| COURT: | ITAT Vizag |
| CORAM: | G. Manjunatha (AM), V. Durga Rao (JM) |
| SECTION(S): | 50C |
| GENRE: | Domestic Tax |
| CATCH WORDS: | capital gains, stamp duty valuation |
| COUNSEL: | C. V. S. Murthy |
| DATE: | December 23, 2016 (Date of pronouncement) |
| DATE: | January 5, 2017 (Date of publication) |
| AY: | 2009-10 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 50C: The stamp duty value on the date of the agreement to sell has to be adopted and not the value on the date of the deed of sale. The proviso to s. 50C, though inserted by the Finance Act 2016 w.e.f. 01.04.2017, has to be given retrospective effect from 01.04.2003 as it is intended to remove an undue hardship and is curative in nature | |
(i) The AO adopted market value of the property u/s 50C of the Act as on the date of sale deed for the purpose of computation of capital gains. The contention of the assessee is that stamp duty value as on the date of agreement to sale has to be considered, but not the stamp duty value as on the date of sale deed. We find force in the arguments of the assessee, for the reason that the assessee has sold the impugned lands by way of registered sale agreement dated 15.12.2007 for a consideration of Rs 3,40,00,000/- and received an advance of Rs 2,52,00,000/-. As on the date of agreement, the market value of the property for the purpose of payment of stamp duty is less than the consideration shown in the sale agreement. The said property has been conveyed through a registered sale deed on 1.9.2008 for a consideration of Rs 3,40,00,000/-, whereas the stamp duty valuation of the property was fixed at Rs 4,12,30,000/-. The A.O. adopted stamp duty value of the property as on the date of sale deed for the purpose of section 50C of the Act, to compute the deemed consideration for the purpose of capital gains. It is the contention of the assessee that market value as on the date of agreement to sale has to be considered, but not as on the date of sale deed for the purpose of determination of deemed consideration to compute capital gains.
(ii) The facts relating to the market value as on the date of agreement to sale and as on the date of sale deed is not disputed. The only dispute is whether the stamp duty value as on the date of agreement to sale or sale deed to be considered for the purpose of computation of capital gain. The purpose of introducing section 50C of the Act was to counter suppression of sale consideration of sale of immovable properties. Before insertion of section 50C of the Act to the statute, there are lot of litigations as to consideration shown in document conveying title and payment of stamp duty. To overcome the litigations, the provision of section 50C of the Act has been inserted to the statute w.e.f. 1.6.2003 wherein it is made mandatory to adopt value u/s 50C of the Act for the purpose of determination of consideration. A proviso to section 50C of the Act has been inserted by the Finance Act, 2016 w.e.f. 1.4.2017 to resolve the genuine and intended hardship, in the case in which the date of agreement to sale is prior to the date of sale and market value of the property as on the date of agreement to sale and date of sale deed is different. The said proviso to section 50C of the Act has been examined by the coordinate bench of ITAT, Ahmedabad bench in the case of Dharma Sibai Sonani Vs. DCIT in ITA No.1237/Ahd/2013 dated 30.09.2016 and held that the proviso to section 50C of the Act inserted by the Finance Act, 2016 w.e.f. 1.4.2017 is curative in nature and intended to remove an undue hardship to the assessee and accordingly given retrospective effect from 1st April, 2003 i.e. the date effective from which section 50C of the Act was introduced. Accordingly, as per the proviso, the stamp duty value of the property on the date of execution of the agreement to sale should be adopted instead of value on the date of execution of sale deed.
(iii) In the present case, on perusal of the facts available on record, we find that the assessee has entered into a sale agreement in the year 2007 and as on that date, the stamp duty value of the property was less than sale consideration agreed to be paid between the parties. Although, stamp duty value of the property has been changed as on the date of sale deed, for the purpose of determination of deemed consideration u/s 50C of the Act, stamp duty value of the property as on the date of execution of agreement to sale should be adopted, instead of value on the date of execution of sale deed. Therefore, we are of the view that the A.O. was erred in adopting value of the property as on the date of sale deed to determine deemed consideration u/s 50C of the Act. Hence, we direct the A.O. to adopt value of the property as on the date of agreement to sale for the purpose of computation of capital gain u/s 50C of the Act.
IMPROMPTU
The 2016 Amendment of Sec 50 C, as critically examined, brings to surface a slew of viewpoints which could be forcefully urged on ‘the not-so-obvious angle’ i.e the propriety and legitimacy of levy of stamp duty on ‘circle value’ ( ‘Guide Line Value), instead of on the actually and factually agreed ‘consideration’, and bonafide paid as per the deed of conveyance itself.
If care to, suggest to read through the brief Post on Linkedin /Facebook @ ‘Property’(?) ‘Transfer’ (?)(- ‘value’ ?)
ADD-on (to incite and provoke more thoughts):
To any eminent tax expert, for trying an independent but comprehensive study, and forming own well- considered opinion, , the points of view high lighted /brought to focus and forcefully urged, usefully so, in legal circles should immensely help and be guidance. To be precise, might have to look up -on the scope still open for challenging the constitutional validity of sec 50C- the expert commentary (and citations) in- Kanga & Pakhivala’s Book- Tenth Edition Vol. 1 – the topic under ‘ 2. Constitutionally Valid’, pg. 1237.