Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. Shri Satya Dev Sharma

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 75 / 2014 Commissioner of Income Tax, Jaipur-II, Jaipur ----Appellant Versus Shri Satya Dev Sharma, 29, J.L.N. Marg, Uniyara Garden, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. Mathur For Respondent(s) : Mr. Sanjay Jhanwar _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE VIJAY KUMAR VYASOrder 11/09/2017 By way of this appeal, the assessee has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the department and allowed the appeal ofassessee. While admitting the matter on 14.07.2016, the Courtframed the following substantial questions of law:- “1.Whether on the facts and in circumstances of thecase, the ITAT was justified in law in holding that themunicipal limits existing on the date of issue ofNotification No.9447 dated 06.01.1994 u/s 2(14)(iii)(b)should be considered for the purpose of determination ofagricultural land instead of the municipal limits existingon the date of sale/transfer. 2.Whether on the facts and circumstances of the case,the ITAT was justified in law in holding that agricultureland sold by the assessee is not a capital asset u/s.2(14) (iii)(b) as it was situated beyond 8 Kms. from themunicipal limits on the date of issue of NotificationNo.9447 dated 06.01.1994 despite the fact that the landwas undisputedly situated within 8 Kms from the municipal limit on the date of sale.” Following decision was passed on 24.07.2017, in D.B.Income Tax Appeal No.328/2011, Commissioner of Income Tax vs. ShriSher Singh Sunda by this Court which reads as under:- “1. By way of this appeal, the appellant has challengedthe judgment and order of the Tribunal whereby thetribunal has dismissed the appeal of the department andthe C.O. of the assessee is partly allowed. 2. While admitting the appeal, this court on 13.04.2012framed the following substantial question of law:- “Whether the Hon’ble ITAT was right in law indeleting the addition of Rs.65.00 lacs made u/s 50Cafter having held that the transaction was transfer u/s2(47) of I.T. Act read with Section 50(c) and where thevalue of the property was assessed for the purpose ofStamp Duty payment and the transaction was coveredby explanation 2 to Section 50C of the I.T. Act, 1961?” 3. For the sake of convenience, Section 50(C)Explanation 2 which is strongly relied upon by theappellant and Section 2(47) of the Income Tax Act isreproduced as under:- “50C. (1) Where the consideration received or accruingas a result of the transfer by an assessee of a capitalasset, being land or building or both, is less than thevalue adopted or assessed 86[or assessable] by anyauthority of a State Government (hereafter in thissection referred to as the "stamp valuation authority")for the purpose of payment of stamp duty in respect ofsuch transfer, the value so adopted or assessed 86[orassessable] shall, for the purposes of section 48, bedeemed to be the full value of the consideration receivedor accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section(1), where— (a) the assessee claims before any Assessing Officer thatthe value adopted or assessed 86[or assessable] by thestamp valuation authority under sub-section (1) exceedsthe fair market value of the property as on the date oftransfer; (b) the value so adopted or assessed 86[or assessable]by the stamp valuation authority under sub-section (1)has not been disputed in any appeal or revision or noreference has been made before any other authority,court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer (2) Without prejudice to the provisions of sub-section(1), where— (a) the assessee claims before any Assessing Officer thatthe value adopted or assessed 86[or assessable] by thestamp valuation authority under sub-section (1) exceedsthe fair market value of the property as on the date oftransfer; (b) the value so adopted or assessed 86[or assessable]by the stamp valuation authority under sub-section (1)has not been disputed in any appeal or revision or noreference has been made before any other authority,court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions ofsub-sections (2), (3), (4), (5) and (6) of section 16A,clause (i) of sub-section (1) and sub-sections (6) and (7)of section 23A, sub-section (5) of section 24, section34AA, section 35 and section 37 of the Wealth-tax Act,1957 (27 of 1957), shall, with necessary modi-fications,apply in relation to such reference as they apply inrelation to a reference made by the Assessing Officerunder sub-section (1) of section 16A of that Act. 87 [Explanation 1].—For the purposes of this section,"Valuation Officer" shall have the same meaning as inclause (r) of section 2 of the Wealth-tax Act, 1957 (27 of1957). 88 [Explanation 2.