ACIT, New Delhi v. Shri Girish Mohan Gupta, New Delhi

ITA 1544/DEL/2011 | 2006-2007
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 154420114 RSA 2011
Assessee PAN AAOPG4049D
Bench Delhi
Appeal Number ITA 1544/DEL/2011
Duration Of Justice 7 month(s) 26 day(s)
Appellant ACIT, New Delhi
Respondent Shri Girish Mohan Gupta, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 25-11-2011
Date Of Final Hearing 16-11-2011
Next Hearing Date 16-11-2011
Assessment Year 2006-2007
Appeal Filed On 30-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C: NEW DELHI BEFORE SHRI G.D. AGARWAL VICE PRESIDENT AND SHRI C.L. SETHI JUDICIAL MEMBER I.T. A. NO.1544/DEL/2011 ASSESSMENT YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX SHRI GIRISH MOH AN GUPTA CIRCLE 33(1) NEW DELHI. VS. 102 PADMA TOWER 11 RAJENDRA PLACE NEW DELHI. PAN: AAOPG4049D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL MISHRA SR. DR. RESPONDENT BY : NONE. O R D E R PER C.L. SETHI JUDICIAL MEMBER THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 16 .12.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SEC. 147/143(3) OF THE INCOME -TAX ACT 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2006-07. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AS UNDE R:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION OF RS.11 96 000/- BEING SUPPRESSED CAPITAL GAINS HOLDING THAT THE REF ERENCE TO THE DVO HAS BEEN MADE U/S 55A AND NOT U/S 50C(2) OF THE ACT. 2 3. IN THIS CASE THE ORIGINAL ASSESSMENT WAS COMPLE TED U/S 143(3) ON 30.12.2008 ACCEPTING THE RETURNED INCOME OF RS.29 3 6 647/- SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME FILED ON 19.10.200 7. IN THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS THE ASSESSING OFFIC ER HAD REFERRED THE CASE TO THE VALUATION CELL UNDER SEC. 55A OF THE ACT TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY SOLD BY THE ASSESSEE DURING T HE RELEVANT YEAR UNDER CONSIDERATION. THE VALUATION REPORT WAS NOT RECEIV ED BY THE AO BY THE TIME HE MADE THE ASSESSMENT UNDER SEC. 143(3) OF THE ACT ON 30.12.2008. SUBSEQUENTLY THE VALUATION REPORT DATED 27.02.2009 WAS RECEIVED BY THE AO ON 5.03.2009 WHERE THE VALUATION OFFICER DETERMINE D FAIR MARKET VALUE OF THE PROPERTY SOLD BY THE ASSESSEE AT RS.28 60 000/- AS AGAINST SALE CONSIDERATION OF RS.16 64 000/- SHOWN BY THE ASSESS EE. IN VIEW OF THE ABOVE DIFFERENCE THE AO REOPENED THE ASSESSMENT BY ISSUI NG NOTICE UNDER SEC. 148 ON 6.03.2009 AND THEREAFTER STATUTORY NOTICES UNDE R SEC. 143(2) AND 142(1) WERE ALSO ISSUED. THE AO THEN PROCEEDED TO MAKE TH E RE-ASSESSMENT UNDER SEC. 147/143(3) OF THE ACT AND WHERE THE FULL VALUE OF CONSIDERATION IN RESPECT OF THE PROPERTY SOLD BY THE ASSESSEE WAS TA KEN AT RS.28 60 000/- AS AGAINST RS.16 64 000/- SHOWN BY THE ASSESSEE. THE AO ACCORDINGLY DETERMINED THE INCOME FROM CAPITAL GAIN AT RS.22 30 011/- AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT (A). 