MR. SURESH SHANTILAL JAIN ,MUMBAI vs. ITO WARD 16(3)(1), MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 11.07.2025, impugned herein, passed by the National
Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax
(Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax
Act, 1961 (in short ‘the Act’) for the A.Y. 2018-19. 2. In this case, as per agreement for sale, the Assessee had purchased the property involved on a consideration of Rs.91,00,000/- as against the stamp duty valuation to the tune of Rs.96,53,000/- and therefore the Assessing Officer (AO) vide assessment order dated 06.08.2021 u/s 143(3) r.w.s 144B of the Act has made the addition of Rs.2,76,500/- being 50% share of the Assessee u/s 56(2)(x) of the Act on account of variation between the Mr. Suresh Shantilal Jain
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purchase value declared by the Assessee and stamp duty valuation as prevalent at that particular time. The AO in the assessment order itself has also mentioned that addition would be subjected to rectification u/s 154 of the Act on receipt of valuation report from the DVO, which is not available and/or not produced by the DVO during the assessment proceedings.
The Assessee, being aggrieved, challenged the said addition and/or assessment order of the AO, by filing first appeal before the Ld. Commissioner u/s 250 of the Act and has claimed that the difference between the value of Rs.95,24,711/- as determined by the DVO in its report dated 31.03.2022 and the actual consideration shown to the tune of Rs. 91,00,000/- by the Assessee was less than 5% and therefore addition made on that count being marginal difference and/or variance, was unsustainable as per leverage granted by the statute in the relevant provisions, as applicable in the instant case and thus, has rightly been deleted by the AO vide rectification order dated 12.07.2023 u/s 154 r.w.s. 143(3) of the Act.
This Court observes that though the Ld. Commissioner considered the said aspect, however while relying on various judgments with regard to the introduction of the relevant provisions in the statute, declined to entertain the claim of the Assessee mainly on the reason that provisions of section 56(2)(x) of the Act have been introduced after 01.04.2017 and thereafter leverage was granted vide Finance Act, 2018 w.e.f. 01.04.2019 and therefore the leverage would not be applicable to the Assessee.
This Court further observes that admittedly, in various cases, the identical issue has been cropped up and ultimately decided in favour of the Assessee, specifically by the Hon’ble Co-ordinate Bench of the Tribunal in the case of ITA No.6912/M/2019 decided Income Tax wherein the Hon’ble Co-ordinate Bench of the Tribunal analyzed the relevant provisions of the law such as section 43CA, 50C & 56(2)(x) of the Act and ultimately allowed the leverage granted by the statue, even by considering 10% as subsequently increased by the Statute, by observing and holding as under:
“9. Before dealing with the substantive issue, it is necessary to look into the relevant statutory provisions. By the Finance (No.2)
Act, 2009 section 50C was introduced in the statute with effect from 01-04-2010. As per the provision of section 50C(1) of the Act, where the consideration received on sale of an immovable asset by an assessee is less than the value determined by the stamp valuation authority, the value so determined would be deemed to be the full value of consideration received or accruing as a result of such transfer, for computing capital gain. By Finance Act,
2018, the third proviso to section 50C(1) of the Act was introduced to the statute with effect from 01-04-2019, which reads as under:-
“50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer :
Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.”
Unlike section 50C of the Act, there was no corresponding provision in the Act vesting the assessing authority with power to adopt the stamp duty value as deemed sale consideration in respect of the buyer of the immovable property. However, by Finance Act, 2013, a new sub clause (b) was introduced to Mr. Suresh Shantilal Jain
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section 56(2)(vii) with effect from 01-04-2014, which reads as under:-
“(b) any immovable property,–
(i) Without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:
…………….”
11. As could be seen from section 56(2)(vii)(b)(ii), it empowers the assessing officer to treat the excess value determined by the stamp duty authority over and above the declared sale consideration as the deemed sale consideration and add it as income at the hands of the person buying the property. Thus, by the aforesaid provision, a buyer of the property was also brought at par with the seller of the property as per Section 50C(1) of the Act. Prima facie, section 56(vii)(b)(ii) would get triggered once the stamp duty authority determines the value of a property in excess of the declared sale consideration. However, the crucial issue which needs to be considered is, whether the third proviso to section 50C(1) of the Act providing exception in case the difference in value is less than 10%, would be applicable to section 56(2)(vii)(b)(ii) of the Act. In this context, the argument of the learned departmental representative is, firstly, there is no provision like third proviso to section 50C(1) of the Act in section 56(2)(vii)(b)(ii) of the Act and secondly, even if there is one, it will apply prospectively.
