The Commissioner Of Income Tax, Ajmer v. M/S Pramod Chand Soni Seth Mool Chand Soni, Marg, Anoop Chowk Ajmer

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 172 / 2012 The Commissioner of Income Tax, Ajmer ----Appellant Versus M/s Pramod Chand Soni Seth Mool Chand Soni, Marg, Anoop Chowk Ajmer. ----Respondent _____________________________________________________ For Appellant(s) : Ms. Parinitoo JainFor Respondent(s) : Mr. Mahendra Gargieya _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 19/09/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal of the assessee reversing the order ofAO as well as CIT (A). 2.This Court while admitting the appeal framed the following substantial questions of law: “(1) Whether the Tribunal was legally justified inreversing the findings of the CIT(A) and deleting theaddition of Rs. 1,49,93,459/- made on account ofcapital gains computed u/s 48 by adopting the fullvalue of consideration as adopted by the Stampvaluation Authority in pursuance of provisions ofsection 50C(1) 2. Whether the Tribunal was legally justified inreversing the findings of the CIT(A) and taking thefull value of consideration for Rs. 20.00 lac withoutany basis for computing the capital gains u/s 48,instead of the value assessed by the Stamp Valuation Authority when the Tribunal was of the view thatmatter should be restored to the file of AO to send itto the DVO?” 3.Counsel for the appellant contended that the Tribunal hasseriously committed an error in reversing the view taken by theCIT (A) which has confirmed the view taken by the A.O. on theissue that the price which has been fixed was changed on the dateon which the transaction was valid, the DLC price was revised on20.11.2006 and the document was executed on 8.1.2007,therefore, the Tribunal has assessed on the basis of new DLC pricefixed by the Department. 4.However, it is contended by counsel for the respondent thatwhile considering the matter, the Tribunal held as under: “6.2. We have considered the written submissions ofboth the parties and rejoinder of the assesseealongwith the order of the AO as well as the order ofCIT(A) and various case laws. This is an undisputedfact that the agreement to sale was executed on07.09.2006foratotalconsiderationofRs.13,81,00,000/-. The buyer requested to hand overthe possession of the land because it wanted to startconstruction work and development. The custodianwith whom the possession of the property was lyinghanded over the possession. The buyer entered into acontract of development. The development bill wasraised. All these facts have been narrated at page 1 ofthe written submissions filed on behalf of theassessee and reproduced somewhere above in theorder. From these facts, it is amply proved thatrequirement of provisions of section 2(47)(v) of theAct, has been satisfied as the possession of the plot isgiven on 4.10.2006. The sale deed was executed on08.01.2007. The possession of land was alreadyhanded over. The work was started already. Ampleproof has been placed on record, which has been seenby us. The bill has been raised by M/s. KshitizEngineers India, Jaipur, dated 25.09.2006, who haveconduced standard penetration test for safe bearingcapacity for and on behalf of the buyer. The custodianof the property i.e. M/s. M.I.C. Pvt. Ltd. has handedover the possession by letter dated 02.10.2006, acopy of which is placed at page E- 4/50. Letter of work contract is also placed at page E-4/52 of thepaper book. Copy of bill placed at page E-4/53 of thepaper book. The payment is also made by the buyer,which is mentioned in the receipt placed at page E-4/54 of the paper book. It is further seen that LocalBody as revised circle rates w.e.f. 20.11.2006, a copyof certificate issued by the competent authority isplaced at page E-10/107-108 of the paper book. Theprevious circle rates i.e. before revising the ratesw.e.f. 20.11.2006 were @ Rs.2500/- per yd toRs.3000/- of the property in the area where theproperty of the assessee is situated. A copy of theserates is placed at page E-9/106 of the paper book.The competent authority revised rates w.e.f.20.11.2006 @ Rs.4000/- per meter and on thesebasis, the sale deed is executed. The assessee hassold the property on the basis of circle rate beforerevising the same i.e. on 20.11.2006, as the propertywas sold by agreement dated 07.09.2006. Theprovisions of section 2(47)(v), which have beenmentioned in the written submissions at page 5 andhave been reproduced somewhere above in this order.The provisions clearly state that any transfer involvingthe allowing of the possession of any immovableproperty to be taken or retained in part performanceof a contract of the nature referred to in section 53Aof the Transfer of Property Act, 1882. Under theIncome Tax Act, it has been mentioned that anytransaction, whether by way of becoming a memberof, or acquiring shares in, a co-operative society,company or other association of persons or by way ofany agreement or any arrangement or in any othermanner whatsoever) which has the effect oftransferring, or enabling the enjoyment of, anyimmovable property. 