3 4. BEFORE THE LEARNED CIT(A) IT WAS CONTENDED BY T HE ASSESSEE THAT THE DOCUMENT OF SALE RELATING TO THE PROPERTY SOLD BY T HE ASSESSEE WAS ACTUALLY NOT REGISTERED WITH THE REGISTRAR AND AS SUCH THE VALUE ASSESSED FOR THE PURPOSE OF STAMP DUTY CANNOT BE SUBSTITUTED BY APPL YING THE PROVISION OF SEC.50C OF THE ACT AS THEY STOOD AT THE RELEVANT TI ME. IT WAS FURTHER CONTENDED THAT THE DEPARTMENTAL VALUATION OFFICER ( DVO) HAS DETERMINED THE FAIR MARKET VALUE ON THE BASIS OF VALUE ADOPTED BY THE STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY WHICH CAN NOT BE MADE A BASIS TO DETERMINE THE FULL CONSIDERATION RECEIVED BY THE AS SESSEE FOR THE PURPOSE OF DETERMINING CAPITAL GAIN IN THE HANDS OF THE ASSESS EE. IN THIS CONNECTION THE ASSESSEE RELIED UPON THE DECISION OF ITAT JODHPUR BENCH (SMC) IN THE CASE OF NAVNEET KUMAR THAKKAR VS. ITO (2008) 110 ITD 525 (JODH)(SMC). 5. AFTER CONSIDERING THE AOS ORDER AND SUBMISSIONS OF THE ASSESSEE THE LEARNED CIT(A) HELD THAT THE SUBSTITUTION OF THE SA LE CONSIDERATION SHOWN BY THE ASSESSEE AT RS.16 64 000/- BY THE SUM OF RS.28 60 000/- ON THE BASIS OF THE DVOS REPORT WAS UNJUSTIFIED AND NOT IN ACCORD ANCE WITH LAW. SINCE THE RELEVANT DOCUMENT OF SALE OF PROPERTY WAS NOT REGIS TERED WITH THE STAMP DUTY VALUATION AUTHORITY THE LEARNED CIT(A) HELD THAT S EC. 50C AS IT THEN STOOD WOULD NOT APPLY BECAUSE AS PER PROVISIONS OF SEC. 5 0C AS IT THEN STOOD IT WAS NECESSARY THAT THE SALE DOCUMENT FOR TRANSFER O F PROPERTY SHOULD HAVE 4 BEEN REGISTERED BEFORE THE COMPETENT AUTHORITY AND THEN THE VALUE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY COULD HAVE BEEN AD OPTED AS A FULL VALUE OF CONSIDERATION OF TRANSFER OF PROPERTY. THE LEARNED CIT(A) FURTHER HELD THAT THE AMENDMENT MADE IN SEC. 50C BY THE FINANCE (NO.2 ) ACT 2009 W.E.F. 1.04.2009 WHEREBY THE WORD ASSESSABLE WAS INSERTE D WOULD BE APPLICABLE ONLY IN CASES WHERE THE TRANSACTIONS OF SALE OF PRO PERTY IS MADE ON OR AFTER 1.10.2009. THE LEARNED CIT(A) THEREFORE DIRECTE D THE AO TO ACCEPT THE SALE CONSIDERATION OF THE PROPERTY SHOWN BY THE ASS ESSEE AT RS.16 64 000/-. 6. HENCE THE DEPARTMENT IS IN APPEAL BEFORE US. 7. THE LEARNED DR HAS SUBMITTED THAT THE OBJECT AND PURPOSE OF INSERTING SEC. 50C OF THE ACT WAS TO ADOPT THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF STATE GOVERNMENT FOR THE PURPOS E OF PAYMENT OF STAMP DUTY IN RESPECT OF TRANSFER OF ANY LAND OR BUILDING OR BOTH AS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF LAND OR BUILDING OR BOTH IF THE CONSIDERATION SHOWN BY THE ASSESSEE IS LOWER THAN THE VALUE ADOPTED OR ASSESSED FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY. HE FURTHER STATED THAT THE WORD OR ASSESSABLE INSERTED AFTER THE WORDS ADOPTED OR ASSESSED IN SEC. 50C OF THE ACT BY THE FINANCE (NO .2) ACT 2009 WITH EFFECT FROM 1.10.2009 SHOULD BE