2024 (1) TMI 1133 - AT - Income Tax

Capital gain computation - reselling of asset - Stamp Duty Valuation - year of transfer - AO had received an information that assessee has sold an immovable property whose sale value did not match with the Stamp Duty Valuation, vis- -vis shown by the assessee - addition made with the aid of Section 50C(1) HELD THAT - As per Section 50C and its first proviso if an assessee has received a consideration or such consideration has accrued to the assessee on sale of a capital assets/ building is less than the value adopted or assessed for the purpose of charging Stamp Duty on such transaction, then, full sale consideration would be deemed equal to the amount on which Stamp Duty has been charged. In this present case assessee has purchased a plot at Indirapuram, Gaziabad and sale deed was executed in favour of the assessee. Later on assessee sold this plot for a consideration as received by the assessee through Bank Draft. The assessee has further executed Power of Attorney in favour of Shri Manoj Kumar Sharma who resold this plot on 18th November, 2011 to one other. Therefore, in the hands of the assessee the Stamp Duty Valuation ought to have been determined in the year 2000 and not 2011. Gaziabad Development Authority must have executed the Conveyance Deed in favour of the assessee more than the value determined by the Registering Authority for the purpose of Stamp Duty. Therefore, a deeming sale consideration cannot be assumed in the hands of the assessee in A.Y. 2011. The proviso appended to Section 50C duly protects the assessee from considering the Stamp Duty value as full sale consideration in the hands of the assessee in 2011. Therefore, both the authorities have erred in computing the alleged long-term capital gain in the hands of the assessee. We allow this ground and delete the addition made by AO. Decided in favour of assessee.

Summary

Issues involved:
The issues in this case revolve around (a) the validity of reopening the assessment and (b) the addition under Section 50C(1) in the hands of the assessee.

Reopening of the assessment:
The Assessing Officer received information about the sale of an immovable property by the assessee that did not match the Stamp Duty Valuation, leading to the issuance of a notice under section 148. The assessee had declared total income in the return filed. The chronological events related to the sale transaction were presented, showing the series of transactions involving the property. The Assessing Officer made an addition based on discrepancies in the valuation.

Addition under Section 50C(1):
The Tribunal examined Section 50C and its proviso, which state that if the consideration received on the transfer of a capital asset is less than the value assessed for Stamp Duty purposes, the latter shall be deemed as the full consideration. However, the proviso allows using the value assessed by the Stamp Valuation Authority on the date of agreement if different from the registration date. In this case, the Tribunal found that the Stamp Duty Valuation should have been determined in 2000 when the property was initially purchased, not in 2011 when it was resold. The proviso protects the assessee from considering the Stamp Duty value as full sale consideration in 2011. Therefore, the authorities erred in computing the capital gain, and the Tribunal deleted the addition made by the Assessing Officer.

Conclusion:
The Tribunal allowed the appeal of the assessee, emphasizing that the valuation for Stamp Duty purposes should have been based on the initial purchase date in 2000, not the subsequent resale in 2011. The Tribunal refrained from deciding on the issue of reopening the assessment.