2018 (8) TMI 2005 - AT - Income Tax

Addition invoking provision of section 50C - HELD THAT - We find that stamp duty valuation as on 04.07.2010 has to be considered for the purpose of section 50C of the Act if provision of section 50C are to be invoked. Since, the stamp duty value of property sold were at ₹ 23,73,710 as against sale consideration of ₹ 35 lakhs as shown in the agreement to sale dtd. 04.07.2010 and in fact received by the assessee. Sale consideration at ₹ 35 Lakh being more than stamp duty value as on date of agreement to sale would be considered for computation of gains if any. Accordingly, the addition of ₹ 20,07,145 made by the AO is therefore, directed to be deleted. This view is further supported by the provision of section 56(2)(vii) has specifically provided that where the agreement for fixing the amount of consideration for the transfer of property and the date of registration are not the same, the stamp value on the date of the agreement may be taken for the purpose of this sub-clause. It has been also provided further that the said provisions shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property. Similarly, other provisions of section 43CA are also have same effect. In the light of above backdrop, the addition made by the AO is deleted. Accordingly, this ground of appeal is allowed.

Summary

Issues:
- Appeal against addition under section 50C of the Income Tax Act for the Assessment Year 2012-13.

Analysis:
- The appeal contested the addition of ?20,07,145 under section 50C of the Act.
- The Assessee sold a residential house for ?35 lakhs, with part payments made before the registration of the sale deed.
- The Assessee argued that stamp duty valuation should be based on the date of the agreement, not the registration date, as per sections 56(2)(vii) and 43CA.
- The Assessee relied on the retrospective application of the proviso to section 50C, inserted by the Finance Act 2016.
- The Departmental Representative argued against the retrospective application of the proviso.
- The Tribunal noted that part payments were made before the registration of the sale deed.
- The Tribunal applied the proviso to section 50C retrospectively, following precedents from the Ahmedabad Tribunal.
- As the sale consideration of ?35 lakhs exceeded the stamp duty value on the agreement date, the addition of ?20,07,145 was deleted.
- The decision was supported by the provisions of sections 56(2)(vii) and 43CA, leading to the allowance of the appeal by the Tribunal.

This detailed analysis highlights the key arguments, legal provisions, and the Tribunal's rationale in allowing the Assessee's appeal against the addition under section 50C of the Income Tax Act for the relevant assessment year.