By Jagdish T. Punjabi / Devendra Jain / Tejaswini Ghag
Chartered Accountants
19. [2018] 100 taxmann.com 334 (Delhi-Trib.) Amit Bansal vs.
ACIT ITA No.:
3974/Delhi/2018 A.Y: 2012-13 Dated: 22nd November, 2018
Section
50C – Proviso to section 50C inserted by Finance Act, 2016 w.e.f. 1.4.2017
being curative in nature is retrospective.
FACTS
For
the assessment year under consideration, the assessee, an individual filed his
return of income declaring total income of Rs.10,20,270/-. During the year
under consideration, the assessee has shown net profit from sale/purchase of
properties under the head ‘Income from other sources’ at Rs.1,33,200/-.
In
the course of assessment proceedings, the Assessing Officer (AO) asked the
assessee to provide the details of sale and purchase of property as well as to
justify why the income from sale of property is not to be assessed as ‘Capital
gain’ as against the ‘Income from other sources’ treated by the assessee. He
also asked the assessee to justify the impact of section 50C on the said
transaction.
The assessee submitted that he has sold the property held
by him jointly with Vikas Bansal on 22nd July, 2011 with net
consideration of Rs. 42 lakh which was purchased by him on 28th
July, 2010 for the sale value of Rs.39,33,600/- and has declared one half share
of profit on sale/purchase of property at Rs1,33,200/-. The assessee further
submitted that he has entered into an agreement to sell the property on 25th
March, 2011 with buyer Phool Pati and taken a part payment of Rs.10 lakh and no
possession was taken on that date. Thereafter, the assessee entered into an
agreement dated 22nd July, 2011 with buyer Phool Pati for final sale
and gave possession of the property in continuation of earlier agreement dated
25th March, 2011 in which the terms of payment were also specified.
It
was submitted that there is no registered conveyance deed and the transaction
was entered into just to earn profit from this venture of sale/purchase.
Alternatively, it was argued that the same may be treated as business income as
against ‘Income from other sources’ and not the ‘Capital gains’ in the hands of
the assessee. So far as the application of provisions of section 50C is
concerned, it was submitted that since the transaction is not in the nature of
capital gains, the provisions of section 50C are not applicable.
The
AO held that since the agreement of purchase as well as sale of plot involved
the possession of sale of property to be taken or retained in part performance
of a contract of the nature referred to in section 53A of Transfer of Property
Act, 1982, the property was a capital asset as prescribed in section 2(47)(v).
Therefore, it had to be treated as a capital asset and the asset was a
short-term capital asset in the hands of the assessee. The Assessing Officer
further noted that the circle rate of the property as on 22-7-2011 was Rs.
16,000/- per sq. yard as against the circle rate of Rs. 11,000/- as on
25-3-2011. Applying the provisions of section 50C, he determined the full value
of consideration at Rs. 57,21,600/- as against the actual sale consideration of
Rs. 42 lakh. Accordingly, the Assessing Officer determined the short-term
capital gain and made addition.
Aggrieved,
the assessee preferred an appeal to the Commissioner (Appeals) who confirmed
the action of the AO including the action of taking the circle rate of Rs.
16,000/- per sq. yard as on 22-7-2011.
Aggrieved
the assessee preferred an appeal to the Tribunal where, on behalf of the
assessee, relying on the ratio of the following decisions
(i) Rahul G. Patel vs. Dy. CIT [(2018) 173 ITD 1
(Ahd. – Trib.)];
(ii) Smt. Chalasani Naga Ratna Kumaris vs. ITO
[(2017) 79 taxmann.com 104 (Vishakhapatnam – Trib.)];
(iii) Hansaben Bhaulabhai Prajapati vs. ITO,
ITA No.2412/Ahd/2016 (ITAT, Ahmedabad).
it
was submitted that in view of the proviso to section 50C(1), where the date of
the agreement fixing the amount of consideration and the date of registration
for the transfer of the capital asset are not the same, the value adopted or
assessed or assessable by the stamp valuation authority on the date of
agreement may be taken and, thus, it had correctly adopted the rates applicable
on the date of the agreement as against the date of actual sale.
HELD
The
Tribunal noted that the proviso to section 50C was inserted by the Finance Act,
2016 with effect from 1-4-2017. It observed that the question that has to be
decided is as to whether the above amendment is prospective in nature i.e.,
will be applicable from assessment year 2017-18 or is retrospective in nature being
curative in nature.
The
Tribunal noted that identical issue had come up before the Ahmedabad Bench of
the Tribunal in the case of Dharamshibhai Sonani [2016] 75 taxmann.com
141/161 ITD 627 (Ahd. – Trib.) where it has been held that amendment to
section 50C introduced by the Finance Act, 2016 for determining full value of
consideration in the case of involved property is curative in nature and will
apply retrospectively. It then proceeded to observe that various other
decisions relied on by the Ld. counsel for the assessee also support the case
of the assessee that where the date of the agreement fixing the amount of
consideration and the date of registration regarding the transfer of the
capital asset in question are not the same, the value adopted or assessed or
assessable by the stamp valuation authority on the date of the agreement is to
be taken for the purpose of full value of consideration.
The
Tribunal accepted the argument made on behalf of the assessee in principle and
restored the issue to the file of the AO with a direction to verify necessary
facts and decide the issue in the light of the above observations directing to
adopt the circle rate on the date of agreement to sell in order to compute the
consequential capital gain.
The
appeal filed by the assessee was allowed.
