IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA.No.1626/Ahd/2016 Asstt. Year: 2011-2012 Dharmidevi Kanaiyalal Suthar ITO, Ward-3(2)(6) 26, Krishna Park Society Ahmedabad. Jasodanagar Road Nr. Sahjanand School Maninagar, Ahmedabad 380 008. PAN : AWRPS 2282 F (Appellant) (Respondent) Assessee by : Shri Ashwin C. Shah, AR Revenue by : Shri Satish Solanki, Sr.DR Date of Hearing : 11/08/2016 Date of Pronouncement: 22/09/2016 ORDER Assessee is in appeal before Tribunal against order of ld.CIT(A)-3, Ahmedabad dated 11.5.2016 passed for Asstt.Year 2011-12. 2. Assessee has taken substantial three grounds of appeal. Out of which ground no.1 relates to challenge to reopening of assessment, and in ground no.2, assessee has challenged confirmation of addition of Rs.31.00 lakhs, which was made by AO with aid of section 50C of Income Tax Act, 1961. Other grounds are peripheral arguments to those main issues. ITA No.1626/Ahd/2016 2 3. As far as reopening of assessment is concerned, ld.counsel for assessee did not press this ground. Accordingly, ground no.1 is rejected. 4. Brief facts with regard to second fold of grievance is that assessee was owner and in possession of plot bearing no.105, admeasuring 1000 sq.meters situated in industrial area, GIDC Kerala. This plot was purchased by assessee on 23.5.2006 for sum of Rs.9.50 lakhs. assessee has entered into agreement to sell of this plot with M/s.Marvel Metal & Alloys on 7.5.2007 for consideration of Rs.11.50 lakhs. According to assessee, payment was received through banking channel and possession was delivered at time of execution of agreement. sale deed of plot was executed on 21.10.2010. assessee has filed its return of income on 26.9.2011 declaring total income at Rs.7,59,710/-. ld.AO had proposed to compute long term capital gain on sale of plot as per section 50C of Income Tax Act. He observed that on basis of stamp duty valuation, value of plot is to be adopted at Rs.59,18,367/-. assessee has objected this computation of value of plot, and ultimately as per sub- section 2 of section 50C, matter was referred to DVO, who made preliminary valuation of plot at Rs.56 lakhs, and after objection of assessee, he adopted value at Rs.42.50 lakhs. capital gain computed by AO reads as under: Valuation as per DVO Report Rs.42,50,000/- Less: Indexation Rs.6,35,660/- Net LTCG Rs.36,14,340/- Less: Disclosed by assessee Rs.5,14,340/- Net Addition Rs.31,00,000/- ITA No.1626/Ahd/2016 3 5. Appeal to CIT(A) did not bring any relief to assessee. 6. Before Tribunal, assessee has raised three fold submissions. In his first fold of submissions, he contended that assessee has received full sale consideration at time of execution of agreement. He has handed over possession to vendee. Therefore, as per section 2(47)(v) of Income Tax Act read with section 53A of Transfer of Property Act, 1882, transaction has taken place on 7.5.2007 when assessee has handed over possession, and any gain arisen to assessee is taxable in Asstt.Year 2008-09 and not in Asstt.Year 2011-12. In his next fold of contentions, he contended that ld.DVO has erred in not considering objection of assessee, and has erred in taking rates w.e.f. 1-4-2010, that is period when sale deed was executed. ld.DVO ought to have taken rates when agreement was executed by assessee. In his last fold of submissions, he contended that amendment has been effected in section 50C, which has been brought on statute book by Finance Bill, 2016. Though amendment has been made effective from 1st day April, 2017 and it is intended to be applied in Asstt.Years 2017-18, but it is procedural aspect, and it can be applied even in pending matters. According to this amendment, it has been provided that wherever, section 50C is being applied, it is to be applied from date of agreement fixing amount of consideration for transfer of immovable property, and date of registration, which are ITA No.1626/Ahd/2016 4 not same, may not be considered. On other hand, ld.DR relied upon orders of Revenue authorities. 7. I have duly considered rival contentions and gone through record carefully. Section 48 of Income Tax Act provides mode of computation of capital gain. It contemplates that income arising under head capital gains shall be computed by deducting from full value of consideration received or accruing, as result of transfer of capital assets following amounts, viz. (a) expenditure incurred wholly and exclusively in connection with such transfer; and (b) cost of acquisition of asset and cost of any improvement thereto. 8. Section 50C further provides that where consideration received or accruing as result of transfer by assessee of capital asset, being land or building or both, is less than value adopted or assessed by any authority for purpose of payment of stamp duty in respect of such transfer, value so adopted or assessed shall for purposes of section 48, be deemed to be full value of consideration. In other words, full consideration mentioned in section 48 is to be replaced by consideration on which value of property was adopted for purpose of payment of stamp duty. 9. Sub-Section (2) of section 50C further contemplates that in case assessee alleges that stamp duty valuation authority under sub-section (1) exceeds fair market value of property as on date of transfer, then, AO may refer valuation of capital asset to Valuation Officer. In present case, this procedure has been followed. ITA No.1626/Ahd/2016 5 reference was made to DVO under sub-section(1) of section 50C and has valued property at Rs.42.50 lakhs. At this stage, let me first deal with first fold of submission made by assessee. Sub-clause (v) of Section 2(47) has direct bearing on controversy. Therefore, it is pertinent to taken note of this clause. It reads as under: Section 2 (47) "transfer", in relation to capital asset, includes, (i) ........ (ii) (iii) . (iv) . (iva) . (v) any transaction involving allowing of possession of any immovable property to be taken or retained in part performance of contract of nature referred to in section 53A of Transfer of Property Act, 1882 (4 of 1882) ; or 10. case of assessee is that he had executed agreement to sell on 7.5.2007 and handed over possession to vendee, therefore, transfer within meaning of section 2(47)(v) was complete, and any gain ought to be assessed in Asstt.Year 2008-09. This argument was not dealt with by ld.Revenue authorities in detail, because, before AO, it was not raised. Before taking cognizance of this argument, it is pertinent to take note of Registration and other related Laws, Amendment Act, 2001 which has brought about radical changes in rights flowing on basis of agreement executed in part performance of contract under section 53A of 1882 Act. ITA No.1626/Ahd/2016 6 amendments have been made to sections 17 and 49 of Indian Registration Act, 1908. It is pertinent to take note of section 17(1A) as well as Section 49 of Registration Act. 17.