Shri Amitkumar Ambalal (HUF),, Ahmedabad v. The ACIT, Circle-10,, Ahmedabad

ITA 3353/AHD/2014 | 2009-2010
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 335320514 RSA 2014
Assessee PAN AAIHS6225B
Bench Ahmedabad
Appeal Number ITA 3353/AHD/2014
Duration Of Justice 2 year(s) 11 month(s) 15 day(s)
Appellant Shri Amitkumar Ambalal (HUF),, Ahmedabad
Respondent The ACIT, Circle-10,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-11-2017
Assessment Year 2009-2010
Appeal Filed On 15-12-2014
Judgment Text
ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] I.T.A. NO.3353/AHD/2014 ASSESSMENT YEAR : 2009-10 AMITKUMAR AMBALAL (HUF) .....APPELLANT SUMERU BUNGLOW NR. ZT. XAVIERS COLLEGE CORNER NAVRANGPURA AHMEDABAD-380009 [PAN : AAIHS 6225 B] VS. ASSISTANT COMMISSIONER OF INCOME-TAX .RESPONDENT CIRCLE-10 AHMEDABAD APPEARANCES BY: SN SOPARKAR FOR THE APPELLANT JAYANT JHAVERI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 29.11.2017 DATE OF PRONOUNCING THE ORDER : 30.11.2017 O R D E R PER PRAMOD KUMAR AM: 1. BY WAY OF THIS APPEAL THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 14 TH OCTOBER 2014 PASSED BY THE CIT(A)-XVI AHMEDABAD I N THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 14 7 OF THE INCOME-TAX ACT 1961 FOR THE ASSESSMENT YEAR 2009-10 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS :- (1) ORDER U/S.250 DT. 14. 10. 2014 BEING ERRONEOUS WITHOUT CONSIDERING FACTS ON RECORD PROPERLY AND AGAINST THE PRINCIPLES OF JU STICE BE CANCELLED AND SET ASIDE. (2) LONG TERM CAPITAL GAIN CONSIDERED RS.1 69 72 3 08/- U/S 50C OF THE ACT TAKING THE VALUE OF RS.5 13 38 440/- AS PER VALUATI ON BY THE REGISTERING AUTHORITY INSTEAD OF ACTUAL SALE CONSIDERATION RS.3 50 00 000/- BEING IMPROPER AND UNWARRANTED BE CANCELLED. ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 2 OF 9 (3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) AHMEDABAD HAS ERRED IN NOT CONSIDERING PROPERLY AND JUDICIOUSLY T HAT: (I) PROVISIONS OF SECTION 50C ARE NOT APPLICABLE AT ALL. (II) AGREEMENT TO SALE THE CONCERNED PROPERTY WAS MADE ON 04.07.2007. (III) OUT OF THE TOTAL SALE CONSIDERATION AGREED AS PER AGREEMENT TO SALE 95% OF THE SALE PRICE ALREADY RECEIVED IN F.Y.2007- 08 31.03.2008. (IV) POSSESSION OF THE PROPERTY WAS HANDED OVER AS PER AGREEMENT DT.30.01.2009. (V) DEED OF SALE EXECUTED AND REGISTERED ON 24.09.2 009 FOR WHICH AUTHORITY CHARGED REGISTRATION FEES ETC. AT RS.3 50 250/- ON THE BASIS OF SALE CONSIDERATION OF RS. 3 50 00 000/- (VI)VALUATION REPORT OF APPROVED VALUER PARAS RANGW ALA OF S.C. RANGWALA DT. 04.06.2007 SUBMITTED IN SUPPORT OF PRE VAILING RATE AT THE TIME OF ENTERING INTO AGREEMENT TO SALE IS ALSO NOT TAKEN INTO ACCOUNT. (VII)IN VIEW OF (VI) ABOVE ASSISTANT COMMISSIONER O F INCOME TAX EVEN NOT REFERRED THE VALUATION TO DEPARTMENT VALUATION OFFI CER AND THEREBY NOT ACTED IN THE SPIRIT OF JUSTICE. (VIII)IN VIEW OF THE ABOVE VALUATION ADOPTED BY STA MP DUTY AUTHORITY AMOUNTS TO PROCEDURE ON THE BASIS OF THEN PREVAILIN G JANTRY RATES. 