The Income Tax Appellate Tribunal (ITAT), Hyderabad bench while observing the difference in dates of agreement fixing for consideration and registration of property, directed to take date of agreement adopted by Stamp Duty Valuation for compute full value consideration.
The assessee, Neela Reddy Moramreddy Garu is an individual and engaged in the business of trading of shares. After filing the return of Income assessee case was selected for scrutiny.Thereafter passed assessment order.
Subsequently, it was noticed that the assessee offered Long Term Capital Gain (LTCG) from the sale proceeds of 2.92 acres of land which was sold on 28.03.2014 and the same was accepted during the scrutiny assessment.
Accordingly, the Assessing Officer reopened the assessment under Section 147 of the Income Tax Act after taking due approval from the competent authority as the difference of sale consideration as per the provisions of section 50C of the Act and the sale consideration offered by the assessee was to the tune of Rs.12,16,34,240/.
During the course of assessment proceedings, the Assessing Officer noted that the agricultural land of 8.66 acres was agreed to be sold as per MoU entered into with Sri Ramji on 28.05.2010.
As per the MoU, the total land agreed to be sold was to an extent of about 8.66 acres and the sale consideration was Rs.9,14,00,000/- which works out to about Rs.1,05,00,000/- per acre. An advance of Rs.1,00,00,000/- was received.
Subsequently, as Sri G. Ramji was unable to fulfill the terms and conditions of the MoU, another MoU dated 16.12.2011 was executed between the assessee, Sri G. Ramji and M/s Tatia Developer Pvt. Ltd.
Out of the above land, an extent of 5.74 acres was finally handed over to M/s Tatia Developer Pvt. Ltd. on 10.11.2012 on receipt of sale consideration of Rs.6,05,00,000. The same was offered for taxation in AY 2013-14 corresponding to FY 2012-13 and was accepted by the department u/s 143(1) of the Income Tax Act.
For the remaining extent of 2.92 acres a GPA was executed on 10.01.2013 between the assessee and M/s Tatia Developer Pvt. Ltd. and the property was finally handed over to M/s Tatia Developer Pvt. Ltd. on 28.03.2014 on receipt of sale consideration of Rs.3,10,00,000.
During the reassessment proceedings, the assessee submitted that since the MoU was signed on 16.12.2011 for sale of the property, the said value should be taken as sale consideration .
However, the Assessing Officer was not satisfied with the arguments advanced by the assessee and made addition of Rs.12,16,34,240/- to the total income of the assessee being the difference in Long-Term Capital Gain
Aggrieved by the order, the assessee filed an appeal before the CIT(A) who provided part relief to assessee. Thereafter, the assesee filed a second appeal before the tribunal.
K.C. Devdas, Counsel for assessee submitted that 1st and second proviso to section 50C apply to the present case because the amounts as part of MoUs and registered GPA were received in cheques/DDs/ RTGS which indicate that the value as per the agreements shall be taken as full value of consideration.
Therefore, when the date of agreement fixing the amount of consideration and date of registration of property is different, the value adopted by stamp valuation authority on the date of agreement was to be taken for purposes of computing the full value of consideration of such transfer.
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