CONSTRUED AS EXPLANATORY A ND THEREFORE EVEN IF THE DOCUMENT OF THE TRANSFER OF PROPERTY WAS NOT REGIST ERED WITH THE REGISTRAR 5 THE VALUE ASSESSABLE BY ANY AUTHORITY OF STATE GOVE RNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF TRANSFER OF ANY LAND OR BUILDING OR BOTH IS TO BE ADOPTED AS FULL VALUE OF CONSIDERATION REC EIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER INASMUCH AS IT WAS THE INTENTION O F THE LEGISLATURE THAT THE FULL VALUE OF CONSIDERATION IS TO BE ADOPTED AS EQU AL TO THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF STATE GO VERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. HE THEREFORE SUBMITTED THAT THE VALUATION REPORT OF THE DVO BASED UPON THE VALUATION DETERMINED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY SHOULD BE ADOPTED AS THE FULL VALUE O F THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE PROPERTY BY THE ASSESSEE. 8. NONE FOR THE ASSESSEE WAS PRESENT. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 10. IN THE PRESENT CASE THE AO HAS ADOPTED THE FUL L VALUE OF CONSIDERATION OF THE PROPERTY SOLD BY THE ASSESSEE AT RS.28 60 00 0/- ON THE BASIS OF THE DVOS REPORT WHO IN TURN DETERMINED THE FAIR MARKE T VALUE OF THE PROPERTY ON THE BASIS OF VALUATION ADOPTED FOR THE PURPOSE O F PAYMENT OF STAMP DUTY BY THE STATE GOVERNMENT. THERE IS NO OTHER MATERIA L ON RECORD TO SHOW AND ESTABLISH THAT THE ASSESSEE HAD RECEIVED ANY AMOUNT OVER AND ABOVE THE SALE 6 CONSIDERATION OF RS.16 64 000/- SHOWN BY THE ASSESS EE. THE SALE CONSIDERATION HAS BEEN ADOPTED BY THE AO AT RS.28 6 0 000/- MERELY ON THE BASIS OF DVOS REPORT WHICH WAS BASED UPON THE PRO VISIONS CONTAINED IN SEC. 50C OF THE ACT PROVIDING TO SUBSTITUTE THE VA LUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSE O F PAYMENT OF STAMP DUTY AS FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCR UING AS A RESULT OF SUCH TRANSFER OF PROPERTY PROVIDED THE VALUE DECLARED BY THE ASSESSEE IS LESS THAN THE VALUE SO ADOPTED OR ASSESSED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. SEC. 50C WAS INSERTED BY THE FINANCE ACT 2002 WITH EFFECT FROM 1.04.2003 WHERE IT WAS PROVIDED THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE 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 OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED OR ASSESSED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY SHALL FOR THE PURPOSE OF SEC.48 BE DEE MED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. IT IS THUS CLEAR THAT PROVISIONS CONTAINED IN SEC. 50C ARE DEE MING PROVISIONS PROVIDING FOR SUBSTITUTING THE VALUE ADOPTED OR ASSESSED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY AS A FULL VALUE OF THE CONSIDERATION REC EIVED OR ACCRUING AS A RESULT OF TRANSFER OF A CAPITAL ASSET BEING LAND O R BUILDING OR BOTH AS AGAINST 7 THE VALUE SHOWN BY THE ASSESSEE IF THE VALUE SHOWN BY THE ASSESSEE IS LESS