6.3. The Hon’ble Gujarat High Court in the case of CITvs. Hormasji Mancharji Vaid (2001) 118 Taxman 276(Guj)/(FB) has clearly held that when the transfer ofdocument is executed and the property passes andmerely because there is no registration certificate, thestate coffers should not suffer. If the view ispropounded that only on registration the act oftransfer will be complete, then in that case, if thedocument is not registered, though the assessee willbe enjoying the property, he will say that is not liableto pay the tax. But that is not the intention of thelegislature. The word ‘transfer’ as indicated in theincome tax act is required to be considered and not‘sale’ as indicated in the Transfer of Property Act. 6.4. In various other cases, decided by the Hon’bleHigh Courts and various Benches of the Tribunal, hasgiven similar findings. Some of the cases have beenmentioned in written submissions on pages 5 & 6, which are reproduced somewhere above in this order.6.5. We further noted that even under section 50C(1),it is clearly mentioned that where the considerationreceived or accruing as a result of the transfer by anassessee of a capital asset, being land or building orboth…….. From the language of section 50C it is alsoproved that property should be transferred. In thepresent case, the date of transfer is 04.10.2006. Thesale agreement was entered on 07.09.2006. The saleconsideration is not less than the DLC rate prevalentat that time, that was Rs.2500 to Rs.3000 per yd. Thesale deed was executed on 08.01.2007 on the basis ofDLC rates prevalent at that time, which were modifiedby the appropriate authority by letter dated20.11.2006 much after the sale agreement andpossession handed over. Therefore, in our consideredview, once the possession was already given on thebasis of sale agreement then provision of section50C(1) of the Act, are not applicable as held byvarious Benches of the Tribunal. Various casesconsidered by the Jaipur Bench and Jodhpur Bench ofITAT are mentioned in para 26 of the writtensubmissions, which are reproduced somewhere abovein this order.” 4.1He relied on the following judgments:- 4.1He relied on the following judgments:- (I) COMMISSIONER OF INCOME TAX, JAIPUR-II ,JAIPUR Versus Shri Sher Singh Sunda, AnandNagar, Sikar, DB ITA No. 328/2011. 5. He has taken to us the observations made by theTribunal in para 2.6 2.8 and 2.9 which are as under:-“2.6 We have heard both the parties. The copy ofgeneral power of attorney is available at pages 12 to14 of paper book filed by the ld. AR. As per thisgeneral power of attorney, the assessee was givenauthority to get different actions executed on behalfof the owner .The genera power of attorney wasauthorized to apply for approval u/s 90B and was alsogiven authority to look after the land and to get NOCfrom JDA and to get the patta issued from JDA. It istrue that general power was executed on stamp paperof Rs.500/-. The Sub-Registrar registered this powerof attorney at Rs.1,07,800/- against stamp duty ofRs.500/-. This general power of attorney has beencancelled vide cancellation deed dated 03.01.2007.The copy of this cancellation is available at pages 15to 20 of the paper book. In the cancellation deed, it isnot mentioned that general power of attorney hasentered into an agreement for sale of land with M/s.Rising Build Estate Ltd. The copy of sale agreement is available at pages 1 to 4 of the paper book. Theagreement has been made on 13.11.2006. In thisagreement, it is mentioned that the assessee has soldthe land which he has purchased. In this agreement,it is stated that the assessee has purchased the landthrough agreement and has also obtained thepossession. The agreement with M/s. Rising BuildEstate Ltd. by the assessee is not in the capacity ofgeneral power of attorney holder but has entered intoan agreement as a person who has purchased theland through agreement