Income Tax Appellate Tribunal - Jaipur
Metal Extrusion India Ltd, Jaipur vs Additional Commissioner Of Income Tax, ... on 25 July, 2019
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCH 'SMC', JAIPUR
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Before : Shri Vijay Pal Rao, Judicial Member
vk;dj vihy la-@ITA No.163/JP/2019
fu/kZkj.k o"kZ@Assessment Year : 2015-16
M/s. Metal Extrusion India Ltd. cuke The Addl. CIT
36A, Suraj Nagar East, Civil Lines Vs. Circle - 1
Jaipur Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAFCM 3410 Q
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls @Assessee by :Shri Rohan Sogani, CA
jktLo dh vksj ls@ Revenue by : Shri Ashok Khanna, JCIT-DR
lquokbZ dh rkjh[k@ Date of Hearing : 25/07/2019
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 25 /07/2019
vkns'k@ ORDER
PER VIJAY PAL RAO, JM
This appeal by the assessee is directed against the order dated 27-12-2018 of ld. CIT(A)-1, Jaipur for the Assessment Year 2015-16.
The assessee has raised the solitary ground as under:-
''Addition of income u/s 50C for Rs. 1,71,600/ without considering the fact of entering into agreement coupled with bank transfer before increase in DLC Value (Circle Rate) is wrong and bad 2 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur in law. The assessee had sold an immovable property for Rs. 34,50,000/- in A.Y. 2015-16. The AO through her order u/s 1434(3) of I.T. Act, 1961 has considered the stamp duty value of the said property as Rs. 36,21,600/- on the date of registry while ignoring the circle rate as on the date of agreement and added back Rs. 1,71,600/- to the income of the assessee.''
2.1 During the year under consideration, the assessee has sold an immovable property at Flat No. 303, Riya Plaza, Old H.B. Road, Ranchi for a consideration of Rs. 34.50 lacs vide sale deed dated 16-12-2014.The AO noted that the property was valued by the Stamp Duty Authority at Rs. 36,21,600/-. Accordingly, the AO proposed to make the addition to the capital gain by adopting full value consideration u/s 50C of the Act.
The assessee objected to the adoption of the stamp duty valuation as on the date of sale deed and contended that there was an agreement to sell between the parties on 31-07-2014 and therefore, as per proviso to Section 60C, the stamp duty valuation as on the date of agreement should be taken as full value consideration. The AO did not accept the contention of the assessee and adopted the full value consideration as per stamp duty valuation as on the date of sale deed and thereby made an addition of Rs.1,71,600/- to the capital income of the assessee. The assessee challenged the action of the AO before the ld. CIT(A) but could not 3 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur succeed as the ld. CIT(A) held that proviso to Section 50C has prospective effect and not retrospective effect.
2.2 Before us, the ld.AR has referred to the agreement dated 31-07-2014 and submitted that as per sale agreement the sale consideration was agreed upon between the parties at Rs. 34.50 lacs and part payment of Rs. 1.00 lac was received by the assessee on the date of agreement through banking channel. He has referred to the bank statement wherein Rs. 1.00 lac is reflected as on 31-07-2014. The ld.AR has also referred to the sale deed dated 16-12-2014 and submitted that there is a reference of agreement dated 31-07-2014 in the sale deed. Thus there is no dispute regarding the agreement dated 31-07-2014 entered into between the parties as well as part consideration was received by the assessee through banking channel. The ld.AR has then referred to the DLC Rate of the property as on the date of agreement i.e. 31-07-2014 at Rs.32,90,680/- and submitted that sale consideration agreed upon between the parties and received by the assessee is more than the DLC rate as on the date of agreement. Hence, the ld.AR has submitted that once the DLC rate as on the date of agreement is less than the sale 4 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur consideration actually received by the assessee, no further addition is called for u/s 50C of the Act. As regards retrospective operation of proviso to section 50C of the Act, the ld.AR has relied on the following decisions.
1. Amit Bansal vs ACIT, Central Circle, Karna, [2019] 174 ITD,349 (Delhi Trib)
2. Rahul G Patel vs DCIT, Circle 1(2), Baroda [2018] 173 ITD 1 (Ahemdabad Trib).
3. Dharamashibhai Sonani vs ACIT, Circle -, 9, Surat [2016] 161 ITD 627 (Ahemdabad Trib)
4. Smt. Chalasani Naga Ratna Kumari vs ITO, Ward- 3(2), Visakhapatnam [2017[ 79 taxmann.com 104 (Visakhapatnam Trib) 2.3 On the other hand, the ld. DR has submitted that proviso to Section 50C was inserted by the Finance Act, 2016 w.e.f. 01-04-2017 and therefore, it is prospective in nature and cannot be applied for the year under consideration. He relied on the order of the ld. CIT(A).
