Acit Non Corporate Circle 7 1 Chennai v. Subhadra Ramamoorthy Chennai

In The Income Tax Appellate Tribunal B Bench Chennai Before Shri Abraham P George Accountant Member And Shri George Mathan Judicial Member I T A No 1628 Mds 2017 C O No 123 Mds 2017 In Ita No 1628 Mds 2017 Assessment Year 2009 2010 The Assistant Commissioner Of Income Tax Non Corporate Circle 7 1 Chennai 600 034 Vs Shri Tas Ramamurthy A 1 Ak Block No 55 10 Th Main Road 16 Th Street Anna Nagar Chennai 600 040 Pan Aadpr 0477 M Appellant Respondent Cross Objector I T A No 1629 Mds 2017 C O No 124 Mds 2017 In Ita No 1629 Mds 2017 Assessment Year 2009 2010 The Assistant Commissioner Of Income Tax Non Corporate Circle 7 1 Chennai 600 034 Vs Smt Subhadra Ramamurthy A 1 Ak Block No 55 10 Th Main Road 16 Th Street Anna Nagar Chennai 600 040 Pan Aadpr 3067 P Appellant Respondent Cross Objector Department By Dr S Pandian Irs Jcit Assessee By Shri G Baskar Advoocate Ita Nos 1628 1629 17 Co 123 124 2017 2 Date Of Hearing 07 12 2017 Date Of Pronouncement 07 12 2017 O R D E R Per Abraham P George Accountant Member These Are Appeals Of The Revenue And Cross Objecti Ons Of The Assessees Directed Against An Order Dated 10 04 2017 Of Ld Commissioner Of Income Tax Appeals 7 Chennai 2 Grounds Taken By The Revenue In Both The Appeals Ar E Common And These Are Reproduced Hereunder 1 The Order Of The Learned Commissioner Of Income Tax Appeals Is Contrary To The Law And Facts Of The C Ase 2 1 The Cit A Erred In Holding That The Provision Of Section 50 C Has No Application On The Impugned Tran Sfer As The Date Of Transfer Is 03 03 2008 I E Before T He Insertion Of The Words Or Assessable Though W E F 01 10 2009 On The Statue 2 2 The Cit A Failed To Consider The Judgment Of The Honble Supreme Court In The Case Of Alom Extrusion S Ltd 319 Itr 306 For The Proposition That Where The Amendments Are Curative In Nature They Are Effecti Ve Retrospectively 2 3 The Cit A Failed To Consider The Judgment Of The Honble Calcutta High Court In The Case Of M S Bag Ri Impex Pvt Ltd Vs Acit 214 Taxman 305 Cal Took A View That The Amendment To The Provision Of Section 50 C Of The Act By The Finance Act 2009 W E F 01 10 2009 Was Applicable Retrospectively Ita Nos 1628 1629 17 Co 123 124 2017 3 2 4 The Cit A Failed To Consider The Judgment Of Honble Itat Hyderabad In The Case Of Mohd Imran Ba Ig Vs Ito Wherein It Was Settled That The Sro Value A S On The Date Of Agreement Of Sale Has To Be Considered For The Purpose Of Computation Of Capital Gains 3 For These And Other Grounds That May Be Adduced A T The Time Of Hearing It Is Prayed That The Order Of The Learned Commissioner Of Income Tax Appeals Be Set Aside And That Of The Assessing Officer Be Restored 3 Assessees Who Are Husband And Wife Had Sold Propert Y Measuring 11 Grounds And 2064 Sq Ft Of Land During The Relevant Previous Year Through A Sale Agreement Entered With One M S N M Associates For An Apparent Consideration Of A 18 16 Crores The Ratio Of Holding Of The Two Assessees In The Property We Re As Under I Shri T A S Rammurthy 6 Grounds Plus 1368 Sq Ft Ii Smt Subhadra Rammurthy 5 Grounds Plus 696 Sq Ft Assessees Had For Computing Long Term Capital Gains Taken The Value Of The Property As On 01 4 1981 At The Rate Of A 5 0 0 000 Per Ground Assessees Also Claimed Payment Of Development Expen Ses As Under While Computing Capital Gains Financial Year 2005 06 Financial Year 2006 07 T A S Ramamurthy 24 26 510 4 20 167 Subhadhra Ramamurthy 18 89 012 3 27 095 Ita Nos 1628 1629 17 Co 123 124 2017 4 For Adopting Value Of A 5 00 000 Per Ground As O N 01 04 1981 Assessees Had Relied On An No Objection