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SHORT ISSUE THAT HE WOU LD LIKE TO PURSUE IN THIS APPEAL IS THAT THE STAMP DUTY VALUATION FOR THE PURPOSE OF AD OPTING VALUE OF CONSIDERATION UNDER SECTION 50C SHOULD BE AS ON THE DATE ON WHICH THE AGREEMENT TO SALE WAS ENTERED INTO AND NOT THE DATE ON WHICH THE TRANSACT IONS ACTUALLY TOOK PLACE. LEARNED COUNSEL SUBMITTED THAT THE RELEVANT DATE FOR ASCERT AINING WHETHER OR NOT THE SALE CONSIDERATION IS SUPPRESSED IS THE DATE ON WHICH AN AGREEMENT WAS ENTERED INTO. IN SUPPORT OF THIS PROPOSITION HE INVITES OUR ATTENTI ON TO A DECISION OF AHMEDABAD SMC BENCH IN THE CASE OF DHARAMSHIBHAI SONANI VS. ACIT (ITA NO.1237/AHD/2013; ORDER DATED 30.09.2016) WHICH INTER ALIA OBSERVES AS FO LLOWS:- [4] THE FUNDAMENTAL PURPOSE OF INTRODUCING SECTION 50C WAS TO COUNTER SUPPRESSION OF SALE CONSIDERATION ON SALE OF IMMOVA BLE PROPERTIES AND THIS SECTION WAS INTRODUCED IN THE LIGHT OF WIDESPREAD B ELIEF THAT SALE TRANSACTIONS OF LAND AND BUILDING ARE OFTEN UNDERVALUED RESULTIN G IN LEAKAGE OF LEGITIMATE TAX REVENUES. THIS SECTION PROVIDES FOR A PRESUMPTI ON A REBUTTABLE PRESUMPTION THOUGH-SOMETHING WITH WHICH I AM NOT CO NCERNED FOR THE TIME BEING THAT THE VALUE FOR THE PURPOSE OF COMPUTING STAMP DUTY ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY REPRESENTS FAIR INDICATION OF THE MARKET PRICE OF THE PROPERTY SOLD. SECTION 50C(1) PROVIDE S THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE 'STAMP VALUATION ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 3 OF 9 AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED OR ASSESSED OR ASSES SABLE SHALL FOR THE PURPOSES OF SECTION 48 BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER . THE TROUBLE HOWEVER IS THAT WHILE THE SALE CONSIDERAT ION IS FIXED AT THE POINT OF TIME WHEN AGREEMENT TO SELL IS ENTERED INTO THERE IS SOMETIMES CONSIDERABLE GAP IN PARTIES AGREEING TO A TRANSACTION (I.E. AGRE EMENT TO SELL) AND THE ACTUAL EXECUTION OF THE TRANSACTION (I.E. SALE DEED) AND YET IT IS THE VALUE AS ON THE DATE OF EXECUTION OF SALE DEED WHICH IS RECOGNIZED BY SECTION 50C FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN BECAUSE THAT IS WHAT IS RELEVANT FOR THE PURPOSE OF COMPUTING STAMP DUTY FOR REGISTRATION OF SALE DEED. THE VERY COMPARISON BETWEEN THE VALUE AS PER SALE DEED AND T HE VALUE AS PER STAMP DUTY VALUATION ACCORDINGLY CEASES TO BE DEVOID OF A RATIONAL BASIS BECAUSE THESE TWO VALUES REPRESENT THE VALUES AT TWO DIFFER ENT POINTS OF TIME. IN A SITUATION IN WHICH THERE IS SIGNIFICANT DIFFERENCE BETWEEN THE POINT OF TIME WHEN AGREEMENT TO SELL IS EXECUTED AND WHEN THE SAL E DEED IS EXECUTED THEREFORE SHOULD IDEALLY BE BETWEEN THE SALE CONSI DERATION AS PER REGISTERED SALE DEED WHICH IS FIXED BY WAY OF THE AGREEMENT T O SELL VIS--VIS THE STAMP DUTY VALUATION AS AT THE POINT OF TIME WHEN AGREEME NT TO SELL WHEREBY SALE CONSIDERATION WAS INFACT FIXED BECAUSE IF AT ALL ANY SUPPRESSION OF SALE CONSIDERATION SHOULD BE ASSUMED IT SHOULD BE ON TH E BASIS OF STAMP DUTY VALUATION AS AT THE POINT OF TIME WHEN THE SALE CON SIDERATION WAS FIXED. INCOME TAX SIMPLIFICATION COMMITTEE SET UP IN 2015 HEADED BY JUSTICE R V EASWAR- A FORMER JUDGE OF DELHI HIGH COURT AND ONE OF THE MOST ILLUSTRIOUS FORMER PRESIDENTS OF THIS