THAN THE VALUE SO ADOPTED OR ASSESSED FOR THE PURPO SE OF PAYMENT OF STAMP DUTY. IT HAS BEEN FURTHER PROVIDED IN SEC. 50C OF THE ACT THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER AND HE HAS NOT DISPUTED THE VALUE SO ADOPTED OR ASSESSE D IN ANY APPEAL ETC. BEFORE ANY AUTHORITY OR COURT. THE A.O. MAY REFER THE VALUATION OF THE RELEVANT ASSET TO A VALUATION OFFICER IN ACCORDANCE WITH SEC. 55A OF THE ACT. IF THE FAIR MARKET VALUE DETERMINED BY THE D.V.O. I S LESS THAN THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES THE A. O. MAY TAKE SUCH FAIR MARKET VALUE TO BE FULL VALUE OF CONSIDERATION. HO WEVER IF THE FAIR MARKET VALUE DETERMINED BY THE VALUATION OFFICER IS MORE T HAN THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES THE A.O. SHALL NO T ADOPT SUCH FAIR MARKET VALUE AND WILL TAKE THE FULL VALUE OF CONSIDERATION TO BE THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES. 11. THE IMPACT AND SCOPE OF SEC. 50C OF THE ACT AS IT WAS THEN INSERTED BY THE FINANCE ACT 2002 W.E.F. 1.04.2003 HAS BEEN CON SIDERED BY THE ITAT JODHPUR BENCH (SMC) IN THE CASE OF NAVNEET KUMAR TH AKKAR (SUPRA) WHERE THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER:- 7. A DEEMING PROVISION HAS BEEN ENSHRINED IN SECTI ON 50C BY VIRTUE OF WHICH A LEGAL FICTION HAS BEEN CREATED FOR ASSUMING 8 THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF S TATE GOVERNMENT AS THE FULL VALUE OF SALE CONSIDERATION RECEIVED IN RESPECT OF SUCH TRANSFER. A LEGAL FICTION HAS BEEN CREATED ONLY IN RESPECT OF THE CASES WHERE THE CONSIDERATION REC EIVED BY THE ASSESSEE IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY` IN RESPECT OF SUCH TRANSFER . IT IS A TRITE LAW THAT THE LEGAL FICTION CANNOT BE EXTENDED BEYON D THE PURPOSE FOR WHICH IT IS ENACTED. SECTION 50C EMBOD IES THE LEGAL FICTION BY WHICH THE VALUE ASSESSED BY THE ST AMP DUTY AUTHORITIES IS CONSIDERED AS THE FULL VALUE OF CONS IDERATION FOR THE PROPERTY TRANSFERRED. IT DOES NOT GO BEYOND TH E CASES IN WHICH THE SUBJECT TRANSFERRED PROPERTY HAS NOT BECO ME THE SUBJECT-MATTER OF REGISTRATION AND THE QUESTION OF VALUATION FOR STAMP DUTY PURPOSES HAS NOT ARISEN. BY NO STRETCH OF IMAGINATION THE LEGAL FICTION CONFINED TO RESTRICT ED OPERATION CAN BE WIDENED TO INCLUDE WITHIN ITS SWEEP ALL THE CASES WHERE `SUCH PROPERTY HAS NOT BEEN VALUED BY THE STATE AU THORITIES FOR STAMP DUTY PURPOSES. THE HONBLE SUPREME COURT IN THE CASE OF CIT V. AMARCHAND N. SHROFF [1963] 48 ITR 59 HAS HELD THAT `LEGAL FICTION ARE ONLY FOR A DEFINITE PURPOSE AND THEY ARE LIMITED TO THE PURPOSE FOR WHICH THEY ARE CREATED A ND SHOULD NOT BE EXTENDED BEYOND THE LEGITIMATE FIELD. SIMI LAR VIEW HAS BEEN REITERATED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. MOTHER INDIA REFRIGERATION INDUSTRIES (P.) L TD. [1985] 155 ITR 711. THUS WHAT IS RELEVANT FOR THE ATTRAC TABILITY OF SECTION 50C IS THAT THE