The Principal Commissioner Of Income Tax 3 v. Dipak Govindbhai Dalwadi

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 605 of 2022 ==========================================================THE PRINCIPAL COMMISSIONER OF INCOME TAX 3 Versus DIPAK GOVINDBHAI DALWADI ========================================================== Appearance: MR KARAN SANGHANI ADVOCATE for MRS KALPANAK RAVAL(1046) for the Appellant(s) No. 1for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANIand HONOURABLE MRS. JUSTICE MAUNA M. BHATT Date : 12/12/2022 ORAL ORDER(PER : HONOURABLE MRS. JUSTICE MAUNA M. BHATT) 1.This tax appeal under section 260A of the Income-taxAct, 1961 (“the Act” for short) is at the instance of therevenue and is directed against the order dated 25.03.2022,passed by the Income Tax Appellate Tribunal, AhmedabadBench ‘B’, Ahmedabad in ITA No.2416/Ahd/2017 for A.Y.2013-2014. 2.Briefly stating facts, the assessee in this case filed hisreturn of income for A.Y.2013-2014 declaring total income ofRs.4,62,980/-. The case of the assessee was selected forscrutiny and in the order under section 143(3) of the Assessing Officer made the additions with the observation that theassessee has sold immovable property for sale consideration ofRs.95,00,000/- on 14.5.2015 and paid stamp duty ofRs.39,35,200/-, however, as per the information available fromthe office of Sub-Registrar, Ahmedabad-9, Bopal, the marketvalue of the said property is determined at Rs.8,03,09,250/- asagainst the sale consideration disclosed by the assessee in thesale deed at Rs.95,00,000/-. The Assessing Officer thereforeworked out the capital gain under Section 50C of the Act ofRs.7,54,36,257/- and order under Section 143 (3) of the Actwas passed on 23.3.2016, assessing the income atRs.7,59,18,346/- as against the returned income ofRs.4,62,980/-. 3.Aggrieved by the addition made, the assessee preferredan appeal under section 246 of the Act before theCommissioner of Income-tax (Appeals), (“CIT (A)” for short)Ahmedabad . 4.The CIT (A) deleted the addition made by the AssessingOfficer on the ground that the stated transaction had alreadybeen treated as transfer in A.Y.2009-2010 and capital gainearned thereon was brought to tax in hands of the assesseeand had been accepted by the assessee also. The CIT (A) alsoobserved that proviso to Section 50C of the Act has been inserted w.e.f. 01.4.2016 and therefore the stamp duty value ason date of entering into agreement to sale/banakath should betreated instead of value on the date of registration of saledeed. CIT (A) thus deleted the addition. 5.Against the order of CIT (A), the revenue preferred anappeal before the Appellate Tribunal. The Tribunal confirmedthe order passed by CIT (A) and dismissed the appeal of therevenue. Against the order of Tribunal dated 25.3.2022,present appeal is filed proposing the following substantialquestion of law. “[A]Whether the Appellate Tribunal was right inlaw and on facts in upholding the order of theCIT(A) in deleting the addition of Rs.7,54,36,257/-made u/s. 50C of the Act, by the Assessing Officer,without considering the detailed reasoning given bythe Assessing Officer that the impugned land was inthe possession of the assessee till 10.05.2012 andhence, the Long Term Capital Gain on sale of thisland is required to be charged in the hands of theassessee in AY 2013-14?" [B]Whether the Appellate Tribunal was right inlaw in holding that First Proviso to Section 50C inserted by the Finance Act, 2016 w.e.f. 01.04.2017was retrospective in nature?" “[A]Whether the Appellate Tribunal was right inlaw and on facts in upholding the order of theCIT(A) in deleting the addition of Rs.7,54,36,257/-made u/s. 50C of the Act, by the Assessing Officer,without considering the detailed reasoning given bythe Assessing Officer that the impugned land was inthe possession of the assessee till 10.05.2012 andhence, the Long Term Capital Gain on sale of thisland is required to be charged in the hands of theassessee in AY 2013-14?" [B]Whether the Appellate Tribunal was right inlaw in holding that First Proviso to Section 50C inserted by the Finance Act, 2016 w.e.f. 01.04.2017was retrospective in nature?" 