2023 (6) TMI 1403 - AT - Income Tax

Capital gain computation - applicability of provision of section 50C - valuation of property for capital gains computation - whether the stamp duty valuation has to be taken on the date of agreement to sell or on the date of the sale deed since both the dates are falling within the same financial year? - HELD THAT - It is not in dispute that part of the sale consideration was received before the date of the agreement for transfer. It is not in dispute that the stamp duty was actually paid on the date of agreement to sell as per the circle rate prevailing at that point of time. An identical issue was considered by the coordinate Bench in the case of Amit Bansal 2018 (11) TMI 1699 - ITAT DELHI held that the proviso to section 50C(1) introduced by the Finance Act 2016 can be construed as clarificatory in nature and can be applied on pending matters. The various other decisions relied on by the Id. counsel for the assessee also support the case of the assessee that where the date of the agreement fixing the amount of consideration and the date of registration regarding the transfer of the capital asset in question are not the same the value adopted or assessed or assessable by the stamp valuation authority on the date of the agreement is to be taken for the purpose of full value of consideration. Therefore; accept the argument of assessee in principle and restore the issue to the file of the AO with a direction to verify necessary facts and decide the issue in the light of my above observation directing to adopt the circle rate on the date of agreement to sell in order to compute the consequential capital gain. The appeal of the revenue is accordingly dismissed.

Summary

Issues involved:
1. Discrepancy in the valuation of property for capital gains computation.
2. Interpretation of section 50C of the Income Tax Act regarding stamp duty valuation.
3. Applicability of amendments to section 50C introduced by the Finance Act, 2016.

Detailed Analysis:
1. The primary issue in this case revolved around a transaction between two parties involving the sale of a property at a lower value than the stamp valuation. The Assessing Officer (AO) added the difference in valuation to the assessee's income, leading to a challenge before the CIT(A). The contention was based on the application of section 50C, which stipulates that the stamp duty value of the property at the time of the agreement to sell should be considered for capital gains computation. The CIT(A) allowed the appeal, citing precedents and emphasizing the importance of the agreement date for valuation purposes.

2. The interpretation of section 50C played a crucial role in determining the correct valuation method for the property transfer. The provision includes specific provisos regarding the consideration amount, registration date, and stamp valuation authority's assessment. In this case, the coordinate Bench's decision in a similar matter highlighted the importance of considering the circle rate on the date of the agreement to sell, rather than the date of actual sale, for computing capital gains. This interpretation was supported by various decisions and was deemed applicable to the present case.

3. The final issue addressed the applicability of the amendments to section 50C introduced by the Finance Act, 2016. The debate centered on whether these amendments were prospective or retrospective in nature. Citing precedents and decisions from other Tribunals, it was established that the amendments were curative and clarificatory, intended to be applied retrospectively. The decision to uphold the CIT(A)'s findings was based on this understanding, emphasizing the importance of the agreement date for stamp duty valuation and capital gains computation.

In conclusion, the judgment dismissed the revenue's appeal, affirming the importance of considering the stamp duty value at the agreement date for computing capital gains and highlighting the retrospective applicability of relevant amendments to section 50C.