for purchase of land. Fromthese, it is clear that the assessee has transferred therights in land and building and we are not inclined toaccept that the assessee has not transferred theimmovable property. Section 50C has been amendedby the Finance Act, 2009 and the word ‘assessable’has been included w.e.f. 1-10-2009. The memoexplaining provision of Finance (No.2) Bill, 2009 (referto 314 ITR 214 St.) states that the word ‘assessable’has been added so that the transactions which areexecuted through agreement to sell power of attorneyare covered u/s 50C of the Act. It will be useful toreproduce the relevant portion from the memoexplaining the provisions of Finance (No.2) Bill, 2009.“The existing provisions of Section 50C provide thtwhere the consideration received or accruing as aresult (6 of 13) of the transfer of acapital asset, being land or building or both, is lessthan the value adopted or assessed by an authority ofa State Government (stamp valuation authority) forthe purpose of payment of stamp duty in respect ofsuch transfer, the value so adopted or assessed shallbe deemed to be the full value of the considerationreceived or accruing as a result of such transfer forcomputing capital gain. However, the present scope ofthe provisions does not include transactions which arenot registered with stamp duty authority, andexecuted through agreement to sell or power ofattorney. With a view to preventing the leakage ofrevenue, it is proposed to amended the Section 50Cso as to provide that where the consideration receivedor accruing as a result of transfer of a capital asset,being land or building or boht is less than the valueadopted or assessed or assessable by an authority ofa State Government for the purpose of payment ofstamp duty in respect of such transfer, the value soadopted or assessed or assessable shall be deemed tobe the full value of the consideration received oraccruing as a result of such transfer for computingcapital gain. Further, it is proposed to insert a newExplanation so as to clarify the meaning of the term“assessable”. This amendment will take effect from1st October, 2009 and shall accordingly apply inrelation to transactions undertaken on or after such date;” 2.8 The Jaipur Bench had occasion to considerthe applicability of Section 50C in the case of transferof land which has not registered. The Tribunal videorder dated 08.04.2011 in ITA No.1356/JP/2010 hasheld that Section 50C will not be applicable whentransaction has not been registered with Stamp DutyAuthority. It will be useful to reproduce para 2.4 ofthe Tribunal in the case of ITO Vs. Shri ShailendraSoni. “2.4 We have heard both the parties. During thecourse of hearing before us, the Ld. AR stated thatthe issue under reference is covered by the order orthe Tribunal in ITA No.42/JP/2010 dated 08.06.2010.The Ld. AR filed the copy of the order. It will be usefulto reproduce para 5 of the order dated 8th June, 2010in the case of Shri Dinesh Kumar Khatoria. “5. Wehave heard both the parties. Section 50C is applicablewhen consideration received or accruing is a result oftransfer of capital asset being land or building or both.The word capital asset is defined in Section 2(14) ofthe I.T. Act and according to which capital assetsmeans property of any kind held by an assessee. Theassessee entered into purchase agreement forpurchase of property. The assessee sold suchagreements. Thus what the assessee has transferredis his right to purchase plots (7 of 13) as 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 incorporatesa legal 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 liketenancy right. In the instant case, the assessee hasnot received consideration on account of transfer ofland and building but has received consideration inrespect of tranfer of purchase agreements. The JaipurBench in the case of Vijay Luxmi Dhadia, 20 DTR 365held that Section 50C will not apply if the transferdocument is not stamped. The plots are still to beregistered with Stamp Valuation authorities. The Ld.CIT(A) has clearly observed that the word ‘assessable’has been inserted in Section 50C of the Income TaxAct by the Finance (No.2) Act, 2009 w.e.f.01.10.2009. The consideration as adopted by thestamp valuation authority can be taken as fullconsideration if the value adopted by the stampvaluation authority is assessable w.e.f. 1.10.2009.The assessment year under reference is 2006-07 andtherefore, the amended provisions of Section 50C isnot applicable. In the memo explaining