The Tax Publishers2013 TaxPub(DT) 1084 (Cal-HC) : (2013) 051 (I) ITCL 0077 : (2013) 259 CTR 0553 : (2013) 214 TAXMAN 0305

INCOME TAX ACT, 1961

--Capital gains--Applicability of section 50CConveyance deed had neither been executed nor registered --Assessee-owner of 2/5 the share in a land had agreed to sell its interest to 15 several buyers and for the same, deeds of conveyance in favour of five buyers were executed on 15-1-1998 and the remaining were executed on 26-5-2006 and registered on 27-11-2007. The stamp duty on the same was assessed on 27-11-2007. Assessee offered the sale proceeds for taxation during the financial year 2005-06 as it had received money before executing the deed of conveyance and contended that the provisions of section 50C have not applicability because on the date when it received the money by way of sale proceeds neither the deed had been executed nor registered. Assessing officer considering the words 'or assessable' introduced in section 50C(1) with effect from 1-10-2009 had taken the value of capital asset as assessed by the stamp valuation authority on 27-11-2007, instead of actual transfer price. Held: Was justified as it was noted that after introduction section 50C in 2003, the value of the land or building or both sold or otherwise transferred had to be the value assessed by the authority of the State Government for the purpose of stamp valuation. Moreso, the intention of the Parliament was that in a case where the land or building or both were sold or otherwise transferred, such transfer should be deemed to have taken place only after the stamp duty had been assessed by the State Government because it was on the valuation made for the purpose of stamp duty that the tax was payable under Income Tax Act. The amendment made in the year 2009 might have made the things simpler, but the intention of legislature was very clear from the beginning that the value for the purpose of income-tax should be the same as the value for stamp duty.

Assessee submitted that going by the definition of word 'Transfer', appearing from section 2(47)(v) of the Income Tax Act, the sale was completed when the consideration was received in the financial year 2005-06. Possession had already been given in the year 1996 pursuant to an agreement for sale. Section 50C had no manner of application because the valuation of the land for the purpose of stamp duty was yet to be assessed. In such circumstances, the Tribunal erred in applying section 50C to the case of the assessee. It is true that 'Transfer' has been defined in section 2(47). But the same was made before section 50C was introduced to the Income Tax Act. After section 50C was introduced in the year 2003, the value of the land or building or both sold or otherwise transferred has to be the value assessed by the authority of the State Government for the purpose of stamp valuation. The submission that in the financial year 2005-06 when the consideration was received, the deed of conveyance had not even been executed has not found favour for the simple reason that the intention of the Parliament is that in a case where the land or building or both are sold or otherwise transferred, such transfer shall be deemed to have taken place only after the stamp duty has been assessed by the State Government, because it is on the valuation made for the purpose of stamp duty that the tax is payable under the Income Tax Act. The amendment made in the year 2009 may have made the things simpler, but the intention of the legislature was very clear from the beginning that the value for the purpose of income-tax shall be the same as the value for stamp duty. By adopting devices to defeat the provision, the assessee cannot be heard to contend that section 50C would not be applicable merely because the deed of conveyance had not at that time been executed or registered. The contention that the property stood transferred in the financial year 2005-06 when the sale proceeds were received on the basis of the definition appearing from section 2(47)(v) of the Income Tax Act is without any substance. The assessee itself did not follow section 2(47)(v) of the Income Tax Act because it did not offer the transfer for taxation in the year 1996 when the possession is claimed to have been made over on the basis of the agreements for sale in accordance with section 2(47)(v) quoted above. Designs to evade tax cannot be permitted. The assessing officer on the date of assessment for the assessment year 2006-2007 had before him the valuation made by the State for the purpose of stamp duty and rightly applied the same.

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