—For the purposes of this section, theexpression "assessable" means the price which thestamp valuation authority would have, notwithstandinganything to the contrary contained in any other law forthe time being in force, adopted or assessed, if it werereferred to such authority for the purposes of thepayment of stamp duty.] (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2)exceeds the value adopted or assessed 88[or assessable]by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed 88[orassessable] by such authority shall be taken as the fullvalue of the consideration received or accruing as aresult of the transfer.] “Section 2(47)Transfer—U/s 2(47) of Income-tax Act1961, the term ‘transfer’ has been defined as Transfer inrelation to a capital asset includes : (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law;or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as stock-in-trade of a business carried on by him, such conversion or treatment; or (v) any transaction involving the allowing of thepossession of any immovable property to be taken orretained in part performance of a contract of the naturereferred to in section 53A of the Transfer of Property Act,1882; or (vi) any transaction (whether by way of becoming amember of, a acquiring shares in, a co-operative society,company or other association of persons or by way of anyagreement or any arrangement or in any other mannerwhatsoever) which has the effect of transferring orenabling the enjoyment of, any immovable property. (vii) maturity or redemption of a zero coupon bond. 4. He and contended that the tribunal has seriouslycommitted an error in dismissing the appeal of thedepartment in as much as the grounds raised by therevenue in para 2.1 reads as under:- “2.1The ground of appeal raised by the Revenue isas under:- “On the facts and in the circumstances of the case, theLd. CIT(A) has erred in law in holding that the provisionsof Section 50C of the I.T. Act, 1961 are not applicable inthe case of the assessee and thereby deleting theaddition of Rs.65.00 lacs made by the AO u/s 50C of theI.T. Act, 1961.” The contentions raised by the assessee are as under: (vii) maturity or redemption of a zero coupon bond. 4. He and contended that the tribunal has seriouslycommitted an error in dismissing the appeal of thedepartment in as much as the grounds raised by therevenue in para 2.1 reads as under:- “2.1The ground of appeal raised by the Revenue isas under:- “On the facts and in the circumstances of the case, theLd. CIT(A) has erred in law in holding that the provisionsof Section 50C of the I.T. Act, 1961 are not applicable inthe case of the assessee and thereby deleting theaddition of Rs.65.00 lacs made by the AO u/s 50C of theI.T. Act, 1961.” The contentions raised by the assessee are as under: “2.2The assessee has shown the long term capitalgains of Rs.7,29,025/- on sale of agriculture land atJaipur. The assessee was asked to file the RegisteredSale Deed and the assessee filed the copy of the saleagreement and power of attorney issued in favour ofassessee by Smt. Pushpa Devi and Smt. Gulab Devi. Thepower of attorney was registered in the office of Sub-Registrar, Sanganer-1, Jaipur. As per registered power ofattorney, the value of sold property was determined atRs.1.35 Crores u/s 54 of the Stamp Duty Act. Theassessee was asked to explain as to why the saleconsideration of the property be not adopted at Rs.1.35crores as provided u/s 50C of the Act. In response toshow-cause notice issued by the AO, the assessee filedthe reply and the same is reproduced by the AO at page2 of the assessment order. The contentions of theassessee are summarized as under:- 1. The power of attorney was executed in favour of theassessee by Smt. Pushpa Kedia and the assessee madepayment of Rs.62,70,975/- to Smt. Pushpa Kedia onexecution of power of attorney in his favour. The powerof attorney was duly registered before the Sub-Registrarand the Sub-Registrar has assessed the value forregistration of power of attorney at Rs.1.35 crores. 2. The assessee executed an agreement in favour ofM/s. Rising Build Estate Ltd. and transferred all the rightacquired under the power of attorney on considerationof Rs.70.00 lacs. This Registration was presented forregistration before the Stamp Duty authority. 3. The assessee has not transferred any immovableproperty but has transferred the right of purchase ofimmovable property. The assessee neither received thepossession of property nor has any control beenacquired on the property. 4.Section 50C is applicable in respect of transfer ofcapital asset being land or building or both while in theinstant case the assessee has neither transferred any landnor transferred any building. 5.The assessee has not presented the agreementexecuted in favour of M/s. Rising Build Estate Ltd. forregistration before the Stamp Duty Authority to assess oradopt any value of the transaction. Hence, Section 50C isnot applicable. 