6.Heard learned standing counsel Mr. Karan Sanghani forMrs. Kalpana Raval, learned senior standing counsel for theappellant. He submitted that the order of Tribunal iserroneous. As per the agreement dated 24.7.2008 (F. Y.2008-09), the sale consideration was for Rs.95,00,000/-. Theregistration of the property was required to be done within aperiod of three months after converting the land into N.A.land. However, the registration took place only on 10.5.2012(F.Y. 2012-13) i.e. after eight months from the date ofconverting the land into NA land. As per the sale deed thestamp duty was paid @ of Rs.39,35,200/- and the fair marketvalue adopted by Sub-Registrar for the said land wasRs.8,03,09,250/- and, therefore, the Tribunal is in error intreating the date of transfer in the A.Y. 2009-10 instead ofA.Y.2013-14 i.e. the year in which the the deed wasregistered. He further submitted that as mentioned in theagreement for sale the transfer took place without possessionand therefore, also the Tribunal is in error in treating the dateof transfer in A.Y. 2009-10. In relation to Question B, hesubmitted that question involving identical issue has beenadmitted by this court in Tax Appeal No 155 of 2020. 7.It is noticed that the Tribunal deleted the addition byobserving as under: “It is an admitted fact that the impugnedtransaction had already been treated as transferin the hands of the assessee in the year inwhich the agreement to sell was entered intoi.e. assessment year 2009-10 and the assesseehad accepted the stand of the revenue. Havingsaid so, we find that there is no case at all fortaxing the same transaction in the impugnedyear also as rightly held by the Ld. CIT(A). Forthis reason alone, the addition made bytreating the said transaction as transferundertaken during the year and substitutingthe stamp duty value for the sale considerationas per the provisions of Section 50C of the Actis therefore not tenable in law. Even thecomputation of capital gain made by the AO asreproduced above, reducing the capital againalready taxed in A.Y 2009-10 from the totalcapital gains computed is an implicit admissionon the part of the Revenue that the impugnedtransaction already stands taxed in an earlieryear. There is absolutely no scope or reason for taxing a transaction of capital gain earnedon account of transfer of capital asset in twoseparate years as the transfer of the asset cantake place in one year only. The Revenuehaving already treated the impugned asset astransferred in A.Y 2009-10, which has beenaccepted by the assessee also, the Revenue isprecluded from changing its stand now andtreating the asset transferred in the impugnedyear. The order of the Ld.CIT(A) deleting theaddition made of Rs.7,54,36,257/-is upheld.” for taxing a transaction of capital gain earnedon account of transfer of capital asset in twoseparate years as the transfer of the asset cantake place in one year only. The Revenuehaving already treated the impugned asset astransferred in A.Y 2009-10, which has beenaccepted by the assessee also, the Revenue isprecluded from changing its stand now andtreating the asset transferred in the impugnedyear. The order of the Ld.CIT(A) deleting theaddition made of Rs.7,54,36,257/-is upheld.” 8.We could not see any error in the Tribunals findingsbecause undisputedly the issue relating to transfer of land toM/s. Aanya Developers in A.Y.2009-10 had attained finalityand against the additions made no appeal has been preferredby the assessee and, therefore, the Tribunal is right inobserving that the issue has been examined and taxed inA.Y.2009-10 on the basis of Banakhat (agreement to sale) dated24.7.2008. The department has also considered the same astransfer in the Assessment order in A.Y.2009-10.Chargingcapital gain tax on the very same land on the basis of finalexecution of sale deed amounts to taxing the same twice over,which is not permissible . 9.Therefore, without entering in the controversy involved inQuestion B, in facts of this case, we could not find anyquestion of law and resultantly present appeal is dismissed. 10. It is once again clarified that this Court has not goneinto the merits of question B and by keeping the issueinvolved in question B open this tax appeal is dismissed. Nocost. (SONIA GOKANI, J) NAIR SMITA V. (MAUNA M. BHATT, J)