2.4 I have considered the rival submissions as well as relevant material on record. There is no dispute that the Flat in question was sold by the assessee vide sale deed 16-12-2014 for a sale consideration of Rs. 34.50 lacs. It is also not in dispute that prior to the sale deed, there was an 5 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur agreement between the parties on 31-07-2014 whereby the parties have agreed to the transaction of purchase and sale of the flat in question for a sale consideration of Rs. 34.50 lacs. Part consideration of Rs. 1.00 lac was also received by the assessee as on the date of agreement i.e. 31-07- 2014. This payment of Rs. 1.00 lac received by the assessee is duly reflected in the bank account of the assessee placed at page no. 21 of the paper book and the entry in the bank account is duly reflected indicating the payment received from the purchaser Shri Deepak Kumar. Thus so far the existence of agreement and receipt of part consideration through banking channel as on the date of agreement dated 31-07-2014 is concerned, the same is not in dispute and also reflected in the sale deed dated 16-12-2014. At page no. 6 of the said sale deed, the reference of sale agreement dated 31-07-2014 is made alongwith part payment of Rs.
1.00 lac. Therefore, the question arises whether the stamp duty valuation on the date of agreement will be relevant for the purpose of adopting full value consideration u/s 50C of the Act or stamp duty valuation as on the date of sale deed will be considered for this purpose.
The assessee has relied on various decisions of the Coordinate Benches of 6 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur the Tribunal wherein issue of retrospective applicability of the proviso to Section 50C has been considered by the Tribunal. In case of Rahul G Patel vs DCIT (supra), the Ahemdabad Bench of the Tribunal has discussed this issue in para 14 to 18 as under:-
''14. It is pertinent to observe that an agreement to sale was executed by the assessee on 8.2.2010 which is followed by payment through account payee cheque. Details of payments have been duly noticed by the ld.AO as well as by the ld.CIT(A). First cheque was received on 1.4.2011 for a consideration of Rs.10 lakhs; then Rs.30 lakhs on 23.7.2011; Rs.15 lakhs on 28.12.2011 and Rs.50 lakhs on 26.3.2012. Similarly on 1.5.2012 Rs.45 lakhs was received through account payee cheque. It means that sale consideration were received by the assessee before the registration of sale deed regularly on different intervals. As observed earlier, section 50C provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration. The question before us is, what could be the full value of sale consideration i.e. whether the value on which stamp duty was paid at the time of sale deed or the value declared in the sale agreement ? In such a situation where the assessee is not satisfied with adoption of sale value on which stamp duty was paid, then scheme of the Act prescribes a mechanism under sub-section (2) of section 50C for making a reference to the DVO to determine fair market value of the property. The reasons for such a mechanism is that stamp duty fee is only 4.95% (herein Gujarat) on the total sale consideration, which is a small amount and can be borne by any vendor/vendee. But for the purpose of Income Tax Act, the liability would enhance multi fold, and due to this reason, mechanism has been provided in the Act for the assessee to demonstrate that the value received by him was far less than one adopted for the purpose of stamp duty valuation. For this, he can make a request to the AO under section 50C(2) for making a reference to the DVO. It is pertinent to observe that the assessee entered into an agreement to sell on 8.2.2010. The AO 7 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur has not disputed this agreement. The assessee has received payment in pursuance of this agreement through account payee cheque. Let us take a situation where a vendee fails to get the sale deed executed. The assessee being vendor has a remedy for filing a suit for specific performance under the Specific Relief Act. The time limit to file a suit for specific performance has been provided in Indian Limitation Act, which is three years. In such situation, when the vendor files a suit for specific performance to force the vendee to purchase the property. In that situation, he will not pay anything over and above, the amount stated in the sale agreement. In that situation, the assessee would not get anything more than the amount mentioned in the agreement, though such situation may arise after three-four years on execution of the decree passed in a suit for specific performance. In between there may an appreciation or depreciation in the said property. Circle rate may rise or reduce. In other words, at the time of an agreement in respect of an immovable property, a right in persona is created in favour of the transferee/vendee. When such right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because vendee in whose favour right in persona is created has legitimate right to enforce such specific performance of the agreement, if the vendor for some reason is not executing the sale deed. Thus, by virtue of agreement to sell, some right is given to the vendee by the vendor. It is encumbrance on the property. At this stage, we would like to make reference to new proviso appended to section 50C by way of Finance Act, 2016 and the background, under which such provision has been incorporated. In 2015, Government of India has set up Income Tax Simplication Committee headed by Justice R.V.Easwar, former judge of Delhi High Court. The Committee in its reported observed as under:
"6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIEF WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL Section 50C makes a special provision for determining the full value of consideration in cases of transfer of immovable property. It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (i.e. "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the 8 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur consideration, and capital gains shall be computed on the basis of such consideration under section 48 of the Income-tax Act.
