2015 (11) TMI 1515 - AT - Income Tax

Applicability of provision of sec 50C - whether SRO value on the date of the agreement of sale has to be considered under the provisions of section 50C - Held that - Since the process of sale has been initiated from the date of sale agreement, the applicability of the provisions of section 50C should be looked at only on the date of sale agreement. CIT(A) was correct in holding that the SRO value as on the date of the agreement of sale has to be considered under the provisions of section 50C of the I.T. Act.

Summary

Issues:
1. Consideration of SRO value under section 50C of the I.T. Act.
2. Applicability of the provisions of section 50C as on the date of sale agreement or as on the date of registration.

Issue 1: Consideration of SRO value under section 50C of the I.T. Act:
The appeal by the revenue was against the order of CIT(A)-3, Hyderabad for the AY 2007-08. The revenue contested the CIT(A)'s decision that the SRO value as on the date of the agreement of sale should be considered under section 50C of the I.T. Act. The assessee was issued a notice u/s 148 to tax capital gains, which led to assessment proceedings where the AO computed capital gains from the sale of a house property in Hyderabad. The AO considered the SRO value at the time of registration, while the assessee argued to adopt the value as per the agreement of sale. The CIT(A) allowed the appeal of the assessee, relying on previous ITAT decisions, leading the revenue to appeal.

Issue 2: Applicability of the provisions of section 50C as on the date of sale agreement or as on the date of registration:
The main issue before the tribunal was whether the value to be adopted under section 50C should be as on the date of the agreement of sale or as on the date of registration. The tribunal referred to previous ITAT decisions, particularly the case of M/s Lahiri Promoters, where it was held that the provisions of section 50C should be applied based on the date of the sale agreement initiation. The tribunal distinguished the decision of the Hon'ble Madras High Court cited by the revenue, emphasizing that it did not address the specific issue of the date for applying section 50C. Ultimately, the tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal based on the precedent set by the Vizag benches and the rationale that the process of sale initiation determines the applicability of section 50C.

In conclusion, the tribunal's judgment clarified the importance of considering the SRO value under section 50C of the I.T. Act and resolved the dispute regarding the date for applying the provisions of section 50C in the context of a sale agreement. The decision was based on established precedents and legal interpretations, ultimately dismissing the revenue's appeal and upholding the CIT(A)'s order.