TRIBUNAL TOOK NOTE OF TH IS INCONGRUITY AND IN ITS VERY FIRST REPORT ( HTTP://TAXSIMPLIFICATION.IN/REPORT.PDF ) OBSERVED AS FOLLOWS: 6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIE F WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL SECTION 50C MAKES A SPECIAL PROVISION FOR DETERMINI NG THE FULL VALUE OF CONSIDERATION IN CASES OF TRANSFER OF IMMOVABLE PROPERTY. IT PROVIDE S 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 S O ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION AND CAPITAL GAINS SHALL BE COMPUTED ON THE BASIS OF SUCH CONSIDERATIO N UNDER SECTION 48 OF THE INCOME- TAX ACT. THE SCOPE OF SECTION 50C WAS EXTENDED W.E.F. A.Y. 2 010-11 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 TRANSFER S. THE PRESENT PROVISIONS OF SECTION 50C DO NOT PROVID E ANY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO SELL THE ASSET MUCH BE FORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY AND THE SALE CONSIDERATION H AS BEEN FIXED IN SUCH AGREEMENT. A LATER SIMILAR PROVISION INSERTED BY WAY OF SECTIO N 43CA DOES TAKE CARE OF SUCH A SITUATION. ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 4 OF 9 6.2 IT IS THEREFORE PROPOSED TO INSERT THE FOLLOWIN G 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 PURP OSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ON THE DATE OF THE AGREEME NT. (5) THE PROVISIONS OF SUB-SECTION (4) SHALL APPLY O NLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION OR A PART THEREOF HAS BEEN RECEIVE D BY ANY MODE OTHER THAN CASH ON OR BEFORE A DATE OF AGREEMENT FOR TRANSFER OF THE A SSET. [5] TRUE TO THE WORK ETHOS OF THE CURRENT GOVERNMEN T IT WAS THE FIRST TIME THAT WITHIN FOUR MONTHS OF THE TAX SIMPLIFICATION C OMMITTEE BEING NOTIFIED NOT ONLY THE FIRST REPORT OF THE COMMITTEE WAS SUBMITTE D BUT THE GOVERNMENT ALSO WALKED THE TALK BY ENSURING THAT THE SEVERAL STATUT ORY AMENDMENTS BASED ON RECOMMENDATIONS OF THIS REPORT WERE INTRODUCED IN THE PARLIAMENT. SO FAR AS SECTION 50 C IS CONCERNED THE FINANCE ACT 2016 WI TH EFFECT FROM 1 ST APRIL 2017 INSERTED THE FOLLOWING PROVISOS TO SECTION 50 C: PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AM OUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CA PITAL ASSET ARE NOT THE SAME THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALU ATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTIN G 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 ELE CTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT ON OR BEFORE THE DATE OF THE AGREEMEN T FOR TRANSFER. [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 CONSIDE RATION IS FIXED UNDER AGREEMENT EXECUTED PRIOR TO THE DATE OF REGISTRATIO N 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 ADO PTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY SHALL BE TAKEN AS THE FULL VALUE OF CONSIDERATION FOR THE PURPOSES OF COMPUTAT ION 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 WHE RE THE SELLER HAS ENTERED INTO AN AGREEMENT TO SELL THE PROPERTY MUCH BEFORE THE ACTU AL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY AND THE SALE CONSIDERATION IS FI XED 