PROPERTY WHICH IS UNDER TR ANSFER FROM THE ASSESSEE TO ANOTHER PERSON SHOULD HAVE BEEN ASS ESSED AT A HIGHER VALUE FOR STAMP VALUATION PURPOSE THAN THAT RECEIVED OR ACCRUING TO THE ASSESSEE. THE VALUE ADOPTED OR ASS ESSED BY THE STAMP VALUATION AUTHORITIES HAS TO BE OF THE VERY S AME PROPERTY WHICH IS THE SUBJECT-MATTER OF TRANSFER. THE LANGU AGE OF THIS SECTION PROVIDES IN UNAMBIGUOUS TERMS THAT THE VALU E ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY HAS TO BE SUBSTITUTED WITH THE SALE CONSIDERATION OF THE `SUC H PROPERTY. BUT FOR SECTION 50C THERE IS ABSOLUTELY NO WARRANT FOR REPLACING THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WITH THE ACTUAL SALE CONSIDERATION FOR THE PURPOSES OF COMPUTING CAPITAL GAIN. THUS IT IS CLEAR THAT THE PROPERTY IN RESPECT OF WHICH VALUATION IS MADE FOR PURPOSES OF STAMP DUTY 9 MUST BE THE VERY SAME PROPERTY WHICH IS THE SUBJEC T-MATTER OF TRANSFER FOR CALCULATING CAPITAL GAIN BY INVOKING T HE PROVISIONS OF THIS SECTION. IT IS WHOLLY IRRELEVANT TO CONSID ER THE ASSESSED VALUE OF ANOTHER PROPERTY FOR STAMP DUTY PURPOSES A S FULL VALUE OF CONSIDERATION BY MAKING REFERENCE TO THE VALUATI ON OFFICER UNDER SECTION 55A. UNLESS THE PROPERTY TRANSFERRED HAS BEEN REGISTERED BY SALE DEED AND FOR THAT PURPOSE THE VA LUE HAS BEEN ASSESSED AND STAMP DUTY HAS BEEN PAID BY THE PARTIE S SECTION 50C CANNOT COME INTO OPERATION. IN SUCH A SITUATIO N THE POSITION EXISTING PRIOR TO SECTION 50C WOULD APPLY AND THE ONUS WOULD BE UPON THE REVENUE TO ESTABLISH THAT SALE CO NSIDERATION DECLARED BY THE ASSESSEE WAS UNDERSTATED WITH SOME CLINCHING EVIDENCE. THE RELEVANT JUDGMENTS DISCUSSED ABOVE V IZ K.P. VARGHESE (SUPRA) AND SHIVAKAMI CO.(P) LTD. (SUPRA) WOULD COME INTO OPERATION AND GOVERN THE DETERMINATION OF FULL VALUE OF CONSIDERATION. 8. ADVERTING TO THE FACTS OF THE CASE IT IS NOTICE D THAT THE ASSESSEE TRANSFERRED THE PROPERTY IN QUESTION BY EX ECUTING AN AGREEMENT WHICH WAS NOT REGISTERED WITH THE REGISTE RING AUTHORITY. IN SUCH A CASE SECTION 50C COULD NOT H AVE COME INTO OPERATION AND THE RESULTANT APPLICATION OF SECTION 55A BY WHICH THE ASSESSING OFFICER GOT THE PROPERTY VALUED AND A DOPTED THE REPORT OF THE VALUATION OFFICER AS THE SOLE BASIS F OR MAKING THE IMPUGNED ADDITION WAS WHOLLY INVALID. AS THE ASSES SING OFFICER HAS NOT EMBARKED UPON MAKING ENQUIRIES FROM THE PURCHASER ABOUT THE ACTUAL SALE CONSIDERATION AND HAS NOT BROUGHT ON RECORD ANY OTHER MATERIAL WORTH THE NAME TO SHOW THAT THE SALE CONSIDERATION DECLARED BY THE ASSESSE E WAS UNDERSTATED IN MY CONSIDERED OPINION THE ADDITION WAS WRONGLY MADE AND SUSTAINED. I THEREFORE ORDER FOR THE DELETION OF THE ADDITION. 