S M ENCLAVE PVT. LTD.,KOLKATA vs. I.T.O., WARD - 10(1), KOLKATA

That the learned CIT(A) has erred in law and in for non-consideration of ten per cent tolerance limit where the estimated value of sale of land computed by the DVO and the actual value of sale consideration and making addition of Rs. 9,94,312/- under section 50C of the Act.

That the learned CIT(A) has erred in law by considering five per cent tolerance limit instead of ten percent where the estimated value of sale of land computed by the DVO and the actual value of sale consideration is within the limit of ten per cent and therefore the difference is to be ignored.

That the appellant cause leave, to add, alter, amend or modify and or all of the above Grounds of Appeal at or before the time of hearing of the appeal."

Brief facts of the case are that the assessee had filed the return of income for AY 2014-15 on 27.09.2014 declaring the total income at ₹16,78,118/-. The case was selected for limited scrutiny as the sale consideration of property was less than the value as per the stamp duty authority. The assessee had shown short-term capital gains of ₹16,45,796/- and long-term capital gains of ₹26,592/- on the sale of land, whereas the stamp duty values of the properties were higher. The Assessing Officer (hereinafter referred to as Ld. 'AO') referred the matter to the valuation cell at the assessee's request but completed the assessment u/s 143(3) of the Act on 29.12.2016 without awaiting the valuation report. The Ld. AO determined the total income at ₹35,16,430/- by adopting the stamp duty value and made additions u/s 50C of the Act of ₹12,38,130/- and ₹6,00,184/- towards short-term and long-term capital gains respectively. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. Addl/JCIT(A). During the appellate proceedings, the DVO's valuation report was received who valued the property at ₹1,26,93,188/-, leading to a difference of ₹9,94,312/- (8.50%) when compared to the assessee's declared value. The Ld. Addl/JCIT(A) noted that this 8.50% difference exceeded the then applicable tolerance limit of 5% and also observed that the 10% limit became applicable only with effect from 01.04.2021. Consequently, the Ld. Addl/JCIT(A) held that the DVO's valuation must substitute the stamp duty valuation and restricted the total addition to ITA No(s). 2429/KOL/2025 Assessment Year(s) 2014-15 ₹9,94,312/-. Accordingly, the Ld. Addl/JCIT(A) modified the action of the Ld. AO and partly allowed the appeal of the assessee vide his findings as under:

Aggrieved with the order of the Ld. Addl/JCIT(A), assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted that the only issue relates to the application of section 50C of the Act. The Ld. AO had substituted the ITA No(s). 2429/KOL/2025 Assessment Year(s) 2014-15 sale value by the value adopted for the purpose of stamp duty. The valuation was referred to the DVO and since the report was not received before the Ld. AO completed the assessment, the assessment was made by making the addition on account of difference between the value for the purpose of stamp duty and the sale consideration received. Before the Ld. Addl/JCIT(A) and during the pendency of the appeal, the Ld. AO collected the valuation report of the DVO and the capital gain was reduced by the appellate authority. It was submitted that since the difference was only 8.50%, therefore, no addition should be made in view of the third proviso to sub-section (1) of section 50C of the Act which states 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 that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer:] [Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and [ten] 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.]”

The Ld. AR submitted that the difference being less than 10%, no addition was liable to be made. The assessee relied upon the following decisions of the coordinate Benches of the Tribunal in support of the claim that the amendment relating to the difference between the sale consideration and the value adopted or assessed or assessable by the stamp valuation authority not exceeding 110% of the consideration received or accruing as a result of the transfer has been held to be retrospective as per the following orders of the coordinate Benches and therefore, no addition was liable to be made: i) Deputy Commissioner of Income-tax v. Santosh Promoters (P.) Ltd.; [2025] 180 taxmann.com 770 (Kolkata - Trib.) ii) Deputy Commissioner of Income-tax v. Tirupati Niryat (P.) Ltd.; [2025] 175 taxmann.com 1069 (Kolkata - Trib.) iii) Chandra Prakash Jhunjhunwala v. DCIT; [2020] 113 taxmann.com 246 (Kolkata - Trib.) / [2020] 181 Income Tax Department iv) Maria Fernandes Cheryl v. Income Tax Officer; [2021] 123 taxmann.com 252 (Mumbai - Trib.) / [2021] 85 ITR (T) / 187 ITD 738 v) Joseph Mudaliar v. DCIT; [2021] 130 taxmann.com 250 (Mumbai - Trib.) / [2021] 191 ITD 7 vi) Girdharbhai Haribhai Gajera v. ITO; [2023] 149 taxmann.com 463 (Surat - Trib.) / [2023] 200 ITD 485 vii) Rajpal Mehra (HUF) v. ACIT; [2024] 159 taxmann.com 1587 (Mumbai - Trib.)

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. Addl/JCIT(A). Since the difference was only 8.5% and the amendment in the third proviso relating to the margin of 10% has been held to be retrospective, we allow the appeal and direct the Ld. AO to delete the addition which had been confirmed by the Ld. Addl/JCIT(A). Hence, the Ground Nos. 1 and 2 of appeal raised by the assessee are allowed while Ground No. 3 is general in nature and does not require any separate adjudication.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 1st September, 2026. [Yogesh Kumar US] [Rakesh Mishra] Judicial Member Accountant Member Dated: 01.09.2026 Bidhan (Sr. P.S.)