Certificate Issued On 18 12 2000 By The Appropriate Authority Under Sec Tion 269 Uc Of The Act Where A Likely Sale Consideration Of A 2 75 00 000 Was Accepted By Such Authority For A Sale Proposed In The Finan Cial Year 2000 2001 Which Never Went Through This Amount When Subjec Ted To Reverse Indexation Upto 1980 81 Gave A Value Of A 5 42 772 Per Ground For The Property As On 01 04 1981 4 The Ld Assessing Officer Did Not Accept Either Co Nsideration Of A 18 16 Crores Claimed As Received By The Assess Ee On The Sale Of The Property Nor Did He Accept The Value As On 01 0 4 1981 Estimated By The Assessee At A 5 00 000 Per Ground For Worki Ng Out The Capital Gains He Also Recomputed The Development Expense S Calculated By The Assessee As Per The Ld Assessing Officer Mark Et Value Of The Property As On 01 04 1981 Had To Be Adopted As A 35 000 Per Ground And For This He Relied On An Letter From The Sro Anna Nagar Chennai For Fixing The Sale Consideration Ld As Sessing Officer Was Of The Opinion That Sec 50 C Of The Income Tax Act 196 1 In Short The Act Had To Be Applied According To Him The Mar Ket Value Of The Property Fixed By The Sro Came To A 11 000 Per Sq Ft This Value Was Derived By The Ld Assessing Officer From The Data Available In Ita Nos 1628 1629 17 Co 123 124 2017 5 Public Domain Pursuant To The Above Long Term Cap Ital Gains Arising To The Assessee Shri Tas Ramamurthy Was Re Compute D By The Ld Assessing Officer As Under Amount In A Amount In A Sale Consideration As Per Section 50 C 12627 Sq Ft X A 11 000 13 88 97 000 Less Cost 01 04 1981 A 35 000 Per Ground Cost Of 5 627 Grounds Adopted At A 1 96 945 I E 5 627 X 35000 Less Indexed Cost For The Cost Of Land 196945 X 582 100 11 46 219 11 46 219 Assessee S Share Of Development Charges As Computed By The Assessee 2603090 17500 X 12627 1889012 Which Was Incurred During The Year 2005 06 Development Charges 1878240 X 582 497 21 99 469 21 99 469 Less Long Term Capital Gain 13 55 51 312 Long Term Capital Gains Of The Assessee Smt Subha Dra Ramamurthy Was Computed As Under Ita Nos 1628 1629 17 Co 123 124 2017 6 Particulars Amount In A Amount In A Sale Consideration As Admitted By The Assessee Is A 12 50 00 000 As Per Sro Value After Invoking Section 50 C Is A 13 51 90 000 I E 12290 Sq Ft X A 11 000 Per Sq Ft 13 51 90 000 13 51 90 000 Less Cost 01 04 1981 A 35 000 Per Ground Cost Of 5 29 Grounds 12290 Sq Ft Adopted At A 1 85 150 I E 5 29 X 35000 Less Indexed Cost For The Cost Of Land 185150 X 582 100 10 77 573 10 77 573 Assessee Share Of Development Charges As Computed By The Assessee 2603090 17500 X 12627 1889012 Which Was Incurred During The Year 2005 06 Development Charges 1889012 X 582 497 22 12 082 22 12 082 Less Long Term Capital Gain 13 19 00 345 5 Aggrieved Assessees Moved In Appeal Before The Ld Commissioner Of Income Tax Appeals In So Far A S Adoption Of Value As On 01 04 1981 Was Concerned Argument Of T He Assessees Was That A Part Of The Same Land Was Sold By The Assessee Shri T A S Ramamurthy During The Previous Year Relevant To Assessment Year 2005 2006 As Per The Assessee Market Value Of The Very Same Property As On 01 04 1981 Was Fixed By The Ld Ass Essing Officer At A 2 36 300 Per Ground In So Far As Development Ch Arges Were Ita Nos 1628 1629 17 Co 123 124 2017 7 Concerned Plea Of The Assessees Was To Take Correc T Indexed Cost Of Such Charges Main Grievance Raised By The Assessee Was On Invocation Of Section 50 C Of The Act As Per The Assessees By Virtue Of Judgment Of Honble Jurisdictional High Court In The Case Of Cit Vs R Sugantha Ravindran 352 Itr 488 When A Transfer Was Effected Through An Unregistered