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Facts
The assessee sold factory land for a consideration lower than the circle rate. During the processing of the return under Section 143(1), the Central Processing Centre (CPC) made an addition under Section 50C based on the difference between the actual sale price and the stamp duty valuation.
Held
The Tribunal upheld the Ld. JCIT(A)'s decision, ruling that the CPC cannot invoke Section 50C while processing a return under Section 143(1) of the Income-tax Act, 1961, as it lacks the authority to refer the matter to a Valuation Officer (DVO).
Key Issues
Whether the Central Processing Centre (CPC) can invoke the provisions of Section 50C read with Section 142A to make an adjustment for capital gains while processing a return under Section 143(1) of the Income-tax Act, 1961, when the property is sold below the circle rate.
Sections Cited
143(1), 50C, 142A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI YOGESH KUMAR U.S.
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2019-20, arises out of the order of the Ld. Joint Commissioner of Income Tax (Appeals)-10, Mumbai [hereinafter referred to as „ld. JCIT(A)‟, in short] dated 08.10.2024 against the order of assessment passed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 17.09.2020 by the Assessing Officer, CPC (hereinafter referred to as „ld. AO‟).
The only effective issue to be decided in this appeal of the revenue is as to whether the provisions of Section 50C read with Section 142A of the Act could be invoked by the Central Processing Centre (CPC) while processing the return u/s 143(1) of the Act on the ground that the property has been sold at a price less than circle rate.
We have heard the rival submissions and perused the material available on record. The assessee filed its original return of income on 26.12.2019 declaring total income of Rs. 1,73,72,900/-. The return of income was duly processed u/s 143(1) of the Act by the ld CPC on 17.09.2020 determining the total income of Rs. 6,10,28,020/-. The assessee company sold its factory land building for a total consideration of Rs. 4.80 crores and incurred book loss of Rs. 22,46,960/- on sale of factory building and earned taxable long term capital gain of Rs. 1,90,91,734/- on sale of factory land which was duly disclosed in the return of income. The assessee placed on record the copy of sale deed. The factory land was initially purchased in the name of NEC Industrial Project Pvt Ltd which was subsequently merged with assessee company vide order of Hon‟ble Delhi High Court dated 21.07.2015 in Company Petition No. 607/2014. The return of income was duly processed u/s 143(1) of the Act on 17.09.2020 by the ld CPC wherein, the addition of Rs. 4,23,42,440/- on account of long term capital gain on sale of factory land was made for difference between actual sale consideration received on sale of land and the sale value as determined for the purpose of stamp duty based on circle rate of the land. The circle rate fixed in the land of the Rs. 4410 per sq mtr for plot in the area of Village Raipur, Pragna, Tehsil Bhagwanpur, District Haridwar whereas the actual sale price of the land sold on 16.11.2018 by the assessee company was Rs. 2282.56 per sq mtr and that in the case of the property bearing No. 139 Khasra No. 127, Village Raipur, Pragna Tehsil-Bhagwanpur, District Haridwar measuring 1421.85 sq mtr was sold at Rs. 1869.75 per sq mtr on 29.08.2018. Similarly, another property bearing No. 83M and 84M, Plot No. 12, Village Raipur, Pragna Tehsil-Bhagwanpur, District Haridwar measuring 4265.6 per sq mtr was sold at Rs. 1774.30 per sq mts dated 14.08.2018. It was submitted that both the said above plots are at Village Raipur, Pragna Tehsil-Bhagwanpur, District Haridwar and as such are comparable with the assessee‟s case. Hence, it was submitted that circle rate of Rs 4410 fixed by the Directorate of Stamp Duty was nowhere near to the actual market rate prevailing at that time. Accordingly, it was pleaded before the ld JCIT(A) that addition u/s 50C(1) of the Act would not survive. The most important aspect that was pleaded before the ld JCIT(A) was that in any case, the said addition u/s 50C of the Act could not be made u/s 143(1) of the Act by the ld CPC. The ld JCIT(A) took due cognizance of the argument of the assessee and deleted the addition by observing as under:-
“5.3.5 The section 50C(2)(a) states that where the assessee claims before any Assessing Officer that the value adopted by the stamp valuation authority exceeds the fair market value of the property on the date of transfer, the Assessing Officer may refer the valuation to Valuation Officer. Hence, it is ample clear that the assessee must be given opportunity of being heard before adopting the value u/s 50C(1) and where the assessee objects to the stamp duty value, the Assessing Officer is required to refer the matter to the DVO. Under the circumstances, the CPC cannot invoke the provisions of section 50C for computing the capital gain while processing the Return of Income u/s 143(1) of the I.T. Act 1961. The CPC while processing the Return of Income u/s 143(1) of the I.T. Act 1961 has not authority to refer the matter to DVO. Since CPC can not refer the matter to DVO, consequently, CPC cannot invoke the provision of section 50C while processing the Return of Income u/s 143(1) of the I.T. Act 1961, 5.3.6 In view of the above, the adjustment made by CPC u/s 50C to the capital gain while processing the Return of Income u/s 143(1) is deleted. It is hereby clarified that what is decided here is scope of adjustment u/s 143(1) of the I.T. Act 1961 only. Therefore, ground of appeal no 3 is hereby allowed.”
4. The aforesaid observations of the ld JCIT(A) could not be controverted by the revenue before us. Hence, we do not find any infirmity in the order passed by the ld JCIT(A). The grounds raised by the revenue are dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 30/07/2025.