the provisions of Finance (No.2) Act, 2009, it was mentioned asunder for making the amendment in Section 50C ofthe Income Tax Act. “The existing provisions ofSection 50C provide that where the considerationreceived or accruing as a result of the transfer of acapital asset, being land or building or both, is lessthan the value adopted or assessed by an authority ofa State Government (Stamp valuation authority) forthe purpose of payment of stamp duty in respect ofsuch transfer, the value so adopted or assessed shallbe deemed to be the full value of the considerationreceived or accruing as a result of such transfer forcomputing capital gain. However the present scope ofthe provisions does not include transactions which arenot registered with stamp duty authority, andexecuted through agreement to sell or power ofattorney. With a view to preventing the leakage ofrevenue, it is proposed to amend the Section 50C soas to provide that where the consideration received oraccruing as a result of transfer of a capital asset,being land or building or both is less than the valueadopted or assessed or assessable by an authority ofa State Government for the purpose of payment ofstamp duty in respect of such transfer, the value soadopted or assessed or assessable shall be deemed tobe the full value of the consideration received oraccruing as a result of such transfer for (8 of 13) computing capital gain. Further, it isproposed to insert a new Explanation so as to clarifythe meaning of the term “assessable”. Thisamendment will take effect from 1st October, 2009 asshall accordingly apply in relation to transactionsundertaken on or after such date.” Hence in theinstant case, the AO was not justified in applying theprovisions of Section 50C of the I.T. Act for increasingthe short terms capital gain. The Ld. CIT(A) wasjustified in deleting the increase in the value of shortterm capital gain. It is not the case of the Revenuethat the assessee has received more consideration asshown in the agreement. In case there was anyevidence to show that the consideration received bythe assessee was more than the considerationmentioned in the agreement then the Revenue couldhave increased the short term capital gain. On thebasis of Section 50C of the Act, the AO was notjustified in enhancing the short term capital gain. Wetherefore, hold that the Ld. CIT(A) was justified indeleting the enhancement in the quantum of shortterm capital gain and accordingly the appeal of theRevenue is dismissed.” 2.9 The assessee has raisedthe cross objection. In the C.O., it is mentioned thatthe ld. CIT(A) is not justified in holding thattransaction is regarded as transfer attracting Section50C of the Act. We had already discussed this issue. We had already held that it is case of transfer of land.Section 50C of the Act is not applicable because thesubstituted word “assessable” is applicable in respectof transfer of transaction after 1-10-2009. Thus theC.O. of the assessee is partly allowed.” We had already held that it is case of transfer of land.Section 50C of the Act is not applicable because thesubstituted word “assessable” is applicable in respectof transfer of transaction after 1-10-2009. Thus theC.O. of the assessee is partly allowed.” 9. He has further contended that the Tribunal whileconsidering the case of assessee in cross objectionhas taken into consideration the provisions of Section50(C) and in view of the decision rendered by theMadras High Court reported in (2013) 32Taxmann.com 274(Madras) has held in para 7,8,9 and10 which reads as under:- “7.Learned counsel for theassessee placed a circular in Circular No.5/2010/(F.No.142/13/2010-SO(TPL)) dated 03.06.2010 issuedby the Board and submitted that as per the circular, itis made clear that the amendment made by theFinance (No.2) Act, 2009 is only prospective in natureand cannot be applied retrospectively. 8.We haveperused the above circular. It is stated therein thatthe scope of the provisions does not includetransaction which are not registered with stamp dutyvaluation authority and executed through agreementto sell or power of attorney. Consequently, it is madeclear therein that the amendments have been madeapplicable with effect from 01.10.2009 and therefore,they will apply only in relation to transactionundertaken on or after such date. The relevantportion of the circular is extracted hereunder: "23.4.Applicability:- These amendments have been madeapplicable with effect from 1st October, 2009 (12 of13) and will accordingly, apply inrelation to transactions undertaken on or after suchdate." 