Sale Agreement Section 50 C Of The Act Could Not Be Applied Prior To Amendment To Section 50 C Of The Act Which Came Into Effect Only On 01 10 2009 6 Ld Commissioner Of Income Tax Appeals After Cons Idering The Submissions Of The Assessees Directed The Ld Assessing Officer To Consider Fmv Per Ground Of The Property As On 01 04 1981 At A 2 26 300 In So Far As Issue Of Development Ch Arges Was Concerned Ld Commissioner Of Income Tax Appeals Did Not Interfere With The Order Of The Ld Assessing Offic Er Except For Directing Correction Of Errors In The Figures Take N However With Regard To Application Of Section 50 C Of The Act F Or Fixing The Fair Value As On Date Of Sale Ld Commissioner Of Income Tax Appeals Held That Section 50 C Of The Act Was Not Applicable For The I Mpugned Assessment Year Reliance Was Placed By The Ld Co Mmissioner Of Income Tax Appeals On The Judgment Of Honble Jur Isdictional High Court In The Case R Sugantha Ravindran Supra Ita Nos 1628 1629 17 Co 123 124 2017 8 7 Now Before Us Ground Taken By The Revenue Assails The View Taken By Ld Commissioner Of Income Tax Appea Ls That Section 50 C Of The Act Had No Application For The Impugned Assessment Year Ld Counsel For The Revenue Submitted That There We Re Amendments To Sec 50 C Through Finance Act 2016 And Such Amend Ments Were Prospective In Nature For Canvassing This Relian Ce Was Placed On The Judgment Of Apex Court In The Case Of Cit Vs Alom Extrusions Ltd 319 Itr 306 And That Of Honble Calcutta High Court In The Ca Se Of M S Bagri Impex Pvt Ltd Vs Acit 214 Taxman 305 According To The Ld Departmental Representative This Position Was Also Clear From The Explanatory Note Issued By The Cbdt On The Amen Dments Made To Section 50 C Of The Act Through Finance Act 2016 8 Per Contra Ld Authorised Representative Supportin G The Order Of The Ld Commissioner Of Income Tax Appea Ls Submitted That There Was A Similar Addition For Assessment Year 20 10 2011 When A Part Of The Same Property Was Sold By One Of The As Sessees According To Him Section 50 C Of The Act Was Invoke D In The Said Year Also As Per The Ld Authorised Representative As Sessee Shri T A S Ramamurthy Had Filed An Appeal For That Assessment Year Also And Ld Commissioner Of Income Tax Appeals Had Called For A Remand Report From The Ld Assessing Officer Contention Of The L D Authorised Representative Was That In The Remand Report Given By The Ld Ita Nos 1628 1629 17 Co 123 124 2017 9 Assessing Officer For Assessment Year 2010 2011 Ld Assessing Officer Had Accepted Guideline Value Of The Very Same Prop Erty As A 2 800 Per Sq Ft Against A 11 000 Per Sq Ft Considered N Ow Thus According To Him Even If Section 50 C Of The Act Was Held To Be Applicable For The Impugned Assessment Year Fair Value Of The Pr Operty As On Date Of Sale Had To Be Taken At The Rate At A 2 800 Per Sq Ft 9 We Have Considered The Rival Contentions And Peruse D The Orders Of The Authorities Below Contention Of The Ld Departmental Representative Is That Amendment To Sub Section 1 To Sec 50 C Of The Act Brought In Through Finance Act 2016 W E F 01 04 2017 Had To Be Construed Retrospectively For This Reliance Wa S Placed On The Judgment Of Apex Court In The Case Of Alom Extrusions Ltd Supra Among Others On The Other Hand Ld Commissioner Of Income Tax Appeals Had Considered Only The Amendment To Su B Section 1 To Sec 50 C Of The Act Brought In Through Finance No 2 Act 2009 W E F 01 10 2009 He Held Such Amendment To Be Pr Ospective In Nature Relying On The Judgment Of Jurisdictional Hi Gh Court In The Case Of R Sugantha Ravindran Supra Ld Commissioner Of Income Tax Appeals Did Not Consider