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Facts
The assessee sold an industrial shed in May 2012 for Rs. 4.80 Crores. The Assessing Officer, applying Section 50C, adopted a higher stamp duty valuation of Rs. 4.97 Crores, resulting in an addition of Rs. 17,80,299/-. The assessee had received part consideration through banking channels in March 2012, prior to the registration of the sale deed, but the CIT(A) confirmed the addition.
Held
The Tribunal held that the assessee was entitled to the benefit of the first and second provisos to Section 50C, as part consideration was received through banking channels on the agreement date. The relevant stamp duty valuation date should be the agreement date (March 2012), not the registration date (May 2012). The Tribunal set aside the previous orders and remitted the case to the AO for re-adjudication, directing the AO to determine the stamp duty valuation as of March 2012.
Key Issues
Whether an addition under Section 50C is sustainable when the agreement date and registration date differ, and part consideration was received through banking channels on the agreement date.
Sections Cited
Section 50C, Section 48
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Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 16.12.2024 passed for assessment year 2013-14.
Though the assessee has taken four grounds of appeal but her solitary grievance revolves around a single issue, namely, whether addition of Rs.17,80,299/- is sustainable in A.Y.2013-24 2 her hand with the aid of Section 50C of the Income Tax Act, 1961 or not.
3. The brief facts of the case are that assessee has sold an Industrial Shed bearing No. 366, Industrial Area, Phase-2 Panchkula on 22.05.2012 for total consideration of Rs.4,80,00,000/-. The AO was of the view that Stamp Duty evaluation of this property was taken at Rs.4.97 Cr., hence, this value deserves to be deemed as full sale value u/s 50C of the Income Tax Act for computing Long Term Capital Gain. Accordingly, he made the addition of Rs.17,80,299/-.
Appeal to the ld. CIT (Appeals) did not bring any relief to the assessee.
Before us, ld. counsel for the assessee drew our attention towards the copy of the Sale Deed available on page No.22 to 28 of the Paper Book. He submitted that an Agreement to Sell was executed in the month of March,2012. At the time of Agreement, assessee has received part payment through Account Payee Cheque on 12.03.2012. The assessee has received six cheques on 12.03.2012 for consideration of Rs.5 lacs, Rs.5 lacs and four cheques for Rs.35 lacs. Thereafter, A.Y.2013-24 3 on 15.03.2012, she again received cheques for a consideration of Rs.30 lacs and Rs.20 lacs. Thus, according to the ld. counsel for the assessee, her case falls within the 1st and 2nd proviso attached to Section 50C of the Act which has been declared as applicable with retrospective effect.
The ld. DR, on the other hand was unable to controvert the contention of ld. counsel for the assessee.
With the assistance of ld. Representative, we have gone through the record carefully. Section 48 of the Income Tax Act provides mode of computation of capital gains. It contemplates that income chargeable under the head ‘capital gains’ shall be computed by deducting from the full value of the consideration received or accruing as a result of transfer of the capital asset following amounts, namely; a) Expenditure incurred wholly and exclusively in connection with such transfer;
b) The cost of acquisition of the asset and cost of any improvement thereto.
Section 50C of the Act is a deeming Section. It contemplates that where consideration received or accruing as a result of the transfer by an assessee of a capital asset, being A.Y.2013-24 4 land or building, or both, is less than the value adopted or assessed by an authority of the State Government for the purpose of charging the Stamp Duty, then such valuation would be considered as a deemed full sale consideration contemplated in Section 48 of the Income Tax Act. In other words, the full value of consideration provided in Section 48 would be replaced by the amount on which Stamp Duty is being charged from the assessee. The only condition is that full value of sale consideration provided in Section 48 should be lesser than the Stamp Duty valuation for the purpose of charging the Stamp Duty. To this extent, there is no dispute in the present appeal. The dispute relates to 1st and 2nd proviso to Section 50C which contemplates as under :
Special provision for full value of consideration in certain cases.- 50C (1) ............
[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, on or before the date of the agreement for transfer.} 9. A bare perusal of these provisions would indicate that where date of agreement fixing the amount of consideration A.Y.2013-24 5 and the date of registration of the transfer of the capital asset are not the same, then for the purpose of deeming the full sale consideration, the sale consideration available on the date of Agreement would be taken. The only condition is that consideration or part consideration should have been received by assessee through a banking channel or electronic mode. In the present case, assessee has received more than Rs.1,80,00,000/- through Account Payee Cheques in the month of March, 2012 at the time of Agreement. Therefore, benefit of this proviso ought to have been given to the assessee. The appointed date for the purpose of considering Stamp Duty valuation is 12.03.2012 and not May, 2012 when Sale Deed was registered. The reason for introduction of this proviso was that if a valid agreement, being entered between the party and a vendor did not execute the Sale Deed, then vendee can file a suit for specific performance of the contract and persuade the vendor to execute the Sale Deed. It can be vice-versa, i.e. vendor can file a suit for specific performance of contract and persuade the vendee to purchase the property. In such situation, where Sale Deeds are being executed with the help of Court, then no money would be exchanged over and above the one stated in the Agreement. Thus, Legislature A.Y.2013-24 6 thought it to introduce the scheme in Section 50C also. Therefore, we are of the view that ld. Revenue Authorities have committed a grave error by not accepting the contention of the assessee. The ld. AO is directed to identify the Stamp Duty valuation rate on 12.03.2012 and if it happened more than Rs.4,80,00,000/-, then only explore the exercise contemplated in sub-clause (ii) of Section 50C, namely, he will refer the case to the DVO and find out what was the value of the industrial plot on 12.03.2012. Only thereafter, he will decide whether any addition deserves to be made in the hands of the assessee. Both the impugned orders are set aside. The additions made by the AO are deleted. Issue is relegated to the file of AO for re-adjudication.
In the result, appeal is allowed. Order pronounced on 03.02.2026.