Provisos to S. 50C(1) inserted by FA, 2016 is retrospective & applies from 01/04/2003

Dharamshibhai Sonani Vs. ACIT (ITAT Ahmedabad)

Provisos to Section 50C(1) of Income Tax Act, 1961 inserted by the Finance Act, 2016 w.e.f. 01/04/2017 are to be treated as curable in nature and would apply with “retrospective” effect from 01/04/2003 i.e. the date from which Section 50C was introduced.

In the above referred case, as pleaded by CA Manojkumar N. Makhania before Honarable Ahmedabad Tribunal, the Capital Gain Tax demand was raised by the Assessing officer for A.Y.2008-09 by taking stamp duty value on date of registration i.e. 24/04/2007 as full value of consideration under section 50C for calculating Capital Gain & not on the date of transfer i.e.29/06/2005 on which registered Satakhat for the consideration through account payee cheque along with possession receipt (Kabja Rashid) was made. Below mentioned facts were also put before the Tribunal.

1. Registration of document was pending as the land was agriculture and buyer was a Pvt. Ltd., Company not eligible for the purpose of agriculture land.
2. When the land was transferred in A.Y. 2006-07 and it was agricultural land and stamp duty value as on date of transaction i.e.29/06/2005 would apply & not that of date of registration of documents i.e.24/04/2007.

It was further prayed before Honorable Tribunal that provisos to the Sec. 50C of the Act which shall be inserted to sub. Sec.1 of Sec.50C by Finance Act, 2016 w.e.f. 01/04/2017 being curative in nature and therefore, applicable retrospectively. The newly inserted provisos indicate the real intention of the legislature to adopt the value of land/property in the year of agreement of sell & not in the year of registration of sale deed with sub-registrar. The appellant would also like to rely upon the judgment of the Honorable Supreme Court in the case of Alom Extrusions Ltd. (319 ITR 306) for the proposition that where the amendments are curative in nature, they are effective retrospectively.

Honorable Tribunal after considering the facts of the case as referred to above allowed the appeal of the assessee.