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2021 (6) TMI 928 - AT - Income TaxCapital gain computation - land was under the ULC Act - section 50C application - HELD THAT - As per date of sale, the land was under the ULC Act and the state legislature repealed on 27.3.2008 and thereafter division of Hon'ble jurisdictional High Court, the state government issued a Memo on 11.7.2012 declaring that the property does not attract the provisions of ULC Act and thereafter the Tahsildar vide letter dt. 24.5.2014 allowed the construction on the land. There is no infirmity in the order of CIT(Appeals). Therefore we dismiss the appeal of the Revenue.
Issues Involved:
1. Applicability of Section 50C of the Income Tax Act on property under the Urban Land Ceiling Act (ULC Act). 2. Validity of the sale consideration adopted by the Commissioner of Income Tax (Appeals) (CIT(A)). 3. Procedural fairness in considering additional evidence without remanding to the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Applicability of Section 50C of the Income Tax Act on Property under the ULC Act: The primary issue is whether Section 50C of the Income Tax Act, which mandates the adoption of the Sub-Registrar Office (SRO) value for stamp duty purposes as the sale consideration, applies to properties under the ULC Act. The Revenue contended that the CIT(A) erred in not confirming the SRO value adopted by the AO for computing capital gains. They argued that the property was not vested with the government under the ULC Act at the time of sale, thus making Section 50C applicable. However, the assessee argued that the property was under the ULC Act at the time of sale, and therefore, Section 50C should not apply. The CIT(A) agreed with the assessee, noting that the property was indeed under the ULC Act when the sale agreement was entered in 1995 and when the sale deeds were executed in 2007, prior to the ULC Act's repeal in 2008. The Tribunal upheld this view, citing that the sale deeds were executed before the ULC Act was repealed and thus, Section 50C could not be invoked. 2. Validity of the Sale Consideration Adopted by the CIT(A): The Revenue questioned the CIT(A)'s decision to not adopt the SRO value as the sale consideration, arguing that the property was not encumbered by the ULC Act at the time of sale. The CIT(A) found that the property was indeed subject to the ULC Act, which restricted its market value. The Tribunal supported the CIT(A)'s findings, noting that the property could not fetch normal market value due to the ULC Act's restrictions. The Tribunal referenced the Supreme Court's decision in S.N. Wadiyar vs. Commissioner of Wealth Tax, which held that properties under the ULC Act should be valued based on the compensation payable by the government, not the market value. 3. Procedural Fairness in Considering Additional Evidence Without Remanding to the AO: The Revenue argued that the CIT(A) accepted additional evidence without providing the AO an opportunity to examine it. The Tribunal observed that the CIT(A) had examined the documents submitted by the assessee and found them credible. The Tribunal did not find any procedural lapse or unfairness in the CIT(A)'s approach, as the evidence supported the assessee's claim that the property was under the ULC Act at the time of sale. Conclusion: The Tribunal dismissed the Revenue's appeals, affirming the CIT(A)'s decision that Section 50C of the Income Tax Act does not apply to properties under the ULC Act. The Tribunal found no fault in the CIT(A)'s adoption of the sale consideration and upheld the procedural fairness in considering additional evidence. The decision in ITA No. 173/Hyd/2017 was applied mutatis mutandis to the other two appeals, ITA Nos. 1157/Hyd/2017 and 1158/Hyd/2017, which were also dismissed. Order Pronounced: The order was pronounced in the open court on 27th May, 2021.
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