Ashokbhai Chinubhai Bharwad v. ITO [ITA No.
650/Ahd/2016, dt. 8-9-2020] : 2020 TaxPub(DT) 3541 (Ahd.-Trib.)
Retrospective application of Proviso 1 of section 50C
Facts:
Assessee as a co-owner had sole a property and returned the
capital gains. The stamp value on the date of registration of the agreement was
much more than the stamp value as on the agreement. The agreement was made in
2010 with part consideration transferred and the registration took place only
in 2012. The assessing officer applied the circle/SRO rate as on the date of
registration and made additions under section 50C which was upheld by the
Commissioner (Appeals). On higher appeal --
Held in favour of the assessee that the insertion of
proviso 1 to section 50C whereby if agreement was entered into much earlier
with actual registration happening on a later date then the stamp value as on
the date of the agreement may be substituted as the sale consideration. Based
on this no additions were warranted in the case of the assessee.
Finance Act, 2016 vide Easwar Committee recommendations had
suggested this amendment which is discussed in this verdict.
This amendment was explained in the Memorandum explaining
the provisions of Finance Bill 2016. It reads as under :--
"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
authority for the purpose of payment of stamp duty shall be taken as the full
value of consideration for the purposes of computation of capital gains. The
Income Tax Simplification Committee (Easwar Committee) has in its first report,
pointed out that this provision does not provide any relief where the seller
has entered into an agreement to sell the property much before the actual date
of transfer of the immovable property and the sale consideration is fixed in such
agreement, whereas similar provision exists in section 43CA of the Act, i.e.,
when an immovable property is sold as a stock-in-trade. It is proposed to amend
the provisions of section 50C so as to provide that where the date of the
agreement fixing the amount of consideration for the transfer of immovable
property and the date of registration are not the same, the stamp duty value on
the date of the agreement may be taken for the purposes of computing the full
value of consideration. It is further proposed to provide that this provision
shall apply only in a case here the amount of consideration referred to
therein, or a part thereof, has been paid by way of an account payee cheque or
account payee bank draft or use of electronic clearing system through a bank
account, on or before the date of the agreement for the transfer of such
immovable property. These amendments are proposed to be made effective from the
1-4-2017 and shall accordingly apply in relation to assessment year 2017-18 and
subsequent years."
The above retrospective reading was applied from Rahul
G. Patel v. DCIT, (2018) 97 taxmann.com 598 (Ahd-Trib) : 2018 TaxPub(DT)
6155 (Ahd-Trib) in this verdict.