2024 (12) TMI 710 - HC - Income Tax

LTCG - applicability of Section 50C - HELD THAT - Applicability of Section 50C of the Act, as amended with effect from 01.10.2009, has been decided in R.Sugantha Ravindran 2013 (3) TMI 271 - MADRAS HIGH COURT we are of the firm view that the insertion of words or assessable by amending Section 50C with effect from 01.10.2009 is neither a clarification nor an explanation to the already existing provision and it is only an inclusion of new class of transactions namely the transfers of properties without or before registration. Before introducing the said amendment, only the transfers of properties where the value adopted or assessed by the stamp valuation authority were subjected to Section 50C application. After introduction of the words or assessable after the words adopted or assessed , such transfers where the value assessable by the stamp valuation authority are also brought into the ambit of Section 50C. Thus such introduction of new set of class of transfer would certainly have the prospective application only and not otherwise. Hence the assessee's transfer admittedly made earlier to such amendment cannot be brought u/s 50C. Decided in favour of assessee.

Summary

Issues:
Challenge to Income-Tax Appellate Tribunal's order regarding property valuation for assessment years 2005-06 under Section 50C of the Income Tax Act.

Analysis:
The High Court of Madras heard two appeals related to assessment years 2005-06, where the Income-Tax Department challenged the Income-Tax Appellate Tribunal's order dated 10.02.2011. The primary issue was the correct valuation of the property sold by the assessee as on 01.04.1981, considering the revaluation figure of Rs. 88,41,695 as on 31.03.1985. The question was whether the Tribunal erred in not considering the guideline value fixed for stamp duty purposes and the lack of relevant material to substantiate the revaluation done in 1985.

The Court referred to a previous judgment in Commissioner of Income Tax v R.Sugantha Ravindran, which dealt with the applicability of Section 50C of the Income Tax Act. The crux of the matter was whether the assessing officer could consider the value of the property assessable by the State Government for stamp duty payment, even if the registration of the sale deed had not taken place. The Court also highlighted a circular issued by the Board, clarifying that the amendments to Section 50C made by the Finance Act, 2009, were prospective and not retrospective in nature.

Moreover, the Court emphasized that the Revenue was bound by the circular issued by the Board, as established in a Supreme Court decision regarding the binding nature of revenue circulars on departmental authorities. The insertion of the words "or assessable" in Section 50C post the 2009 amendment was viewed as the inclusion of a new class of transactions, i.e., transfers of properties without or before registration. This amendment was deemed to have prospective application only, thus not applicable to transfers made before the amendment.

Consequently, the Court dismissed the Tax Appeal, ruling in favor of the assessee based on the existing law and circulars. The substantial question of law was decided against the Revenue, affirming the Tribunal's order. Ultimately, the tax case appeals were dismissed with no costs incurred.