12. FROM THE AFORESAID DECISION AND LANGUAGE USED I N SEC. 50C OF THE ACT AS INSERTED BY THE FINANCE ACT 2002 W.E.F. 1.4.200 3 IT IS CLEAR THAT UNLESS THE PROPERTY HAS BEEN TRANSFERRED BY REGISTERED SAL E DEED AND FOR THAT PURPOSE THE VALUE FOR THE PURPOSE OF STAMP DUTY HAS BEEN ASSESSED AND 10 STAMP DUTY HAS BEEN PAID BY THE PARTIES SEC. 50C C ANNOT COME INTO OPERATION AND IN SUCH A SITUATION THE POSITION EX ISTING PRIOR TO SEC.50C WOULD APPLY AND THE ONUS WOULD BE UPON THE REVENUE TO ESTABLISH THAT SALE CONSIDERATION DECLARED BY THE ASSESSEE WAS UNDERSTA TED BY BRINGING ON RECORD SOME CLINCHING OR ADEQUATE EVIDENCES. 13. SUBSEQUENTLY THE WORD OR ASSESSABLE HAS BEEN INSERTED BY THE FINANCE (NO.2) ACT 2009 WITH EFFECT FROM 1.04.2009 IN SEC. 50C OF THE ACT WITH THE INTENTION TO PREVENT THE LEAKAGE OF REVENU E INASMUCH AS THE SCOPE OF THE PROVISIONS OF SEC. 50C AS IT EXISTED PRIOR TO T HE INSERTION OF THE TERM ASSESSABLE BY THE FINANCE (NO.2) ACT 2009 IN SEC . 50C OF THE ACT DID NOT INCLUDE TRANSACTIONS WHICH ARE NOT REGISTERED WITH THE STAMP DUTY VALUATION AUTHORITY AND EXECUTED THROUGH AGREEMENT TO SELL O R POWER OF ATTORNEY. THEREFORE WITH A VIEW TO PREVENT THE LEAKAGE OF RE VENUE THE LEGISLATURE IN ITS WISDOM HAD AMENDED SEC.50C SO AS TO PROVIDE THA T WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VA LUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT F OR THE PURPOSE OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOP TED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER FOR COMPUTING CAPITAL GAIN. THUS THE 11 EXPRESSION ASSESSABLE WAS INSERTED AFTER THE TERM ADOPTED OR ASSESSED IN SEC. 50C OF THE ACT AND A NEW EXPLANATION WAS ALSO INSERTED TO CLARIFY THE MEANING OF THE TERM ASSESSABLE. IN THE MEMORANDU M ISSUED BY THE BOARD IT HAS BEEN CLEARLY STATED THAT THIS AMENDMENT WILL TAKE EFFECT FROM 1 ST OCTOBER 2009 AND SHALL ACCORDINGLY APPLY IN RELATI ON TO TRANSACTIONS UNDERTAKEN ON OR AFTER SUCH DATE. THE BOARD HAS IS SUED A MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE (NO.2) BIL L 2009 WHERE THE BOARD HAS CLARIFIED AND EXPLAINED THE POSITION WITH REGAR D TO THE AMENDMENT BROUGHT IN SECTION 50C OF THE ACT BY THE FINANCE (N O.2) BILL 2009 AS UNDER:- PROVISIONS FOR DEEMED VALUATION IN CERTAIN CASES O F TRANSFER THE EXISTING PROVISIONS OF SECTION 50C PROVIDE THA T WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF A CAPITAL ASST BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY AN AUTHORITY OF A STATE GOVERNMENT (STAMP VALUATION AUTHORITY) FOR THE PURP OSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER FOR COMPUTING CAPITAL GAIN. HOWEVER THE PRESENT S COPE OF THE PROVISIONS DOES NOT INCLUDE TRANSACTIONS WHICH ARE NOT REGISTERED WITH STAMP DUTY VALUATION AUTHORITY AND EXECUTED THROUGH AGREEMENT TO SELL OR POWER OF ATTORNEY. WITH A VIEW TO PREVENTING THE LEAKAGE OF REVENUE I T IS PROPOSED TO AMEND SECTION 50C SO AS TO PROVIDE THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LE SS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTH ORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF STAMP