Ashok Vadilal Patel Vs ITO (ITAT Ahmedabad)
The dispute between the assessee and the Revenue is, for the purpose of section 50C, which rate is to be deemed as full consideration for the sale of this property for purpose of section 48 of the Act ? According to the assessee, the rate should be adopted at Rs.200/- per sq.meter, which was settled between him and the vendee on the date of agreement i.e. 30.12.2010. On this day, even the stamp duty valuation authority has also fixed rate of Rs.140/-. Had the sale deed been executed on this date for the purpose of section 50C no other consideration could be deemed because the sale consideration disclosed by the assessee at the rate of Rs.200/- per sq.meter was far higher than Rs.140/- per sq.meter.
It is pertinent to observe that the assessee has entered into an agreement to sale on 30.12.2010. Had the assessee not executed the sale deed, then time limit for filing a suit for specific performance under the Specific Relief Act has been provided in the Limitation Act, and this limitation is three years from the date of the agreement.
In case vendee refused to get the sale deed registered, then the assessee can only sue for specific performance persuading the vendee to purchase land. In that circumstance, the assessee would not get anything more than the amount agreed in the agreement. Similarly, there can be a time gap between the date of agreement vis-à-vis ultimate registration of sale deed. There can be an appreciation or depreciation in the value of the property.
In other words, at the time of execution of agreement in respect of an immovable property, the right in persona is created in favour of the transferee/vendee. When such right is created in favour of the vendee, the vendor is restrained from selling the said property to someone-else, because vendee in whose favour the right in persona is created has legitimate right to enforce specific performance of the agreement, if vendor for some reason is not executing the sale deed.
Thus, by virtue of agreement to sell, some right is given to the vendee by the vendor. It is an encumbrance on the property and considering this aspect, one has to adopt the rate for the purpose of section 50C on the date on which agreement was executed.
In the present case, the payments have been made through account payee cheque, and time gap between the presentation of the sale deed for registration vis-à-vis revision of rates for the purpose of charging higher stamp duty is not substantive and considerable. The sale deed was presented on 24.5.2011 where as the rates were revised on 18.4.2011. The time gap between the agreement vis-à-vis sale deed is also not substantive. Agreement is dated 31.12.2010 and sale deed was presented for registration on 24.5.2011.
Considering this hardship for the vendors, section 50C was amended and second proviso has been brought on the statute book, which authorized an assessee to argue that where the amount of consideration or part thereof has been received by way of account payee cheque, then the appointing day for the purpose of valuation of the property for the purpose of section 50C is to be taken the date of agreement. This proviso has been held to be applicable with retrospective effect by the ITAT, Ahmedabad in the case of Dharamshibhai Sonani Vs. ACIT, 161 ID 627 (Ahd-Trib). It is also pertinent to note that the assessee has submitted before the ld.CIT(A) that simultaneous sale deed was registered on survey no.932, 951, 899 and 894 where stamp duty valuation authority has also accepted the rate at Rs.200/- per sq.meter and the sale agreement were entered on 30.12.2010. The assessee has placed copies of the sale deed before the ld.Revenue authorities below, but in spite of that even under section 50C(2), this aspect was not appreciated. Taking into consideration all the facts and circumstances, we are satisfied that for the purpose of computation of long term capital gain on sale of land, the value shown by the assessee at the rate of Rs.200/- per sq.meter is to be adopted. We accordingly direct the AO to take value disclosed at the rate of Rs.200/- per sq.meter, and thereafter calculate the long term/short term capital gain, if any, leviable in the hands of the assessee. First ground of appeal is accordingly allowed.