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 T HE 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 REGI STRATION ARE NOT THE SAME THE STAMP DUTY VALUE ON THE DATE OF THE AGREEMENT MAY B E TAKEN FOR THE PURPOSES OF ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 5 OF 9 COMPUTING THE FULL VALUE OF CONSIDERATION. IT IS FU RTHER PROPOSED TO PROVIDE THAT THIS PROVISION SHALL APPLY ONLY IN A CASE WHERE THE AMOU NT 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 CLEAR ING SYSTEM THROUGH A BANK ACCOUNT ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRAN SFER 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 ASSESSME NT YEAR 2017-18 AND SUBSEQUENT YEARS. [7] WHILE THE GOVERNMENT HAS THUS RECOGNIZED THE GE NUINE AND INTENDED HARDSHIP IN THE CASES IN WHICH THE DATE OF AGREEMEN T TO SELL IS PRIOR TO THE DATE OF SALE AND INTRODUCED WELCOME AMENDMENTS TO THE S TATUE TO TAKE THE REMEDIAL MEASURES THIS BRINGS NO RELIEF TO THE ASS ESSEE BEFORE ME AS THE AMENDMENT IS INTRODUCED ONLY WITH PROSPECTIVE EFFEC T FROM 1 ST APRIL 2017. THERE CANNOT BE ANY DISPUTE THAT THIS AMENDMENT IN THE SCHEME OF SECTION 50C HAS BEEN MADE TO REMOVE AN INCONGRUITY RESULTI NG 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 INT O AN AGREEMENT TO SELL THE ASSET MUCH BEFORE THE ACTUAL DATE OF TRANSFER O F 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 WA S 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 D ISPUTE THAT A STATUTORY AMENDMENT IS BEING MADE TO REMOVE AN UNDUE HARDSHIP TO THE ASSESSEE OR TO REMOVE AN APPARENT INCONGRUITY SUCH AN AMENDMEN T HAS TO BE TREATED AS EFFECTIVE FROM THE DATE ON WHICH THE LAW CONTAININ G SUCH AN UNDUE HARDSHIP OR INCONGRUITY WAS INTRODUCED. IN SUPPORT OF THIS PROPOSITION I FIND SUPPORT FROM HONBLE DELHI HIGH COURTS JUDGMENT IN THE CAS E OF CIT VS ANSAL LANDMARK TOWNSHIP PVT LTD [(2015) 377 ITR 635 (DEL) ] WHEREIN APPROVING THE REASONING ADOPTED AN ORDER AUTHORED BY ME DURIN G MY TENURE AT AGRA BENCH [I..E RAJEEV KUMAR AGARWAL VS ACIT (2014) 149 ITD 363 (AGRA)] WHICH CENTRED ON THE PRINCIPLE THAT WHEN LEGISLATURE IS R EASONABLE AND COMPASSIONATE ENOUGH TO UNDO THE UNDUE HARDSHIP CAU SED BY THE STATUTE SUCH AN AMENDMENT IN LAW IN VIEW OF THE WELL SETTL ED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINT ENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN TH OUGH IT MAY NOT STATE SO SPECIFICALLY . IN THIS CASE IT WAS SPECIFICALLY OBSERVED AND IT WAS THIS OBSERVATION WHICH WAS REPRODUCED WITH APPROVAL BY T HEIR LORDSHIPS AS FOLLOWS: NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENO UGH TO CURE THESE SHORTCOMINGS OF PROVISION AND THUS OBVIATE THE UNI NTENDED 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 STAT E SO SPECIFICALLY THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPEC TIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCE D. IN VIEW OF THESE DISCUSSIONS AS ALSO FOR THE DETAILED REASONS SET O UT EARLIER WE CANNOT ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 6 OF 9 SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN 'I NTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON-DEDUCTION OF TAX AT SO URCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING M UCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CUR ATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL 2005 BEING TH E 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 PRI NCIPLE WHEN APPLIED IN THE PRESENT CONTEXT LEADS TO THE CONCLUSION THAT THE P RESENT AMENDMENT BEING AN AMENDMENT TO REMOVE AN APPARENT INCONGRUITY WHIC H RESULTED IN UNDUE HARDSHIPS TO THE TAXPAYERS SHOULD BE TREATED AS RE TROSPECTIVE IN EFFECT. QUITE CLEARLY THEREFORE EVEN WHEN THE STATUTE DOES NOT S PECIFICALLY STATE SO SUCH AMENDMENTS IN THE LIGHT OF THE DETAILED DISCUSSION S ABOVE CAN ONLY BE TREATED AS RETROSPECTIVE AND EFFECTIVE FROM THE DAT E RELATED STATUTORY PROVISIONS WAS INTRODUCED. VIEWED THUS THE PROVISO TO SECTION 50 C SHOULD ALSO BE TREATED AS CURATIVE IN NATURE AND WITH RETR OSPECTIVE EFFECT FROM 1 ST APRIL 2003 I.E. THE DATE EFFECTIVE FROM WHICH SECTION 50 C WAS INTRODUCED. WHILE THE GOVERNMENT MUST BE COMPLIMENTED FOR THE UNPARALLELE D SWIFTNESS WITH WHICH THE EASWAR COMMITTEE RECOMMENDATIONS AS ACCEPTED B Y THE GOVERNMENT WERE IMPLEMENTED I AS A JUDICIAL OFFICER WOULD T HINK THIS WAS STILL ONE STEP SHORT OF WHAT OUGHT TO HAVE BEEN DONE INASMUCH AS T HE AMENDMENT IN TUNE WITH THE JUDGE MADE LAW OUGHT TO HAVE BEEN EFFECTI VE 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 R EFER TO THE OBSERVATIONS OF HONBLE SUPREME COURT THE CASE OF CIT VS ALOM EXTRUSION LTD [(2009) 319 ITR 306 SC)] 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 PARLIAME NT ONLY W.E.F. 1ST APRIL 2004 WOULD BECOME CURATIVE IN NATURE HENCE IT WOULD AP PLY 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 ALLI ED MOTORS (P) LTD. ETC. VS. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC) THE SCHE ME 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 BUSINES S 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 DE DUCTION CLAIMED BY THE ASSESSEE WHICH WAS ON ACCOUNT OF SALES-TAX COLLECTE D BY THE ASSESSEE FOR THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEAR. THE DEDUCT ION WAS DISALLOWED UNDER S. 43B WHICH AS STATED ABOVE WAS INSERTED W.E.F. 1ST APR IL 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 ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 7 OF 9 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 MOT ORS (P) LTD. ETC. (SUPRA). THIS COURT IN ALLIED MOTORS (P) LTD. ETC. (SUPRA) HELD THAT WH EN A PROVISO IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECT ION WORKABLE A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION A ND WHICH PROVISO IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SE CTION A REASONABLE INTERPRETATION IT COULD BE READ RETROSPECTIVE IN O PERATION 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 CURAT IVE 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 PRO VISO IS DELETED BUT EVEN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRINGING ABOUT A N UNIFORMITY IN TAX DUTY CESS AND FEE ON THE ONE HAND VIS-A-VIS CONTRIBUTIONS TO WELF ARE 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 WH ICH IS BINDING ON US. ACCORDINGLY WE HOLD THAT FINANCE ACT 2003 WILL