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TMI Blog2009 (2) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, It is abundantly clear from the explanation given in the CBDT circular that the basic intention to insert s. 50C is for the purpose of determining full value of sale consideration for the purpose of computation of capital gains u/s. 48. It is well-settled rule of interpretation that meaning ascribed by the authority (sic). The issuing of notification or circular is good guide of contemporaneous exposition of the position of the law and this rule is popularly known as 'contemporanea expositio'. This rule of interpretation has been given recognition by the Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO [ 1981 (9) TMI 1 - SUPREME COURT] . In our opinion, there should not be any cloud of doubt that s. 50C has application only to the extent of determining sale consideration for computation of capital gain under Chapter IV-E of the Act and it cannot be applied for determining the income under other heads. We are therefore, of the opinion that, when admittedly in the present case the sale of the flats is treated as the business income and not as a capital gain, hence, the provision of s. 50C is not applicable. We, therefore, delete the addition made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as selected for scrutiny. The assessee company had shown profit on sale of said flats as business income and the AO has also accepted same. In respect of the sale of the two flats, the AO was of the opinion that as the valuation made for the purpose of the stamp duty was more than the sale consideration shown in the sale deeds, hence, in view of the provisions of s. 50C of the Act, the valuation adopted for the purpose of the stamp duty should be treated as the sale consideration. The AO, therefore, made the addition of Rs. 51,22,956 that was the difference between valuation adopted for the purpose of the stamp duty and actual sale consideration shown by the assessee. The assessee carried the issue before the learned CIT(A), but did not find favour. 4. We have heard the rival submissions of the parties. We have also carefully considered the facts as per the record before us. The argument of the learned counsel is that s. 50C is introduced in Chapter IV of the IT Act and it is relevant only in respect of the computation of a 'capital gain' and the said section cannot be invoked where the income is assessed as business income under the head "Profits and gains of the business or pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority under sub-s. (1) 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 AO may refer the valuation of the capital asset to a valuation officer and where any such reference is made, the provisions of sub-ss. (2), (3), (4), (5) and (6) of s. 16A, cl. (i) of sub-s. (1) and sub-ss. (6) and (7) of s. 23A, sub-s. (5) of s. 24, s. 34AA, s. 35 and s. 37 of the WT Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the AO under sub-s. (1) of s. 16A of that Act. Explanation: For the purposes of this section, 'valuation officer' shall have the same meaning as in cl. (r) of s. 2 of the WT Act, 1937 (27 of 1957). (3) Subject to the provisions contained in sub-s. (2), where the value ascertained under sub-s. (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-s. (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer." 8. As per legislative history, s. 50C is inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so, however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or debentures of, an Indian company: Provided further that where long-term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of cl. (ii) shall have effect as if for the words 'cost of acquisition' and 'cost of any i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any statutory provision are clear and unambiguous, in that case to find out intention of the legislature need no further investigation by resorting to process of interpretation. Then the words used by the legislature should be the base to interpret a particular provision. On many occasions the provisions are drafted in such a way that they may create confusion when the same are being tried to apply and in such situation there is no option but to go with process of interpretation. What is the correct meaning of those words when the law or particular provision was enacted? Normal rule of interpretation is that, if the language is very clear then the provision is to be interpreted in its ordinary, popular and natural meaning. It is also well settled principle that, when the language of the statute is plain and explicit and does not admit of any doubtful interpretation, the Court cannot expand the meaning of the words used by the legislature. So far as s. 50C is concerned the language of the said section is so clear in respect of its intention that it is brought on statute book by way of deeming provision in the nature of Explanation to s. 48. 10. Moreover, after the Finance Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is well-settled rule of interpretation that meaning ascribed by the authority (sic). The issuing of notification or circular is good guide of contemporaneous exposition of the position of the law and this rule is popularly known as 'contemporanea expositio'. This rule of interpretation has been given recognition by the Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC). In our opinion, there should not be any cloud of doubt that s. 50C has application only to the extent of determining sale consideration for computation of capital gain under Chapter IV-E of the Act and it cannot be applied for determining the income under other heads. 12. We are therefore, of the opinion that, when admittedly in the present case the sale of the flats is treated as the business income and not as a capital gain, hence, the provision of s. 50C is not applicable. We, therefore, delete the addition made by the AO of Rs. 51,22,956 and set aside the order of the CIT(A) on this issue. The ground No. 1 is therefore, allowed. 13. Next issue is addition on account of sale of two car parking spaces. 14. We have heard the parties. The AO has noted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). As per ground No. 3 is concerned, it is in the nature of alternate ground which was raised before the CIT(A}, but the same was not decided. In our opinion as we have already deleted the addition made by the AO under s. 50C, the ground No. 3 does not survive. Hence, the same is dismissed. 19. In respect of the ground No. 4 is concerned, as agreed by both the parties, we restore the same to the file of the CIT(A) for adjudication. 20. Now we will take ground No. 5 which is in respect of the disallowance of the mobile phone expenses. 21. We have heard the parties. We have also perused the facts and reasons given by the learned CIT(A). In our opinion the CIT(A) has rightly rejected the plea of the assessee. We therefore, confirm the order of the CIT(A) on this issue. In the result, ground No. 5 is dismissed. As we concur with the findings and reasoning given by both the lower authorities, no separate finding needs to be given. 22. The next issue is in respect of 1/4th travelling expenditure. 23. We have heard the parties. In our opinion, considering the facts relevant to the issue and considering possibility of personal element involved in travelling expenses, if the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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