2024 (3) TMI 1157 - AT - Income Tax

Determination of long term capital gain u/s 50C - assessee has received part sale consideration - whether the assessee is eligible for the benefit of First and Second proviso to Section 50C? - HELD THAT - The first proviso to Section 50C specify that in case where the date of agreement fixing the amount of consideration and the date of registration of the transfer of capital asset is not the same, the value adopted or assessed by the stamp valuation authority or the date of agreement may be taken for the purpose of computing full values of consideration for such transfer. Further second proviso to section 50C specify that the benefit of first proviso shall apply only in case where the amount of consideration, or part thereof has been received by way of account payee cheque or by banking channel. As part payment of the consideration is received by the assessee prior to the execution of agreement to sale in the month of June 2011, which we have verified from the bank statement of the assessee and as find that as per jantri rate applicable as on 01.08.2011 (sale agreement date) i.e., Rs. 64,82,526/-, the assesse has shown / received sale of Rs. 1.94 Crore, which is much more than the agreed price. Thus, in view of the aforesaid factual discussion, we find that the assessee is entitled for the benefit of first and second proviso to section 50C. Hence, the addition made by assessing officer by invoking the provision of section 50C is not sustainable and the same is deleted. In the result, the ground No. 1 of the appeal raised by the assessee is allowed.

Summary

Issues Involved:
- Addition of long term capital gain u/s 50C
- Applicability of First and Second proviso to Section 50C

The appeal was against the order of National Faceless Appeal Centre, Delhi for assessment year 2013-14, arising from the assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961. The main issue raised by the assessee was the addition of long term capital gain u/s 50C amounting to Rs. 55,64,300.

The Assessing Officer noted that the assessee sold immovable property for Rs. 1.94 crores, while the Stamp Valuation Authority valued it at Rs. 2.50 crores. This led to the application of Section 50C. Despite the assessee's explanations and request to refer to the District Valuation Officer, the Assessing Officer added Rs. 55,64,300 to the income of the assessee.

The assessee contended before the NFAC/Ld.CIT(A) that the sale consideration exceeded the prevailing jantri rate at the time of sale, making the First and Second proviso to Section 50C applicable. The NFAC/Ld.CIT(A) dismissed the appeal, leading to the current appeal before the Tribunal.

During the hearing, the Ld. AR for the assessee argued that the First and Second proviso to Section 50C were clearly applicable in this case, as evidenced by the part payment received by the assessee and the sale consideration exceeding the jantri rate. The Ld. Sr-DR for the Revenue supported the lower authorities' decision.

After considering the submissions and relevant case law, the Tribunal found that the assessee was eligible for the benefit of the First and Second proviso to Section 50C. As the sale consideration exceeded the jantri rate and part payment was received through banking channels, the addition made by the Assessing Officer was deemed unsustainable and was therefore deleted.

In conclusion, the Tribunal allowed the appeal of the assessee, ruling in favor of the applicability of the First and Second proviso to Section 50C in determining the long term capital gain.