The scope of section 50C was extended w.e.f. A.Y. 2010-11 to the transaction which were executed through agreement to sell or power of attorney by inserting the word "assessable" alongwith words "the value so adopted or assessed". Hence, section 50C is now also applicable in case of such transfers.
The present provisions of section 50C do not provide any relief where the seller has entered into an agreement to sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement. A later similar provision inserted by way of section 43CA does take care of such a situation.
6.2 It is therefore proposed to insert the following provisions in section 50C:
(4) Where the date of an agreement fixing the value of consideration for the transfer of the asset and the date of registration of the transfer of the asset are not same, the value referred to in sub-
section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement.
(5) The provisions of sub-section (4) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before a date of agreement for transfer of the asset.
**
15. Taking a clue from the report, a proviso has been appended by way of Finance Act, 2016 to section 50C and such proviso reads as under:
"Provided that 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 for the purposes of computing full value of consideration for such transfer:9 ITA No. 163/JP/2019
M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer."
16. 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 where 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. 30 These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years."10 ITA No. 163/JP/2019
M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur
17. If we take all these aspects in their settings as a whole, then it would indicate that earlier whenever an assessee disputed adoption of sale equivalent to the amount on which stamp duty is paid, then reference to the DVO is made under section 50C(2). Normally, as observed earlier, when a sale agreement was executed, payment was received in part performance of the agreement, then vendor would not get anything more than the amount agreed in the sale agreement. There may be a time gap between execution of agreement to sell and execution of sale deed. In between if circle rate is being enhanced, then he would like to challenge adoption of higher sale value on the strength of sale agreement. In that situation, unnecessary energy would be devoted in ascertaining fair market value of the property on the date of sale. The encumbrance on the property by virtue of sale agreement would also goad the DVO to determine the fair market value of the property on the date of sale at a lesser amount than the value adopted for the purpose of payment of stamp duty. We have already made a reference to Specific Relief Act and how a vendor or vendee could enforce the sale agreement under Specific Relief Act. Under such enforcement, they would settle their right on the basis of agreed terms in the sale agreement. This proviso would only simplify this exercise i.e. instead remitting the matter to the DVO under section 50C(2), he would conduct an inquiry as to what could be value of the property on the date of execution of the agreement, and whether such agreement has created any encumbrance or not. There could be a difference in the actual sale consideration than the amount on which stamp duty was paid. This proviso has simplified this thing. It contemplates that stamp duty valuation of the property for the purpose of stamp duty payment on the date of agreement can be deemed as full consideration of the capital asset. Thus, in this way, the proviso can be construed as clarificatory in nature, and can be applied on pending matters as already held by the ITAT in the case of Dharamshibhai Sonani (supra).
18. In the present case, we find that the assessee has contended that consideration of Rs.3,00,11,000/- is more than the valuation for the purpose of stamp duty as on 8.2.2010. No where the assessee has pointed out specific rate on the date of agreement. Therefore, we allow these two grounds of appeal for the statistical purpose. We set aside this issue to the file of the AO. The ld.AO shall call for circle rate for the purpose of stamp duty valuation of this property as on 8.2.2010. He shall determine the sale value of the property on the basis of circle rate applicable on this property on 8.2.2010, and thereafter compute long 11 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur term capital gain assessable in the assessment year 2013-14. In other words, transfer of this property would be construed on 5.6.2012, but the full value of consideration is to be equivalent to the amount on which stamp duty was payable on 8.2.2010.