As could be seen, section 56(2)(vii) in its original form was introduced by Finance Act, 2009 with effect from 01-10-2009. However, by Finance Act, 2017 it was provided that section 56(2)(vii)(2) would be applicable in respect of the specified transaction undertaken between 1st day of October, 2009 and before 1st day of April, 2017. This amendment was effective from 01-04-2017. Simultaneously with the aforesaid amendment made to section 56(2)(vii), the Finance Act, 2017 also introduced clause (x) to section 56(2) to bring within its ambit the transactions referred to in section 56(2)(vii) undertaken after 1st day of April, 2017. Clause (x) of section 56(2) was subsequently amended by Finance Act, 2018 with effect from 01-04-2019 and again by Finance Act, 2020 with effect from 01-04-2021. The relevant part of section 56(2) which is required for our purpose is extracted hereunder:- Mr. Suresh Shantilal Jain
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“(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April,
2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,—
(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
69[(B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:—
(i) the amount of fifty thousand rupees; and (ii) the amount equal to five per cent of the consideration: …………………”
13. Thus, as can be seen, after introduction of section 56(2)(x), applicable for transactions undertaken after 01-04-2017, by Finance Act, 2018, identical exception as provided in third proviso to section 50C(1) is also provided in sub clause (b)(B)(ii) from 01-04-2019. Interestingly, section 43CA introduced to the statute by Finance Act, 2013 with effect from 01-04-2014 also provide for adoption of the value determined by the stamp valuation authority if it is in excess of the declared sale consideration of an immovable property. However, this provision is applicable to an asset other than a capital asset. It will be further interesting to note, in the first proviso to section 43CA(1) of the Act which was introduced by Finance Act, 2018 with effect from 01-04-2019, similar exception as provided in third proviso to section 50C(1) and section 56(2)(x)(b)(B)(ii) of the Act was introduced. It will be further relevant to observe, by the Finance
Act2020, the permissible limit of variation in the value has been enhanced to ten per cent from five per cent. Of course, in case of section 43CA further benefit has been granted to the assessee by enhancing the limit of variation to 20%.
On a conjoint reading of sections 50C, 43CA and 56(2)(x) of the Act, the legislative intention becomes absolutely clear that wherever the statute provides for adoption of the value determined by the stamp valuation authority as the deemed sale consideration, in case, it exceeds declared sale consideration, exceptions have also been provided not to adopt the market value Mr. Suresh Shantilal Jain
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if the difference between the value declared by the assessee and determined by the stamp duty authority is within a permissible limit.
The reason for not providing such an exception in section 56(2)(vii)(b)(ii) is patent and obvious. As could be seen, the amendments to sections 50C, 56(2)(x) and 43CA providing for exception in case of marginal difference between the declared sale consideration and value determined by the stamp valuation authority were introduced to the statute by Finance Act, 2018 with effect from 01-04-2019. Meaning thereby, the legislature did not felt the necessity of introducing such an exception to section 56(2)(vii)(b)(ii) simply for the reason that such provision was applicable for a period between 1 st October, 2009 to 1st April, 2017. Therefore, non-introduction of similar exception to section 56(2)(vii(b)(ii) cannot be held against the assessee. Rather, section 56(2)(vii)(b)(ii) has to be harmoniously construed along with sections 50C, 56(2)(x) and 43CA and the exceptions provided in the later three provisions have to be read into section 56(2)(vii)(b)(ii) to provide true meaning to the intention of the legislature. This, according to us, clearly answers submissions of learned departmental representative regarding absence of a provision identical to third proviso to section 50C(1) in section 56(2)(vii)(b)(ii).
Thus, in our considered opinion, the assessee would be eligible to get the benefit of ten per cent margin difference in the valuation between the value determined by the stamp duty authority and the declared sale consideration. Thus, if the variation between the aforesaid two values falls within the range of ten per cent, no addition can be made.
It is further relevant to observe, section 50C or for that matter section 56(2)(vii)(b)(ii) are identical provisions. Only difference being, 50C is applicable to the seller of an immovable property, whereas, the later provision is applicable to the buyer of the property. Therefore, a benefit given to a seller of the property in respect of marginal variation cannot be denied to the buyer of the property, since, they stand on the same footing. This aspect of the issue has also been considered by the co-ordinate bench in case of Shri Sandip Patil vs ITO (supra), wherein, the co-ordinate bench has held that there cannot be two different fair market value in respect of the very same property, i.e. one at the hands of the seller and the other at the hands of the buyer. Thus, in our view, if the difference in valuation between the value determined by the stamp duty authority and the declared sale consideration is less than 10%, no addition can be made under section 56(2)(vii)(b)(ii) of the Act. Mr. Suresh Shantilal Jain
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18. Having held so, the second aspect of the issue which requires consideration is whether the exception to section 50C(1) by way of third proviso and section 56(2)(x)(b)(B) would apply prospectively or retrospectively. The issue is no more res integra in view of a number of decisions of different benches of the Tribunal. The Tribunal has consistently expressed the view that since the aforesaid amendments made by Finance Act, 2018 with effect from 01-04-2019 are curative in nature and beneficial provisions, it would apply retrospectively. In this context, we get support from the following decisions:-
Shri Sandip Patil vs ITO (supra) 2. Maria Fernandes Cheryl vs ITO (supra)
Thus, keeping in view the discussions hereinabove, we delete the addition of Rs.23,30,694/-. This ground is allowed.”
Admittedly, the provision for grant of leverage or benefit for marginal difference of 10% in the stamp duty valuation and value declared by the Assessee, as introduced by statute, is benevolent and beneficial provision and for advancement of social and economic justice and therefore in the considered opinion of this Court, would be applicable retrospectively, as also held by the Hon’ble Co-ordinate Bench of the Tribunal, in the aforesaid case.
Thus, the impugned order is set aside/quashed and the relief already granted vide rectification order dated 12.07.2023 u/s 154 r.w.s. 143(3) of the Act, is sustained and/or restored.
In the result, the appeal of the Assessee is allowed.
Order pronounced in the open court on 16.09.2025. (NARENDER KUMAR CHOUDHRY)
JUDICIAL MEMBER
* Kishore, Sr. P.S.
Mr. Suresh Shantilal Jain
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Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The DR Concerned Bench
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By Order
Dy/Asstt.