DUTY IN R ESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE 12 SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDE RATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER F OR COMPUTING CAPITAL GAIN. FURTHER IT IS PROPOSED TO INSERT A NEW EXPLANATION SO AS TO CLARIFY THE MEANING OF THE TERM ASSESSABLE. THIS AMENDMENT WILL TAKE EFFECT FROM 1 ST OCTOBER 2009 AND SHALL ACCORDINGLY APPLY IN RELATION TO TRANSACT ION UNDERTAKEN ON OR AFTER SUCH DATE. 14. FROM THE AFORESAID CLARIFICATION ISSUED BY THE BOARD IT IS THUS CLEAR THAT THE THEN EXISTING PROVISIONS OF SEC. 50C WOULD NOT INCLUDE TRANSACTIONS WHICH WERE NOT REGISTERED WITH STAMP DUTY VALUATION AUTHORITY AND EXECUTED THROUGH AGREEMENT TO SELL OR POWER OF ATTORNEY AND WITH A VIEW TO COVER UP THE TRANSACTIONS WHICH WERE NOT REGISTERED WITH ST AMP DUTY VALUATION AUTHORITY THE EXPRESSION ASSESSABLE WAS INSERTED IN SEC. 50C OF THE ACT PROVIDING THAT EVEN THE VALUE ASSESSABLE BY ANY AUT HORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF TRANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH THE VALUE SO ASSESSABLE SHALL ALSO BE DEEMED TO BE THE FULL VALUE OF THE CO NSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER FOR COMPUTING CAPITAL GAIN. IN THE AFORESAID MEMORANDUM THE BOARD HAS FURTHER CLARIFI ED THAT THE AMENDMENT BY THE FINANCE (NO.2) BILL 2009 WOULD TAKE EFFECT F ROM 1 ST OCTOBER 2009 AND SHALL ACCORDINGLY APPLY IN RELATION TO TRANSACT IONS UNDERTAKEN ON OR AFTER SUCH DATE. 13 15. IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT THE TRANSACTION OF TRANSFER OF A HOUSE SOLD BY THE ASSESSEE WAS MADE IN FEBRUAR Y 2006 AND THE TRANSACTION OF SALE OF PROPERTY WAS NOT REGISTERED WITH THE STAMP DUTY VALUATION AUTHORITY. THUS IN THE PRESENT CASE TH E PROVISIONS OF SEC. 50C AS IT THEN STOOD ARE NOT APPLICABLE INASMUCH AS THE T RANSACTION IN QUESTION WAS NOT REGISTERED WITH THE STAMP DUTY VALUATION AUTHOR ITY AND THEREFORE THE VALUATION OF THE PROPERTY MADE BY THE VALUATION OFF ICER BY ADOPTING THE CIRCLE RATE FIXED FOR THE PURPOSE OF PAYMENT OF STA MP DUTY WOULD NOT BE RELEVANT FOR THE PURPOSE OF DETERMINING ACTUAL CONS IDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF THE HOUSE SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO NOT IN DISPUT E THAT THE AO HAS NOT EMBARKED UPON MAKING ANY OTHER ENQUIRIES ABOUT THE ACTUAL SALE CONSIDERATION AND HAS MERELY MADE THE ASSESSMENT O N THE BASIS OF THE DVOS REPORT WHICH IN TURN BASED UPON THE VALUATI ON FIXED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY AS CIRCLE RATE. WE THERE FORE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN HOLDING THAT IN VIEW OF THE PROVISIONS CONTAINED IN SEC. 50C AS IT THEN STOOD AND IN VIEW OF THE FACT THAT THE PROVISIONS OF SEC. 50C AS AMENDED BY THE FINANCE (N O.2) ACT 2009 WOULD APPLY FROM 1 ST OCTOBER 2009 IN RELATION TO TRANSACTIONS UNDERTAK EN ON