9.Learned counsel for the Revenue is notdisputing about the existence of such circular issuedby the Board. If the Board has issued a circularclarifying the applicability of Section 50C in pursuanceof the amendment made by Amendment Act 2 of2009, we fail to understand as to how the Revenuecan canvass the same issue in this case which ineffect is against the circular issued by the Board.Certainly, the Revenue is bound by the circular issuedby the Board. At this juncture, it is pertinent to notethat in a decision made in the case of State of TamilNadu and another Vs. India Cements Ltd. and anotherreported in (2011) 40 VST 225 (SC), the HonourableSupreme Court has held that the circulars issued bythe Revenue are binding on the Department andtherefore, they cannot repudiate that they areinconsistent with the statutory provisions. Relevantparagraphs 21 and 22 are extracted hereunder: "21.Itis manifest from the highlighted portion of the circularthat as per the clarification issued by the Commissioner of Commercial Taxes, in exercise of thepower conferred on him under Section 28A of theTNGST Act, the benefit of the sales tax deferralscheme would be available to a dealer from the dateof reaching of BPV or BSV, whichever is earlier, as ispleaded on behalf of the first respondent. It is tritelaw that circulars issued by the Revenue are bindingon the departmental authorities and they cannot bepermitted to repudiate the same on the plea that it isinconsistent with the statutory provisions or itmitigates the rigour of the law. 22.In Paper ProductsLtd. Vs. Commissioner of Central Excise ((2001) 247ITR 128 SC: (1999) 7 SCC 84), while interpretingSection 37B of the Central Excise Act, 1944, which isin pari materia with Section 28A of the TNGST Act,this Court had held that the circulars issued by theCentral Board of Excise and Customs are binding onthe Department and the Department is precludedfrom challenging the correctness of the said circulars,even on the ground of the same being inconsistentwith the statutory provision. It was further held thatthe Department is precluded from the right (13 of 13) to file an appeal against thecorrectness of the binding nature of the circulars andthe Department's action has to be consistent with thecircular which is in force at the relevant point of time." 10. Before proceeding with the matter, it will not beout of place to mention here that those transactionswhich are shown as transaction under Section 50©[Explanation-2], even if taken into consideration, thetransaction which take place as short term capitalgain in total consideration of the payment after saleagreement was determined as Rs.1.35 crores and itcannot be assessed. Therefore, both the authoritieshave committed no error in reaching the conclusion. 2. Commissioner of Income Tax vs. HormasjiMancharji Vaid, (2001) 250 ITR 0542 20. In our view, considering the aforesaid decisionsand the object of the Act, definition given in the Act isrequired to be taken into consideration. When thedocument is executed, the property passes andmerely because there is no registration certificate, theState coffers should not suffer. If the view propoundedthat only on registration, act of transfer will becomplete, then in that case, if the document is notregistered, though the assessee will be enjoying theproperty, he will say that he is not liable to pay thetax. But that is not the intention of the Legislature. In our opinion, the word 'transfer' as indicated in theIncome-tax Act is required to be considered and not'sale' as indicated in the Transfer of Property Act. Ifthe intention of the Legislature was different, thenthere would have been specific reference. Relevantprovision of clause (47) of section 2 is as under: Unless context otherwise requires, transfer is to beunderstood in the simple meaning as it is indicatedwhich includes sale, exchange or relinquishment ofthe asset or the extinguishment of any rights thereinor the compulsory acquisition thereof under any law.If the words are defined in the Act itself, then it is notproper to read the meaning of the similar words givenin another statute unless otherwise expresslyprovided. In the Income-tax Act, wherever Legislaturehas thought fit to have the meaning of the wordprovided in different statute, specific provision hasbeen made. In our opinion, therefore, 'transfer' asdefined in the Act is to be given simple meaning asindicated. Unless