6.Section 50C is a fiction made in the Act for adoptionof value in certain specific cases. The fiction cannot be readin wider sense. No value is adopted or accepted by Stamp Duty Authority.Therefore, the provisions of Section 50C is not applicable.It was further argued that capital gain is not chargeable inin case the asset which is transferred has no cost at all.” 5.He has taken to us the observations made by theTribunal in para 2.6 2.8 and 2.9 which are as under:- 5.The assessee has not presented the agreementexecuted in favour of M/s. Rising Build Estate Ltd. forregistration before the Stamp Duty Authority to assess oradopt any value of the transaction. Hence, Section 50C isnot applicable. 6.Section 50C is a fiction made in the Act for adoptionof value in certain specific cases. The fiction cannot be readin wider sense. No value is adopted or accepted by Stamp Duty Authority.Therefore, the provisions of Section 50C is not applicable.It was further argued that capital gain is not chargeable inin case the asset which is transferred has no cost at all.” 5.He has taken to us the observations made by theTribunal in para 2.6 2.8 and 2.9 which are as under:- “2.6We have heard both the parties. The copy of generalpower of attorney is available at pages 12 to 14 of paperbook filed by the ld. AR. As per this general power ofattorney, the assessee was given authority to get differentactions executed on behalf of the owner .The genera powerof attorney was authorized to apply for approval u/s 90Band was also given authority to look after the land and toget NOC from JDA and to get the patta issued from JDA. Itis true that general power was executed on stamp paper ofRs.500/-. The Sub-Registrar registered this power ofattorney at Rs.1,07,800/- against stamp duty of Rs.500/-.This general power of attorney has been cancelled videcancellation deed dated 03.01.2007. The copy of thiscancellation is available at pages 15 to 20 of the paperbook. In the cancellation deed, it is not mentioned thatgeneral power of attorney has entered into an agreementfor sale of land with M/s. Rising Build Estate Ltd. The copyof sale agreement is available at pages 1 to 4 of the paper book. The agreement has been made on 13.11.2006. In thisagreement, it is mentioned that the assessee has sold theland which he has purchased. In this agreement, it is statedthat the assessee has purchased the land throughagreement and has also obtained the possession. Theagreement with M/s. Rising Build Estate Ltd. by theassessee is not in the capacity of general power of attorneyholder but has entered into an agreement as a person whohas purchased the land through agreement for purchase ofland. From these, it is clear that the assessee hastransferred the rights in land and building and we are notinclined to accept that the assessee has not transferred theimmovable property. Section 50C has been amended by theFinance Act, 2009 and the word ‘assessable’ has beenincluded w.e.f. 1-10-2009. The memo explaining provisionof Finance (No.2) Bill, 2009 (refer to 314 ITR 214 St.)states that the word ‘assessable’ has been added so that thetransactions which are executed through agreement to sellpower of attorney are covered u/s 50C of the Act. It will beuseful to reproduce the relevant portion from the memoexplaining the provisions of Finance (No.2) Bill, 2009. “The existing provisions of Section 50C provide tht wherethe consideration received or accruing as a result of thetransfer of a capital asset, being land or building or both, isless than the value adopted or assessed by an authority of aState Government (stamp valuation authority) for thepurpose of payment of stamp duty in respect of suchtransfer, the value so adopted or assessed shall be deemedto be the full value of the consideration received or accruingas a result of such transfer for computing capital gain.However, the present scope of the provisions does notinclude transactions which are not registered with stampduty authority, and executed through agreement to sell orpower of attorney. “The existing provisions of Section 50C provide tht wherethe consideration received or accruing as a result of thetransfer of a capital asset, being land or building or both, isless than the value adopted or assessed by an authority of aState Government (stamp valuation authority) for thepurpose of payment of stamp duty in respect of suchtransfer, the value so adopted or assessed shall be deemedto be the full value of the consideration received or accruingas a result of such transfer for computing capital gain.However, the present scope of the provisions does notinclude transactions which are not registered with stampduty authority, and executed through agreement to sell orpower of attorney. With a view to preventing the leakage of revenue, itis proposed to amended the Section 50C so as to providethat where the consideration received or accruing as aresult of transfer of a capital asset, being land or building orboht is less than the value adopted or assessed orassessable by an authority of a State Government for thepurpose of payment of stamp duty in respect of