OPERATE RETROS PECTIVELY W.E.F. 1ST APRIL 1988 (WHEN THE FIRST PROVISO STOOD INSERTED). LASTLY WE MAY P OINT OUT THE HARDSHIP AND THE INVIDIOUS DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSE E(S) IF THE CONTENTION OF THE DEPARTMENT IS TO BE ACCEPTED THAT FINANCE ACT 2003 TO THE ABOVE EXTENT OPERATED PROSPECTIVELY. TAKE AN EXAMPLEIN 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 A ND THE DATE OF PAYMENT FALLS AFTER THE DUE DATE UNDER THE EMPLOYEES' PROVIDENT FUND ACT T HEY WILL BE DENIED DEDUCTION FOR ALL TIMES. IN VIEW OF THE SECOND PROVISO WHICH STOOD ON THE S TATUTE BOOK AT THE RELEVANT TIME EACH OF SUCH ASSESSEE(S) WOULD NOT B E ENTITLED TO DEDUCTION UNDER S. 43B OF THE ACT FOR ALL TIMES. THEY WOULD L OSE THE BENEFIT OF DEDUCTION EVEN IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE C ONTRIBUTIONS TO THE WELFARE FUNDS WHEREAS A DEFAULTER WHO FAILS TO PAY THE CO NTRIBUTION TO THE WELFARE FUND RIGHT UPTO 1ST APRIL 2004 AND WHO PAYS THE CONTRI BUTION 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 INDICAT ED ABOVE SHOULD BE READ AS RETROSPECTIVE. IT WOULD THEREFORE OPERATE FROM 1S T APRIL 1988 WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE THAT THE PARLIAMENT HAS EXPLICITLY STAT ED THAT FINANCE ACT 2003 WILL OPERATE W.E.F. 1ST APRIL 2 004. 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 RE TROSPECTIVE IN EFFECT IS CONCERNED THERE IS NO DOUBT ABOUT THE LEGAL POSITI ON. I HOLD THE PROVISOS TO SECTION 50C BEING EFFECTIVE FROM 1 ST APRIL 2003. THIS IS PRECISELY WHAT THE LEARNED COUNSEL HAS PRAYED FOR. IN HIS DETAILED WRI TTEN SUBMISSIONS HE HAS MADE OUT OF A STRONG CASE FOR THE AMENDMENT TO SECT ION 50C BEING TREATED AS RETROSPECTIVE AND WITH EFFECT FROM 1 ST APRIL 2003. THE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN AND DESERVES ACCEPTANCE. WHAT FOL LOWS 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 RE CEIVED THROUGH BANKING CHANNELS THE ASSESSING OFFICER SO FAR AS COMPUTAT ION OF CAPITAL GAINS IS CONCERNED WILL ADOPT STAMP DUTY VALUATION AS ON 2 9.6.2005 OF THE PROPERTY ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 8 OF 9 SOLD AS IT EXISTED AT THAT POINT OF TIME. IN CASE T HE 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 AGA IN AS ON 29.6.2005 OF THE SAID PROPERTY. AS A COROLLARY THERETO THE SUBSEQUE NT 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 RECOMP UTED. WITH THESE DIRECTIONS THE MATTER STANDS RESTORED TO THE FILE OF THE ASSES SING OFFICER FOR ADJUDICATION DE NOVO AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND BY WAY OF A SPEAKING ORDER. I ORDER SO. 4. LEARNED COUNSEL THEN ALSO INVITES OUR ATTENTION TO A DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS SHIMBHU MEHRA [2016] 65 TAXMANN.COM 142 (ALLAHABAD) IN SUPPORT OF THE SAME PROPOSITION . LEARNED COUNSEL THEN INVITES OUR ATTENTION TO THE COPY OF THE AGREEMENT TO SALE WHICH IS PLACED AT PAGE NOS. 1-8 OF THE PAPER BOOK AS ALSO THE COPY OF THE SALE DEED WH ICH IS PLACED AT PAGE NOS. 9-30 OF THE PAPER-BOOK. LEARNED COUNSEL FURTHER POINTS O UT THAT THE DATES ON WHICH RELEVANT PAYMENTS ARE MADE ARE CLEARLY SET OUT IN T HE SALE DEED