context otherwise requires, transfer is to beunderstood in the simple meaning as it is indicatedwhich includes sale, exchange or relinquishment ofthe asset or the extinguishment of any rights thereinor the compulsory acquisition thereof under any law.If the words are defined in the Act itself, then it is notproper to read the meaning of the similar words givenin another statute unless otherwise expresslyprovided. In the Income-tax Act, wherever Legislaturehas thought fit to have the meaning of the wordprovided in different statute, specific provision hasbeen made. In our opinion, therefore, 'transfer' asdefined in the Act is to be given simple meaning asindicated. There are various methods by which there can beavoidance of tax. The tax evaders always keep faith intheir counterparts. Even property is being transferredby merely executing special power of attorney on thestamp paper of Rs. 20 and the transfer deed is notexecuted as contemplated under the law. Thetransferor puts transferee in possession but in view ofthe document, namely, power of attorney executed bythe transferor, it is said that the transferee is not theowner of the property though for all practicalpurposes transferee acts as the owner, in view ofirrevocable power of attorney. By this method taxevaders are securing double benefits, i.e., avoidanceof income-tax and stamp duty. It seems thatconsidering various devices which the tax evaders areapplying, the Legislature, therefore, amended byinserting clauses in the definition of 'transfer' byclause (47) of section 2 which is as under: (47) 'transfer', in relation 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 theowner thereof into, or is treated by him as, stock-in- trade of a business carried on by him, such conversionor treatment; or (v) any transaction involving the following of thepossession of any immovable property to be taken orretained in part performance of a contract of thenature referred to in section 53A of the Transfer ofPropertyAct,1882(4of1882);or (vi) any transaction (whether by way of becoming amember of, or acquiring shares in, a co-operativesociety, company or other association of persons or byway of any agreement or any arrangement or in anyother manner whatsoever) which has the effect oftransferring, or enabling the enjoyment of, anyimmovableproperty. Explanation. -For the purposes of sub-clauses (v) and(vi), 'immovable property' shall have the samemeaning as in clause (d) of section 269UA. 22. In case of ownership, there is a transfer of capitalassets. This is a case of lease. The transferee was putin possession and was enjoying the property as alease holder. There cannot be different criteria fortransfer of capital asset. For the purpose of tax even ifdocument, i.e., conveyance is not executed but thetransferee exercises all the rights of the true owner,one cannot emphasize for the taxation purpose thatunless and until the deed of conveyance transferringthe rights in property is executed, the transferee isnot liable though did everything which is required foracquiring a property. As pointed out, vendor is notpermitted in law to dispossess or question the title ofthe vendee. Under the circumstances, our answerwould be that transfer of immovable property of thevalue exceeding Rs. 100 can be said to have beeneffected on the date of execution of the document. Inview of this answer, it is not necessary to answerfurther questions. 3. Smt. D. Kasturi vs. Commissioner of IncomeTax and Anr. (2010) 323 ITR 0040 3. Smt. D. Kasturi vs. Commissioner of IncomeTax and Anr. (2010) 323 ITR 0040 4. We have carefully considered the respectivesubmissions. In order that the doctrine of partperformance as contained in Section 53A of theTransfer of Property Act to be invoked, it is necessarythat the act or part performance must be such as notonly be referable to the contract of which partperformance is alleged, but be referable to no othertitle. The handing over of possession of agreement. Allthat is required is that an agreement in writing to be signed by the transferor which could be gathered fromthe evidence as will. The facts of this case wouldreveal that the agreement dated March 29, 1993,between the assessee and the agreement holder M/s.Chettinad Investments was with reference to thewhole property. Clause (1) of the agreementcontemplates that the vendor shall sell and thepurchaser shall purchase the property in question. Forthe execution of sale deed, a no objection certificate,from the competent