suchtransfer, the value so adopted or assessed or assessableshall be deemed to be the full value of the considerationreceived or accruing as a result of such transfer forcomputing capital gain. Further, it is proposed to insert a new Explanation soas 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 transactionsundertaken on or after such date;” 2.8The Jaipur Bench had occasion to consider theapplicability of Section 50C in the case of transfer of landwhich has not registered. The Tribunal vide order dated08.04.2011 in ITA No.1356/JP/2010 has held that Section50C will not be applicable when transaction has not beenregistered with Stamp Duty Authority. It will be useful toreproduce para 2.4 of the Tribunal in the case of ITO Vs.Shri Shailendra Soni. “2.4We have heard both the parties. During thecourse of hearing before us, the Ld. AR stated that theissue under reference is covered by the order or theTribunal in ITA No.42/JP/2010 dated 08.06.2010. The Ld.AR filed the copy of the order. It will be useful toreproduce para 5 of the order dated 8[th] June, 2010 in thecase of Shri Dinesh Kumar Khatoria. 2.8The Jaipur Bench had occasion to consider theapplicability of Section 50C in the case of transfer of landwhich has not registered. The Tribunal vide order dated08.04.2011 in ITA No.1356/JP/2010 has held that Section50C will not be applicable when transaction has not beenregistered with Stamp Duty Authority. It will be useful toreproduce para 2.4 of the Tribunal in the case of ITO Vs.Shri Shailendra Soni. “2.4We have heard both the parties. During thecourse of hearing before us, the Ld. AR stated that theissue under reference is covered by the order or theTribunal in ITA No.42/JP/2010 dated 08.06.2010. The Ld.AR filed the copy of the order. It will be useful toreproduce para 5 of the order dated 8[th] June, 2010 in thecase of Shri Dinesh Kumar Khatoria. “5.We have heard both the parties. Section 50C isapplicable when consideration received or accruing is aresult of transfer of capital asset being land or building orboth. The word capital asset is defined in Section 2(14) ofthe I.T. Act and according to which capital assets meansproperty of any kind held by an assessee. The assesseeentered into purchase agreement for purchase ofproperty. The assessee sold such agreements. Thus whatthe assessee has transferred is his right to purchase plotsas per agreement. Section 50C is applicable whenconsideration received or accruing is as per result oftransfer of capital asset being land or building or both.Section 50C is a deeming provision which incorporates alegal fiction to adopt the stamp duty value as fullconsideration for transfer of capital asset being andbuilding. The legal fiction cannot extend beyond thepurpose for which it is enacted. Hence the legal fictioncreated in Section 50C cannot be applied in respect oftransfer of capital asset other than land or buildingincluding the rights in land and building just like tenancyright. In the instant case, the assessee has not receivedconsideration on account of transfer of land and buildingbut has received consideration in respect of tranfer ofpurchase agreements. The Jaipur Bench in the case ofVijay Luxmi Dhadia, 20 DTR 365 held that Section 50Cwill not apply if the transfer document is not stamped.The plots are still to be registered with Stamp Valuationauthorities. The Ld. CIT(A) has clearly observed that theword ‘assessable’ has been inserted in Section 50C of theIncome Tax Act by the Finance (No.2) Act, 2009 w.e.f.01.10.2009. The consideration as adopted by the stampvaluation authority can be taken as full consideration ifthe value adopted by the stamp valuation authority isassessable w.e.f. 1.10.2009. The assessment year under reference is 2006-07 and therefore, the amendedprovisions of Section 50C is not applicable. In the memoexplaining the provisions of Finance (No.2) Act, 2009, itwas mentioned as under for making the amendment inSection 50C of the Income Tax Act. “The existing provisions of Section 50C provide thatwhere the consideration received or accruing as a resultof the transfer of a capital asset, being land or buildingor both, is less than the value adopted or assessed by anauthority of a State Government (Stamp valuationauthority) for the purpose of payment of stamp duty inrespect of such transfer, the value so adopted orassessed shall be deemed to be the full value of theconsideration received or accruing as a result of suchtransfer for computing capital gain. However the presentscope of the provisions does not include transactionswhich are not registered with stamp duty authority, andexecuted through agreement to sell or power of attorney. “The existing provisions of Section 50C provide thatwhere the consideration received or accruing as a resultof the transfer of a capital asset, being land or buildingor both, is less than the value adopted or assessed by anauthority of a State Government (Stamp valuationauthority) for