The Amendments Brought I N Through Finance Act 2016 What We Find Is That Honble J Urisdictional High Court Considered Sec 50 C Of The Act As It Stood Pr Ior To The Ita Nos 1628 1629 17 Co 123 124 2017 10 Amendment To Said Section Through Finance Act 2016 While Adjudicating The Applicability Of Said Section To Sales Effected Through Agreements Prior To The 2016 Amendment Said Sub Section Read As Under 1 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 Va Lue Adopted Or Assessed Or Assessed Or Assessable By An Y Authority Of A State Government Hereafter In This Section Referred To As The Stamp Valuation Authori Ty For The Purpose Of Payment Of Stamp Duty In Respect Of Such Transfer The Value So Adopted Or Assessed Or Assessed Or Assessable Shall For The Purposes Of Section 48 Be Deemed To Be The Full Value Of The Consideration Received Or Accruing As A Result Of S Uch Transfer Through The Amendment Done Through Finance Act 201 6 W E F 01 04 2017 Two Provisos Were Added To Sub Section 1 Of Section 50 C Of The Act With The Additions Of These Proviso The Said Sub Section Reads As Under 1 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 L Ess Than The Value Adopted Or Assessed Or Assessed Or Assessable By Any Authority Of A State Government Hereafter In This Section Referred To As The Stam P Valuation Authority For The Purpose Of Payment Of Stamp Duty In Respect Of Such Transfer The Value So Adopted Or Assessed Or Assessed Or Assessable Shall For The Purposes Of Section 48 Be Deemed To Be The Full Value Of The Consideration Received Or Accruing As A Result Of Such Transfer 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 Ita Nos 1628 1629 17 Co 123 124 2017 11 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 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 Argument Of The Revenue Before Us Is That The Two Provisos Added Through Finance Act 2016 Will Have Retrospective O Peration And Judgment Of Honble Jurisdictional High Court In Th E Case Of R Sugantha Ravindran Supra Has No More Applicability Be That As It May Contention Of The Ld Authorised Representativ E Is That Guideline Value Of The Subject Property Was Only A 2 800 Per Sq Ft And This Had Been Accepted By The Ld Assessing Officer In The R Emand Report For Assessment Year 2010 2011 Where Also A Similar Ad Dition Was Made No Doubt For The Same Property There Cannot Be Wide Ly Varying Guideline Values In Close Proximity Of Time Consi Dering The Facts And Circumstances Of The Case We Set Aside The Order Of The Ld Commissioner Of Income Tax Appeals In So Far As I T Relates To Adoption Of Guideline Value As On Date Of Sale For Computing Long Term Capital Gains And Also On The Question Of Applicabi Lity Of Section 50 C Of Ita Nos 1628 1629 17 Co 123 124 2017 12 The Act For The Impugned Assessment Year Back To Th E File Of The Ld Assessing Officer For Consideration Afresh In Accor Dance With Law 10 Now We Take Up Cross Objections Of The Assessees 11 Ld Counsel For The Assessees Submitted That If The Matter Is Sent Back To The Ld Assessing Officer For Consider Ing The Correct Guideline Value As On Date Of Sale For Computation Of Long Term Capital Gains Cross Objections Could Be Treated As Infruct Uous 12 In The Result Appeals Of The Revenue Are Allowed For Statistical Purpose Whereas Cross Objections Of T He Assessees Stands Dismissed Order Pronounced In The Opening Court At The Time O F Hearing On 7 Th December 2017 At Chennai Sd Sd George Mathan Judicial Member Abraham P George Accountant Member Chennai Dated 7th December 2017 Kv Copy To 1 0 Appellant 3 1 Cit A 5 45 6 Dr 2 70 Respondent 4 1 Cit 6 58 9 Gf