authority under the Income TaxAct is necessary, as could be seen from Clause (4) ofthe agreement. Such a certificate was also obtained.Nevertheless, the assessee had not executed thenecessary sale deeds. The fact remains that theassessee had received the full sale consideration ofRs. 25,00,000 from M/s. Chettinad Investments,namely, the agreement holder even before the powerof attorney was executed. The contention of thelearned senior counsel for the assessee is that the actof the assessee in selling the portion of the propertyto third parties in subsequent years and executing thesale deeds in favour of such vendees by utilising thepower of attorney granted to the partners of the firmhas much relevance while considering the applicationof Section 53A of the Transfer of Property Act. In ouropinion, the said contention cannot be accepted. Forapplication of Section 53A the relevant considerationwould be the clauses in the agreement between theparties to the agreement and their performance interms of the agreement. The subsequent act of theassessee in executing the power of attorney and thesale deeds executed by the power holder on the basisof such power of attorney would not in any way alterthe status of the parties to the agreement datedMarch 29, 1993, for applicability of Section 53A ashas been rightly held by the learned single judge. Theassessee could no longer assert possessory rightsagainst the firm to which possession was alreadygiven pursuant to the agreement and that too afterreceiving the full sale consideration. 4. Navneet Kumar Thakkar vs. Income TaxOfficer (1007) 112 TTJ 0076 7. A deeming provision has been enshrined in Section50C by virtue of which a legal fiction has been createdfor assuming the value adopted or assessed by anyauthority of State Government as the full value of saleconsideration received in respect of such transfer. Alegal fiction has been created only in respect of thecases where the consideration received by theassessee is less than the value adopted or assessedby the stamp valuation authority of the StateGovernment for the purpose of payment of stamp 4. Navneet Kumar Thakkar vs. Income TaxOfficer (1007) 112 TTJ 0076 7. A deeming provision has been enshrined in Section50C by virtue of which a legal fiction has been createdfor assuming the value adopted or assessed by anyauthority of State Government as the full value of saleconsideration received in respect of such transfer. Alegal fiction has been created only in respect of thecases where the consideration received by theassessee is less than the value adopted or assessedby the stamp valuation authority of the StateGovernment for the purpose of payment of stamp duty "in respect of such transfer". It is a trite law thatthe legal fiction cannot be extended beyond thepurpose for which it is enacted. Section 50C embodiesthe legal fiction by which the value assessed by thestamp duty authorities is considered as the full valueof consideration for the property transferred. It doesnot go beyond the cases in which the subjecttransferred property has not become the subject-matter of registration and the question of valuationfor stamp duty purposes has not arisen. By no stretchof imagination, the legal fiction confined to restrictedoperation can be widened to include within its sweepall the cases where "such property" has not beenvalued by the State authorities for stamp dutypurposes. The Hon'ble Supreme Court in the case ofCIT v. Amarchand N. Shroff MANU/SC/0196/1962 hasheld that "legal fiction are only for a definite purposeand they are limited to the purpose for which they arecreated and should not be extended beyond thelegitimate field". Similar view has been reiterated bythe Hon'ble Summit Court in the case of CIT v. MotherIndiaRefrigerationIndustries(P)Ltd.MANU/SC/0135/1985. Thus, what is relevant for theattract ability of Section 50C, is that the propertywhich is under transfer from the assessee to anotherperson should have been assessed at a higher valuefor stamp valuation purpose than that received oraccruing to the assessee. The value adopted orassessed by the stamp valuation authorities has to beof the very same property, which is the subject-matter of transfer. The language of this sectionprovides in unambiguous terms that the valueadopted or assessed by the stamp valuation authorityhas to be substituted with the sale consideration ofthe "such property". But for Section 50C, there isabsolutely no warrant for replacing the value adoptedby the