the purpose of payment of stamp duty inrespect of such transfer, the value so adopted orassessed shall be deemed to be the full value of theconsideration received or accruing as a result of suchtransfer for computing capital gain. However the presentscope of the provisions does not include transactionswhich are not registered with stamp duty authority, andexecuted through agreement to sell or power of attorney. With a view to preventing the leakage of revenue, it isproposed to amend the Section 50C so as to provide thatwhere the consideration received or accruing as a resultof transfer of a capital asset, being land or building orboth is less than the value adopted or assessed orassessable by an authority of a State Government for thepurpose of payment of stamp duty in respect of suchtransfer, the value so adopted or assessed or assessableshall be deemed to be the full value of the considerationreceived or accruing as a result of such transfer forcomputing capital gain. Further, it is proposed to insert a newExplanation so as to clarify the meaning of the term“assessable”.This amendment will take effectfrom 1[st] October, 2009 as shall accordingly apply inrelation to transactions undertaken on or after such date.”Hence in the instant case, the AO was not justified inapplying the provisions of Section 50C of the I.T. Act forincreasing the short terms capital gain. The Ld. CIT(A)was justified in deleting the increase in the value of shortterm capital gain. It is not the case of the Revenue thatthe assessee has received more consideration as shown inthe agreement. In case there was any evidence to showthat the consideration received by the assessee was morethan the consideration mentioned in the agreement thenthe Revenue could have increased the short term capitalgain. On the basis of Section 50C of the Act, the AO wasnot justified in enhancing the short term capital gain. Wetherefore, hold that the Ld. CIT(A) was justified indeleting the enhancement in the quantum of short termcapital gain and accordingly the appeal of the Revenue isdismissed.” 2.9The assessee has raised the cross objection. Inthe C.O., it is mentioned that the ld. CIT(A) is notjustified in holding that transaction is regarded astransfer attracting Section 50C of the Act. We hadalready discussed this issue. We had already held that itis case of transfer of land. Section 50C of the Act is notapplicable because the substituted word “assessable” isapplicable in respect of transfer of transaction after 1-10-2009. Thus the C.O. of the assessee is partly allowed.” 6. He contended that the Tribunal has committed seriouserror in interpreting Section 50(C) and has travelledbeyond the observations which are made by the CIT(A)in para 2.3. Same reads thus:- “2.3I have carefully considered the facts of the caseand submissions of Ld. AR. However, on perusal of therelevant material on record, In find that the contentions/submissions/ arguments of the Ld. AR, raised in supportof this ground of appeal, are not fully acceptable. In thisregard, the following observations are made. 6. He contended that the Tribunal has committed seriouserror in interpreting Section 50(C) and has travelledbeyond the observations which are made by the CIT(A)in para 2.3. Same reads thus:- “2.3I have carefully considered the facts of the caseand submissions of Ld. AR. However, on perusal of therelevant material on record, In find that the contentions/submissions/ arguments of the Ld. AR, raised in supportof this ground of appeal, are not fully acceptable. In thisregard, the following observations are made. (i) As far as the claim of Ld. AR that the purchase andsale of agricultural land, in question, by the appellant isonly in the nature of a finance arrangement, notinvolving real purchase and sale, is concerned, I find thatthe said claim of Ld. AR is contrary to the facts onrecord. In this regard, it is seen that the appellantpurchased agricultural land, measuring 1.80 Hectares(located at village Murlipura, Tehsil Sanganer), Jaipur,from Smt. Pushpa Kedia and Smt. Gulab Devi (sellers),for 62,70,975/, and also passed on the sale considerationto the said sellers, as well as, obtained possession of thatproperty. The fact that the appellant had actuallypurchased the aforesaid property from Smt. Pushpa DeviKedia and Smt. Gulab Devi is evident from the contentsof para 2 on page 2 of the sale agreement dated13.11.2006, entered into between the appellant and M/sRising Build Estate Pvt. Ltd., Jaipur, wherein the appellanthas confirmed to have purchased, and also to have takenpossession, of the aforesaid property from Smt. PushpaKedia and Smt. Gulab Devi. Therefore, the saidtransaction has to be treated as “transfer” in terms of theprovisions of S.2(47) of the I.T. Act. Thus, the aforesaidtransaction was found to be in the nature of purchase ofland and, hence, the contention of Ld. AR that the saidtransaction was only a part of a financial arrangement,and