AT INTERNAL PAGE NO.12 WHICH ARE IN ACCORDANCE WITH THE AGREEMENT T O SALE. LEARNED COUNSEL THUS CONTENDS THAT THE BONAFIDES OF THE AGREEMENT TO SAL E IN THE LIGHT OF THE DATES ON WHICH THE PAYMENTS ARE MADE CANNOT BE DOUBTED. ON THE STRENGTH OF THIS SUBMISSION WE ARE URGED TO REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE STAMP DUTY VALUATION AS ON T HE DATE ON WHICH THE AGREEMENT TO SALE WAS ENTERED INTO SHOULD BE TAKEN FOR THE PURPO SES OF APPLICATION OF SECTION 50C AND NOT THE DATE ON WHICH THE SALE DEED WAS ACTUALL Y EXECUTED. 5. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND RELIES UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITS THAT TH E PROVISIONS OF THE STATUTE ARE CLEAR AND UNAMBIGUOUS INASMUCH AS THE RELEVANT DATE FOR THE PURPOSE OF SECTION 50C STAMP DUTY VALUE IS THE DATE ON WHICH THE SALE DEED IS ENTERED INTO. 6. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD WE FIND THAT THE ISSUE IN APPEAL IS SQUARELY COVERE D BY THE TRIBUNALS DECISION IN THE CASE OF DHARAMSHIBHAI SONANI (SUPRA) WHICH HAS BEE N SUBSEQUENTLY FOLLOWED BY LARGE NUMBER OF DIVISION BENCH OF THIS TRIBUNAL. A S RIGHTLY HELD BY THE TRIBUNAL IN THE CASE OF DHARAMSHIBHAI SONANI (SUPRA) THE AMENDMENT BROUGHT ABOUT BY FINANCE ACT 2016 PROVIDING THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT O F CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME THE VALUE ADOPTED OR ASSESSED OR ASSESSAB LE 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 IS RETROSPECTIVE IN EFFECT AND APPLIES FROM 1 ST APRIL 2003. THE DETAILED REASONS FOR COMING TO TH IS CONCLUSION ARE ALREADY SET OUT IN THE EXTRACT FROM THE TRIBUNALS DECISION QUOTED EARLIER IN THIS ORDER. 7. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND ENTIRETY OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE PLEA OF THE LEARNED COUNSEL INDEED MERITS ACCEPTANCE. WE THEREFORE DEEM IT FIT AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE ITA NO. 3353/AHD/2014 AMITKUMAR AMBALAL (HUF) VS. ACIT A.Y. 2009-10 PAGE 9 OF 9 ASSESSING OFFICER FOR ADJUDICATION DE NOVO IN THE LIGHT OF OBSERVATIONS ABOVE AND THE LEGAL POSITION SET OUT IN DHARAMSHIBHAI SONANI (SUPRA). ORDERED ACCORDINGLY. 8. IN THE RESULT APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT TODAY ON THIS 30 TH DAY OF NOVEMBER 2017. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD THE 30 TH DAY OF NOVEMBER 2017 **BT* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES AHMEDABAD 1. DATE OF TAKING DICTATION: .. .3 PAGES DICTATION PAD ATTACHED 30.11.2017. 2. DATE OF TYPING & DRAFT ORDER PLACED BEFORE THE DI CTATING MEMBER: ... 30.11.2017.................... ..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S.: ...30.11.2017...... 4. DT. ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT: . 30.11.2017... ..... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: . ....30.11.2017........................ 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: ..... 7. THE DT. ON WHICH THE FILE GOES TO THE ASTT. REGISTR AR FOR SIGNATURE ON THE ORDER: .................. ....... 8. DATE OF DESPATCH OF THE ORDER: ................. ........