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2007 (3) TMI 317 - ITAT JODHPURAddition on Long-term capital gain - consideration received on sale of land - Valuation estimated u/s 55A - applicability of section 50C - HELD THAT:- It is a trite law that the legal fiction cannot be extended beyond the purpose for which it is enacted. Section 50C embodies the legal fiction by which the value assessed by the stamp duty authorities is considered as the full value of consideration for the property transferred. It does not go beyond the cases in which the subject transferred property has not become the subject-matter of registration and the question of valuation for stamp duty purposes has not arisen. By no stretch of imagination, the legal fiction confined to restricted operation can be widened to include within its sweep all the cases where 'such property' has not been valued by the State authorities for stamp duty purposes. The Hon'ble Supreme Court in the case of CIT v. Amarchand N. Shroff [1962 (10) TMI 51 - SUPREME COURT] has held that 'legal fiction are only for a definite purpose and they are limited to the purpose for which they are created and should not be extended beyond the legitimate field'. It is wholly irrelevant to consider the assessed value of another property for stamp duty purposes as full value of consideration by making reference to the Valuation Officer u/s 55A. Unless the property transferred has been registered by sale deed and for that purpose the value has been assessed and stamp duty has been paid by the parties, section 50C cannot come into operation. In such a situation, the position existing prior to section 50C would apply and the onus would be upon the revenue to establish that sale consideration declared by the assessee was understated with some clinching evidence. The relevant judgments discussed above viz., K.P. Varghese [1981 (9) TMI 1 - SUPREME COURT] and Shivakami Co. (P.) Ltd.[1986 (3) TMI 2 - SUPREME COURT] would come into operation and govern the determination of full value of consideration. It is noticed that the assessee transferred the property in question by executing an agreement which was not registered with the registering authority. In such a case, section 50C could not have come into operation and the resultant application of section 55A by which the Assessing Officer got the property valued and adopted the report of the Valuation Officer as the sole basis for making the impugned addition was wholly invalid. As the Assessing Officer has not embarked upon making enquiries from the purchaser about the actual sale consideration, and has not brought on record any other material worth the name to show that the sale consideration declared by the assessee was understated, in my considered opinion the addition was wrongly made and sustained. I, therefore, order for the deletion of the addition. In the result, the appeal is allowed.
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