stamp valuation authority with the actual saleconsideration for the purposes of computing capitalgain. Thus it is clear that the property in respect ofwhich valuation is made for purposes of stamp dutymust be the very same property, which is the subject-matter of transfer for calculating capital gain byinvoking the provisions of this section. It is whollyirrelevant to consider the assessed value of anotherproperty for stamp duty purposes as full value ofconsideration by making reference to the ValuationOfficer under Section 55A. Unless the propertytransferred has been registered by sale deed and forthat purpose the value has been assessed and stampduty has been paid by the parties, Section 50C cannotcome into operation. In such a situation, the positionexisting prior to Section 50C would apply and theonus would be upon the Revenue to establish thatsale consideration declared by the assessee was understated with some clinching evidence. Therelevant judgments discussed above viz., K.P.Varghese (supra) and Shivakami Co. (P) Ltd. (supra)would come into operation and govern thedetermination of full value of consideration. understated with some clinching evidence. Therelevant judgments discussed above viz., K.P.Varghese (supra) and Shivakami Co. (P) Ltd. (supra)would come into operation and govern thedetermination of full value of consideration. 8. Adverting to the facts of the case, it is noticed thatthe assessee transferred the property in question byexecuting an agreement which was not registeredwith the registering authority. In such a case, Section50C could not have come into operation and theresultant application of Section 55A by which the AOgot the property valued and adopted the report of theValuation Officer as the sole basis for making theimpugned addition was wholly invalid. As the AO hasnot embarked upon making enquiries from thepurchaser about the actual sale consideration, andhas not brought on record any other material worththe name to show that the sale consideration declaredby the assessee was understated, in my consideredopinion the addition was wrongly made and sustained.I, therefore, order for the deletion of the addition. 4.2It is further contended that taking into consideration theactual agreement was prior to 20.11.2006, the view taken by theTribunal is required to be accepted in favour of the assessee. 5.We heard the learned counsel for the parties. 5.1It is well settled that the parties, if they admitted even afterby a MOU and in view thereof, possession was already handedover on 4[th] October, 2006, no person is ready to give revisedrates. 5.2On the second issue, the Tribunal while considering thematter has observed specifically that there is no scientific methodadopted and held as under:- 10. After considering the order of the AO and theCIT(A) and the written submissions, we are of theconsidered view that the assessee deserves tosucceed in this ground in part. It is stated thatproperty sold by the assessee was rented out for more than 50 years and was in possession of oldtenants at the time of execution of sale deed. Hence,it can be reasonably inferred that such property shallnot fetch prevalent market value when sold in themarket as compared to the other property which hasnot been subjected to such limiting factors. Further,various reasons have been assigned in the writtensubmissions. After going through these reasons, weare of the view that if the valuation of this property istaken to Rs.20 lakhs instead of Rs.33,76,391/- orshown by Registered Valuer that will meet ends ofjustice. Though the valuation of Registered ValuationOfficer is on some authentic method but there can besome shortcomings also. The AO has not referred thematter to DVO whereas he should have referred thematter to the DVO for taking valuation from him sothat both the valuation can be compared. It is amatter of small addition. Therefore, we are notinclined to send the matter to the file of the AO forreferring the matter to the DVO for the purpose ofascertaining actual market value. Accordingly, wedirect the AO to adopt valuation of this property atRs.20 lacs for the purpose of capital gains. We orderaccordingly. 5.3In our considered view, the view taken by the Tribunal isrequired to be accepted. Issue No.2 is also decided in favour ofthe assessee. 5.4Hence, both the issues are answered in favour of theassessee and against the Department. The appeal stands dismissed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. //bm gandhi 59