SHRI G. GUNASEKARAN,TIRUPUR vs. ITO, WARD - I (2), TIRUPUR
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that Section 50C of the Act is not applicable when the property is mortgaged and the sale is affected due to circumstances like illness, preventing effective negotiation for market value.
What were the facts?
The assessee sold a property for Rs. 50,01,000 but the guideline value was Rs. 72,50,000. The assessee claimed the sale consideration as Rs. 57,00,000 based on a registered valuer's report, citing distress sale due to mortgage and illness.
What were the issues?
Whether Section 50C of the Income Tax Act, 1961, is applicable when the property sale consideration is less than the guideline value due to encumbrances and distress sale circumstances.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Smt. D. Anitha v. ITO10 citing55 Taxmann.com 538 · 2015 · ITAT
Income Tax Appellate Tribunal, ‘B/SMC’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
PER N.R.S. GANESAN, JUDICIAL MEMBER:
Both the appeals of the assessee are directed against the orders passed by the Commissioner of Income Tax (Appeals)-3, Coimbatore dated 02.08.2019 and pertains to the assessment year 2013-14.
Shri T.S.Rajarajeswaran, the Ld. Representative for the assessee submitted that the assessee sold the property for Rs. 50,01,000/-. However, for computation of capital gain, the assessee has taken the sale consideration at Rs. 57,00,000/-. The assesse has also obtained report from the registered valuer, he estimated the market value at Rs. 57,00,000/. The value estimated by the registered valuer is a distress sale value, however the guideline value of the Registration Department is Rs. 72,50,000/- the difference of Rs. 15,05,000/- was taken as sale consideration for computing the capital gain. According to the the Ld. Representative for the assessee, the property was mortgaged to Cathholic Syrian Bank. One of the assessee Smt. Murugasamy Lalitha was suffering due to Kidney failure therefore, they could not effectively negotiate the sale of the property to obtain the correct market value.
Placing reliance on the decision of ITAT, Hyderabad Bench in the case of G. Anitha vs. ITO 55 taxmann.com 538 (Hyd), the Ld. Counsel for the the market value of the property need not be taken for computing the capital gain by applying s. 50C of the Act. In view of the above decision, according to Ld. Representative, the Assessing Officer (AO) is not justified in adopting the value u/s. 50C of the Act.
On the contrary, Shri A.R.V. Sreenivasan, the Ld. Departmental Representative submitted that s. 50C of the Act is a statutory mandate.
Wherever the property was sold less than the guideline value, the AO is bound to take the guideline value for computing capital gain. In the case of Smt. G. Anitha (supra) there was an encumbrance in the capital asset therefore, the Division Bench of ITAT, Hyderabad Bench found that s. 50C of the Act need not be applied.
Having heard the Ld. Representative for the assessee and the Ld. Departmental Representative, this Tribunal is of the considered opinion that the property is admittedly mortgaged with Catholic Syrian Bank. It is also not in dispute that one of the assessee Smt. Muragasamy Lalitha was suffering from Kidney failure. Therefore, the contention of the assessee that the property could not be sold for the market rate may have some justification. Moreover, in the case of G. Anitha (supra) Division
4 & 2813/Chny/2019 Bench of ITAT, Hyderabad Behcn found that wherever there was an encumbrance, the value u/s. 50C of the Act need not be applied. The decision of the Division Bench of ITAT, Hyderabad (supra) is binding on a single Member. Therefore, by following the decision of Division Bench of ITAT, Hyderabad (supra) this Tribunal is of the considered opinion that when the assessee mortgaged property to Catholic Syrian Bank and could not effectively negotiate for sale of property due to Kidney failure of one of the assessee, the provisions of s. 50C of the Act not be applicable. Accordingly, the orders of the both the lower authorities are set aside and the addition made by the AO as confirmed by the Ld. CIT(A) is deleted.
More judgments on Section 50C
- M N S Barium Salts, Kadapa vs ITO, Ward-1, KadapaITA 2412/HYD/2025[2020-21]Status: Disposed16 Oct 2026AY 2020-21
- Sawalchand Chunilal Bafna HUF, Mumbai vs Income Tax Officer-16(1)(1), MumbaiITA 7492/MUM/2025[2011-12]Status: Disposed16 Oct 2026AY 2011-12
- Jagdishbhai Vasharambhai Italiya, Ahmedabad vs The ITO, Ward-3(1)(1), AhmedabadITA 150/AHD/2026[2015-16]Status: Disposed14 Oct 2026AY 2015-16
- Rohini Ramhari Bhadale, Pune vs Assessing Officer Ward 2(2) Pune, PuneITA 2767/PUN/2026[2015-2016]Status: Disposed14 Oct 2026AY 2015-2016
- Sweta Somani, Kolkata vs ITO, Ward 44(2), KolkataITA 1656/KOL/2026[2015-2016]Status: Disposed14 Oct 2026AY 2015-2016
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