(1A) documents containing contracts to transfer for consideration, any immovable property for purpose of section 53A of Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after commencement of Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for purposes of said section 53A. 49. Effect of non-registration of documents required to be registered. No document required by section 17 1[or by any provision of Transfer of Property Act, 1882 (4 of 1882)], to be registered shall (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered: Provided that unregistered document affecting immovable property and required by this Act or Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of contract in suit for specific performance under Chapter II of Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument.] 11. I also deem it pertinent to take note of Section 53A of Transfer of Property Act, 1882. It reads as under: 53A. Part performance. Where any person contracts to transfer for consideration any immoveable property by writing signed by ITA No.1626/Ahd/2016 7 him or on his behalf from which terms necessary to constitute transfer can be ascertained with reasonable certainty, and transferee has, in part performance of contract, taken possession of property or any part thereof, or transferee, being already in possession, continues in possession in part performance of contract and has done some act in furtherance of contract, and transferee has performed or is willing to perform his part of contract, then, notwithstanding that where there is instrument of transfer, that transfer has not been completed in manner prescribed therefor by law for time being in force, transferor or any person claiming under him shall be debarred from enforcing against transferee and persons claiming under him any right in respect of property of which transferee has taken or continued in possession, other than right expressly provided by terms of contract: Provided that nothing in this section shall affect rights of transferee for consideration who has no notice of contract or of part performance thereof. 12. perusal of section 53A of TPA would indicate that it provides protection to transferee to retain his possession which was taken in part performance of contract. He was able to protect his possession even after expiry of limitation to bring suit for specific performance. But after amendment effected in Registration and Other Related Laws Amendment Act, 2001, it has been provided that though contract accompanied by either of possession or executed in favour of person in possession is compulsorily registerable under section 17(1A) of Registration Act, 1908, if he failed to register such contract, then, he would not be able to protect his possession or any benefit conferred by section 53A of TPA. Proviso appended to section 49 of Indian Registration Act only postulates that such ITA No.1626/Ahd/2016 8 agreement could be tendered in evidence in suit for specific performance. In other words, validity of unregistered agreement has not been denied for purpose of adducing it as evidence for obtaining benefit flowing from such contract. But for purpose of protecting possession, un-registered contract could not be enforced. transfer within meaning of section 2(47) of Income Tax Act would complete, if possession is protected. Therefore, I do not find any merit in first fold of submissions raised by ld.counsel for assessee. 13. As far as second fold of submission is concerned, ld.counsel for assessee drew my attention towards page nos.3 to 6 of paper book. He contended that stamp duty valuation authority has notified rates in area on 1.4.1999. rates were Rs.50/- per sq.meter. On 8.2.2007 these rates have been revised. According to revised rates, enhancement has been made in valuation of market rate to extent of 50% from rate notified in 1999. In other words, rates notified at Rs.50/- per sq.meter had been revised to Rs.75/- per sq.meter. assessee has sold property on 7.5.2007. rates notified on 8.2.2007 ought to be adopted by DVO for working out value of property for purpose of stamp duty. ld.AO has taken rates of 2010 i.e. date on which sale deed was registered. On due consideration of this line of arguments, I am of view that ld.Revenue authorities have failed to appreciate controversy in right perspective. assessee has extinguished his right in property on 7.5.2007 when this agreement was executed. Vendee could enforce this agreement by way of suit for specific performance, and in that proceedings, agreement is to be tendered as evidence, as provided in proviso to ITA No.1626/Ahd/2016 9 section 49 of Indian Registration At. In other words, right to obtain sale deed executed was accrued in favour of vendee. rates applicable on 7.5.2007 ought to be applied for determining value of property for purpose of computing capital gain. It has been brought to my notice that ld.DVO has adopted rates as applicable on 20.10.2010. I accepted this fold of contentions and directed AO to compute value of property by adopting rate at Rs.75/- per sq.meter. If this value exceeds value declared by assessee in sale deed, and adopted for computing capital gain, then, AO would take this value, otherwise, capital gain would be computed on sale consideration disclosed by assessee in his computation. ld.AO shall carry out this exercise after providing opportunity of hearing to assessee. 5. As far third fold of contention is concerned, I do not deem it necessary to consider, because under second fold of contentions, I have accepted stand of assessee that value on date of agreement for purpose of computing capital gain ought to be adopted 6. In result, appeal of assessee is party allowed for statistical purpose. Order pronounced in Court on 22nd September, 2016 at Ahmedabad. Sd/- (RAJPAL YADAV) JUDICIAL MEMBER Ahmedabad; Dated 22/09/2016 Dharmidevi Kanaiyalal Suthar v. ITO, Ward-3(2)(6) Ahmedabad