not actual purchase, is rejected. However, it isobserved that at the time of the registration of theaforesaid transaction of agricultural land (purchase bythe appellant/sale by Smt. Pushpa Kedia and Smt. Gulab Devi), the value the property was taken by the SubRegistrar at Rs. 1,35,00,000/- for stamp duty purposes.Therefore, as the appellant was a “buyer” in thattransaction, the provisions of S.50C of the I.T. Act werenot applicable in his case. However, as the provisions ofS.50C of the Act are applicable in the case of the “seller”,the applicability of S.50C of the Act was required to beconsidered in the hands of “the sellers”, i.e. Smt. PushpaDevi Kedia and Smt. Gulab Devi. Devi), the value the property was taken by the SubRegistrar at Rs. 1,35,00,000/- for stamp duty purposes.Therefore, as the appellant was a “buyer” in thattransaction, the provisions of S.50C of the I.T. Act werenot applicable in his case. However, as the provisions ofS.50C of the Act are applicable in the case of the “seller”,the applicability of S.50C of the Act was required to beconsidered in the hands of “the sellers”, i.e. Smt. PushpaDevi Kedia and Smt. Gulab Devi. (ii) Further, it is observed that the appellant has sold theaforementioned agricultural land, to M/s Rising BuildEstates Pvt. Ltd., Jaipur for Rs.70,00,000/-, videagreement for sale deed dated 13.11.2006. On perusalof the said agreement, it is noticed that the appellanthad received the entire sale consideration and had alsohanded over the possession of the said property to thebuyer on 13.11.2006. Therefore, the said transaction isalso to be treated as “transfer” in terms of the provisionof S.2(47) of the I.T. Act. Hence, the contention of Ld.AR that the said transaction was merely a part of afinancial arrangement, and not actual sale, is rejected.However, it is noted that there is no dispute regardingthe fact that the said sale agreement dated 13.11.2006was not registered and, therefore, the concernedRegistering Authority had not determined the value ofthe sold property for the Stamp Duty purposes, withreference to the aforesaid sale agreement dated13.11.2006 (wherein the appellant is a “seller”). Hence,there is substance in the argument of Ld. AR that theprovisions of S.50C of the Act were not applicable insuch situation, because where the Registering Authorityhad not determined the value of the sold property, theactual sale amount (as per the sale agreement) cannotbe substituted by some other amount. It is observedthat the said contention of ld.AR is supported by thedecisions of Hon’ble ITAT Jaipur Bench in the case of ITOv/s Sh. Anurag Mishra, ITA No.878/JP/2007, dated20.06.2008 and of Hon’ble ITAT Jodhpur Bench, in thecase of Navneet Kumar Thakkar v/s ITO, 112 TTJ 76.Therefore, it is to be held that Ld. AO was not justifiedin applying the provisions of S.50 of the I.T. Act inrespect of the aforementioned sale of property by theappellant (made vide sale agreement dated 13.11.2006)to M/s Real Build Estates Pvt. Ltd., Jaipur and thereby insubstituting the sale value shown at Rs. 70,00,000/- inthe sale agreement dated 13.11.2006 by Rs.1,35,00,000/-.” 7. He contended that the Tribunal has committedserious error in holding that the transaction under Section 50(C) was assessable which has now beenincorporated in the amendment Act of 2009 w.e.f.1.10.2009 and he has wrongly invoked the same andthe benefits are wrongly granted in favour of theassessee. 8. Counsel for the respondent contended that theargument put forward by the department ismisconceived, inasmuch as the transaction which istaken place was through power of attorney holder. Theproperty was never transferred. Even before initiatingproceeding under Section 50(C), the assessee hasalready paid the short term capital gain to the tune ofRs.10 lacs and therefore the assessment which wasmade on complete consideration is without jurisdictionand therefore while interpreting the assessment, CIT(A)has rightly observed in para 2.3 which was reproducedhereinabove and correctly interpreted the provisionswhile relying on the decision of the Jaipur Bench in thecase of ITO Vs. shri Anurag Mishra (ITANo.878/JP/2007) dated 20[th] June, 2008 and has rightlyheld the value of the property determined as 1.35crores. 9. He has further contended that the Tribunal whileconsidering the case of assessee in cross objection hastaken into consideration the provisions of Section 50(C)and in view of the decision rendered by the MadrasHigh Court reported in (2013) 32 Taxmann.com274(Madras) has held in para 7,8,9 and 10 which readsas under:- 9. He has further contended that the Tribunal whileconsidering the case of assessee in cross objection hastaken into consideration the provisions of Section 50(C)and in view of the decision rendered by the MadrasHigh Court reported in (2013) 32 Taxmann.com274(Madras) has held in para 7,8,9 and 10 which readsas under:- “7.Learned counsel for the assessee placed a circular inCircular No.5/2010/(F.No.142/13/2010-SO(TPL)) dated03.06.2010 issued by the Board and submitted that asper the circular, it is made clear that the amendmentmade by the Finance (No.2) Act, 2009 is onlyprospective in nature and cannot be appliedretrospectively. 