OR AFTER SUCH DATE THE DVOS REPORT WHICH HAS TAKEN THE CIRCLE RATE FIXED FOR 14 THE PURPOSE OF PAYMENT OF STAMP DUTY AS THE BASIS O F DETERMINING THE FAIR MARKET VALUE AS ON 16.02.2006 CANNOT BE USED AS AN EVIDENCE FOR MAKING THE ADDITION BY WAY OF ENHANCING THE VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING TO THE ASSESSEE AS A RESULT OF SUCH TRANSF ER AS AGAINST THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE. MOREOVER SEC. 55A IS APPLICABLE TO ASCERTAIN THE FAIR MARKET VALUE OF THE CAPITAL ASSE T AND NOT FOR THE PURPOSE OF DETERMINING VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. IN THIS CONNECTION A RELIANCE MAY BE PLACED UPON A DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SMT. NILOFER I. SINGH (2009) 309 ITR 233 (DELHI) WHERE IT HAS BEEN HELD THAT THE REFERENCE TO A VALUATION OFFICER UNDER SEC. 55A IS FOR THE OBJECT OF ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASS ET. IT IS ONLY WHEN THE ASSESSING OFFICER IS REQUIRED TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASSET IN SUCH CASES AS COVERED BY SECTION 45(4) OR SECTION 45(1A) THAT THE PROVISIONS OF SECTION 55A CAN BE INVOKED. IT WAS F URTHER HELD THEREIN THAT WHEN A SALE OF PROPERTY TAKES PLACE THE CAPITAL GA INS ARISING OUT OF SUCH A TRANSFER HAS TO BE COMPUTED BY TAKING INTO ACCOUNT THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. FROM THE FULL VALUE OF THE CONSIDERATION THE AMOUNT OF EXPENDITU RE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AS ALS O THE COST OF ACQUISITION OF 15 THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO H AVE TO BE DEDUCTED. THE EXPRESSION FULL VALUE OF CONSIDERATION CANNOT BE CONSTRUED AS HAVING REFERENCE TO THE MARKET VALUE OF THE ASSET TRANSFER RED BUT ONLY MEANS THE FULL VALUE OF CONSIDERATION RECEIVED BY THE TRANSFEROR I N EXCHANGE OF THE CAPITAL ASSET TRANSFERRED BY HIM. IN THE CASE OF A SALE TH E FULL VALUE OF CONSIDERATION IS THE FULL SALE PRICE ACTUALLY PAID. FULL VALUE MEANS THE WHOLE PRICE WITHOUT ANY DEDUCTION WHATSOEVER AND IT CANNOT RE FER TO THE ADEQUACY OR INADEQUACY OF THE PRICE BARGAINED FOR. NOR DOES IT HAVE ANY NECESSARY REFERENCE TO THE MARKET VALUE OF THE CAPITAL ASSET WHICH IS THE SUBJECT-MATTER OF THE TRANSFER. THE FULL VALUE OF CONSIDERATION D OES NOT HAVE ANY REFERENCE TO THE MARKET VALUE BUT ONLY TO THE CONSIDERATION R EFERRED TO IN THE SALE DEEDS AS THE SALE PRICE OF THE ASSETS WHICH HAVE BEEN TRA NSFERRED. FOR THE REASONS GIVEN ABOVE AND IN THE LIGHT OF THE DISCUSSION WE HAVE MADE ABOVE THE ORDER OF THE LEARNED CIT(A) IS THUS UPHE LD. 16. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 17. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 25 TH NOVEMBER 2011. SD/- SD/- (G.D. AGARWAL) (C.L. SETHI) VICE PRESIDENT JUDICIAL MEMBER DATED: 25 TH NOVEMBER 2011 16 ITA NO 1544/DEL/2011 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.