIT (A) erred in directing the Assessing Officer to consider only the saleable area for computation of capital gains as per the SRO value of Rs. 1200/- per sq.ft as against the total area sold of 2.92 acres. 2. The learned CIT (A) failed to appreciate that the fact that assessee is not in the business of development ..... 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