Thus the Tribunal has held that the AO shall call for the Circle Rate for the purpose of stamp duty valuation as on the date of agreement and not on the date of subsequent sale deed. Similar view was taken by the ITAT Ahemdabd Bench in the case of Dharamshibhai Sonani vs ACIT (supra) in para 6 to 10 as under:-
''6. This amendment was explained, in the Memorandum Explaining the Provisions of Finance Bill 2016 (http://indiabudget.nic.in/ub2016- 17/memo/mem1.pdf), as follows:
"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 12 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur 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 where 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. 30 These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years."
7. While the Government has thus recognized the genuine and intended hardship in the cases in which the date of agreement to sell is prior to the date of sale, and introduced welcome amendments to the statue to take the remedial measures, this brings no relief to the assessee before me as the amendment is introduced only with prospective effect from 1st April 2017. There cannot be any dispute that this amendment in the scheme of Section 50C has been made to remove an incongruity, resulting in undue hardship to the assessee, as is evident from the observation in Easwar Committee report to the effect that "The (then prevailing) provisions of section 50C do not provide any relief where the seller has entered into an agreement to sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement"
recognizing the incongruity that the date agreement of sell has been ignored in the statute even though it was crucial as it was at this point of time that the sale consideration is finalized. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. In support of this proposition, I find support from Hon'ble Delhi High Court's judgment in the case of CIT v. Ansal Landmark Township (P.) Ltd. [2015] 377 ITR 635/234 Taxman 825/61 taxmann.com 45, wherein approving the reasoning adopted an order authored by me during my tenure at Agra bench [i.e Rajeev Kumar Agarwal v. Addl. CIT [2014] 149 ITD 363/45 taxmann.com 555 (Agra - Trib.) which centred on the principle that when legislature is reasonable and 13 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur compassionate enough to undo the undue hardship caused by the statute "such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically". In this case, it was specifically observed, and it was this observation which was reproduced with approval by Their Lordships, as follows:
'Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence"
to punish the assessees for non-deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative, in nature and it has retrospective effect from 1st April, 2005 being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act 2004'
8. Their Lordships were pleased to hold that this reasoning and rationale of this decision "merits acceptance". The same principle, when applied in the present context, leads to the conclusion that the present amendment, being an amendment to remove an apparent incongruity which resulted in undue hardships to the taxpayers, should be treated as retrospective in effect. Quite clearly therefore, even when the statute does not specifically state so, such amendments, in the light of the detailed discussions above, can only be treated as retrospective and effective from the date related statutory provisions was introduced. Viewed thus, the proviso to Section 50 C should also be treated as curative in nature and with retrospective effect from 1st April 2003, i.e. the date effective from which Section 50C was introduced. While the Government must be complimented for the unparalleled swiftness with 14 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur which the Easwar Committee recommendations, as accepted by the Government, were implemented, I, as a judicial officer, would think this was still one step short of what ought to have been done inasmuch as the amendment, in tune with the judge made law, ought to have been effective from the date on which the related legal provisions were introduced. As I say so, in addition to the reasoning given earlier in this order, I may also refer to the observations of Hon'ble Supreme Court, the case of CIT v. Alom Extrusion Ltd. [2009] 319 ITR 306/185 Taxman 416, to the following effect:
"Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only w.e.f. 1st April, 2004, would become curative in nature, hence, it would apply retrospectively w.e.f. 1st April, 1988 (i.e. the date on which the related legal provision was introduced). Secondly, it may be noted that, in the case of Allied Motors (P.) Ltd.
Etc. v. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), the scheme of s. 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales-tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales-tax law should be disallowed under s.
43B of the Act while computing the business income of the previous year? That was a case which related to asst. yr. 1984-
85. The relevant accounting period ended on 30th June, 1983. The ITO disallowed the deduction claimed by the assessee which was on account of sales-tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under s. 43B which, as stated above, was inserted w.e.f. 1st April, 1984. It is also relevant to note that the first proviso which came into force w.e.f. 1st April, 1988 was not on the statute book when the assessments were made in the case of Allied Motors (P.) Ltd. Etc. (supra). However, the assessee contended that even though the first proviso came to be inserted w.e.f. 1st April, 1988, it was entitled to the benefit of that proviso because it operated retrospectively from 1st April, 1984, when s. 43B stood inserted. This is how the question of retrospectivity arose in Allied Motors (P.) Ltd. Etc. (supra). This Court, in Allied Motors (P.) Ltd. Etc. (supra) held that when a proviso is inserted to remedy unintended 15 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur consequences and to make the section workable a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give the section a reasonable interpretation, it could be read retrospective in operation, particularly to give effect to the section as a whole. Accordingly, this Court, in Allied Motors (P.) Ltd. Etc. (supra), held that the first proviso was curative in nature, hence, retrospective in operation w.e.f. 1st April, 1988. It is important to note once again that, by Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgment in Allied Motors (P.) Ltd. Etc. (supra) is delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that Finance Act, 2003, will operate retrospectively w.e.f. 1st April, 1988 (when the first proviso stood inserted). Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, to the above extent, operated prospectively. Take an example--in the present case, the respondents have deposited the contributions with the R.P.F.C. after 31st March (end of accounting year) but before filing of the Returns under the IT Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under s. 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under s. 43B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate w.e.f. 1st 16 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur April, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003."