8.We have perused the above circular. It is stated thereinthat the scope of the provisions does not includetransaction which are not registered with stamp dutyvaluation authority and executed through agreement tosell or power of attorney. Consequently, it is made cleartherein that the amendments have been made applicablewith effect from 01.10.2009 and therefore, they willapply only in relation to transaction undertaken on orafter such date. The relevant portion of the circular isextracted hereunder: "23.4. Applicability:- These amendments have been madeapplicable with effect from 1st October, 2009 and willaccordingly, apply in relation to transactions undertaken onor after such date." 9.Learned counsel for the Revenue is not disputing aboutthe existence of such circular issued by the Board. If theBoard has issued a circular clarifying the applicabilityof Section 50C in pursuance of the amendment madeby Amendment Act 2 of 2009, we fail to understand as tohow the Revenue can canvass the same issue in this casewhich in effect is against the circular issued by the Board.Certainly, the Revenue is bound by the circular issued bythe Board. At this juncture, it is pertinent to note that in adecision made in the case of State of Tamil Nadu andanother Vs. India Cements Ltd. and another reported in(2011) 40 VST 225 (SC), the Honourable Supreme Courthas held that the circulars issued by the Revenue arebinding on the Department and therefore, they cannotrepudiate that they are inconsistent with the statutoryprovisions. Relevant paragraphs 21 and 22 are extractedhereunder: "21.It is manifest from the highlighted portion of thecircular that as per the clarification issued by theCommissioner of Commercial Taxes, in exercise of thepower conferred on him under Section 28A of the TNGSTAct, the benefit of the sales tax deferral scheme would beavailable to a dealer from the date of reaching of BPV orBSV, whichever is earlier, as is pleaded on behalf of the firstrespondent. It is trite law that circulars issued by theRevenue are binding on the departmental authorities andthey cannot be permitted to repudiate the same on theplea that it is inconsistent with the statutory provisions or itmitigates the rigour of the law. 22.In Paper Products Ltd. Vs. Commissioner of CentralExcise ((2001) 247 ITR 128 SC: (1999) 7 SCC 84), whileinterpreting Section 37B of the Central Excise Act, 1944,which is in pari materia with Section 28A of the TNGST Act,this Court had held that the circulars issued by the CentralBoard of Excise and Customs are binding on theDepartment and the Department is precluded fromchallenging the correctness of the said circulars, even onthe ground of the same being inconsistent with thestatutory provision. It was further held that theDepartment is precluded from the right to file an appealagainst the correctness of the binding nature of thecirculars and the Department's action has to be consistentwith the circular which is in force at the relevant point oftime." 22.In Paper Products Ltd. Vs. Commissioner of CentralExcise ((2001) 247 ITR 128 SC: (1999) 7 SCC 84), whileinterpreting Section 37B of the Central Excise Act, 1944,which is in pari materia with Section 28A of the TNGST Act,this Court had held that the circulars issued by the CentralBoard of Excise and Customs are binding on theDepartment and the Department is precluded fromchallenging the correctness of the said circulars, even onthe ground of the same being inconsistent with thestatutory provision. It was further held that theDepartment is precluded from the right to file an appealagainst the correctness of the binding nature of thecirculars and the Department's action has to be consistentwith the circular which is in force at the relevant point oftime." 10.Before proceeding with the matter, it will not be outof place to mention here that those transactions which areshown as transaction under Section 50© [Explanation-2],even if taken into consideration, the transaction which takeplace as short term capital gain in total consideration of thepayment after sale agreement was determined as Rs.1.35crores and it cannot be assessed. Therefore, both theauthorities have committed no error in reaching theconclusion. 11.Neither the stamp authority has assessed thecomplete charges because transaction has not taken place,and in our considered opinion, the valuation which wasdetermined by the AO is nothing but harassment to thehonest tax payers of a transaction which has been rightlyreversed by the CIT(A) and confirmed by the Tribunal.” In view of above, issue is answered in favour of the assessee and against the department. The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/73