9. So far as the amendment to Section 50C being retrospective in effect is concerned, there is no doubt about the legal position. I hold the provisos to Section 50C being effective from 1st April 2003. This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is indeed well taken and deserves acceptance. What follows is this. The matter will now go back to the Assessing Officer. In case he finds that a registered agreement to sell, as claimed by the assessee, was actually executed on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C, he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29.6.2005, of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g. the conversion of use of land) are to be ignored. It is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer for adjudication de novo, after giving an opportunity of hearing to the assessee and by way of a speaking order. I order so.
10. As I part with the matter, I may make one more observation. The amendment in Section 50C was brought in to provide relief to the assessee in a situation in which the stamp duty valuation of a property has risen between the date of execution of agreement to sell and execution of sale deed, as is the norm rather than exception, but the real estate market is now traversing through a difficult phase and there can be situations in which there is a fall in the stamp duty valuation rates with the passage of time. Such a situation has actually arisen in many places in the country, such as in Gurgaon (http://www.hindustantimes.com/gurgaon/for-the-first-time-circle- rates-reduced-in-gurgaon/story-cjp6e72TeGS9H5jJIALAGP.html), New Delhi (http://www.delhismartcities.com/blogs/high-circle-rates- causing-slump-realty-reduce-delhi-government/),and even in Dehradun (Uttarakhand) (http://www.tribuneindia.com/news/uttarakhand/relief-
17 ITA No. 163/JP/2019M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur to-property-buyers-as-circle-rates-cut-50-pc/247805.html) and some other places. It is therefore possible that, at first sight, first proviso to Section 50C may seem to work to the disadvantage of the assessee in certain situation in the event of the word 'may' being construed as mandatory in application, but then one cannot be oblivious to the fact that this proviso states that "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 (emphasis supplied)" making it clearly optional to the assessee, and that, in any event, what has been brought by the lawmakers as a measure of relief to the taxpayers cannot be construed as resulting in a higher tax burden on the taxpayers. Of course, assuming that my understanding of this statutory provision is in harmony with the legislative intention, insertion of words "at the option of the assessee" between "stamp valuation authority on the date of agreement may and be taken for the purposes of computing full value of consideration for such transfer, in first proviso to Section 50C(1), could have made the legal provision even more unambiguous.'' Thus the Tribunal held that proviso to Section 50C of the Act is effective from 01-04-2013 and amendment brought to Section 50C was treated as retrospective. The other decisions of the Tribunal as relied on by the ld.AR of the assessee have also taken consistent view that proviso to section 50C is having retrospective effect being remedial / clarificatory in nature. Following the decisions of the Coordinate Benches of the tribunal and in the absence of any contrary decision brought to my notice, I hold the DLC rate as on date of 31-07-2014 when agreement to sell was entered between the parties and part consideration received by the 18 ITA No. 163/JP/2019 M/s. Metal Extrusion India Ltd. vs Addl. CIT , Circle-1, Jaipur assessee through banking channel shall be taken as full value consideration. Accordingly, the AO is directed to adopt full value consideration as DLC rate on the date of agreement and if sale consideration shown in the sale deed is more than DLC Rate of the property as on s31-07-2014 then no addition u/s 50C is called for.
3.0 In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 25 /07/2019.
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(Vijay Pal Rao)
U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 25 /07/ 2019
*Mishra
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s. Metal Extrusion India Ltd. Jaipur
2. izR;FkhZ@ The Respondent- The Addl. CIT.Circle-1, Jaipur
3. vk;dj vk;qDr¼vihy) @ CIT(A),
4. vk;dj vk;qDr@ CIT,
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No.163/JP/2019) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar