INCOME TAX ACT, 1961

Section 50C

Capital gains - Addition under section 50C - Third provisio to section 50C, whether retrospective in nature - Difference in valuation being less than 5%

It was noticed by AO that the assessee had declared long-term capital gain of Rs. 1,22,63,576 against sale of property at Pretoria Street, Kolkata on 14-12-2013. AO noticed that the issue of sale of property by the assessee attracts the provision of section 50C as the sale consideration received as a result of the transfer of a capital asset was less than the market value as per stamp duty valuation. AO stated that why full value of consideration received as a result of the said transfer should not be taken at Rs. 3,27,01,950 (market value as per stamp duty authority) in place of Rs. 3,15,00,000 (sale consideration received as per the assessee). So, an amount of Rs. 12,01,950 (difference of Rs. 3,27,01,950 - Rs. 3,15,00,000) was added to the total income of the assessee by invoking section 50C. CIT(A) confirmed the addition. The third proviso to section 50C as amended by the Finance Act, 2018 w.e.f. 1-4-2019 was the issue in dispute whether prospective in operation or retrospective in nature.Held: The insertion of third proviso to section 50C was declaratory and curative in nature. Third proviso to section 50C relates to computation of value of property, hence, it was not a substantive amendment, it was only a procedural amendment therefore, the Coordinate Benches of the ITAT used to ignore the variation up to 10%, therefore, the said amendment should be retrospective. Quite clearly therefore, even when the statute does not specifically state so, such amendments, can only be treated as retrospective and effective from the date related statutory provisions was introduced. Viewed thus, third proviso to section 50C should be treated as curative in nature and with retrospective effect from 1-4-2003, i.e., the date effective from which section 50C was introduced. Finance Act, 2018, with effect from 1-4-2019 provided that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration was not more than 5% of the sale consideration. The difference of Rs. 12,01,950 was not more than 5% of the sale consideration i.e., it was at 3.81% [12,01,950/3,15,00,000 x 100] of sale consideration, this Tribunal therefore, deleted the addition of Rs. 12,01,950.

Relied:CIT v. Ansal Landmark Township (P.) Ltd. (2015) 377 ITR 635 (Del) : (2015) 234 Taxman 825 (Del) : (2015) 61 Taxmann.com 45 (Del) : 2015 TaxPub(DT) 3482 (Del-HC), Alom Extrusions Ltd. (2009) 185 Taxman 416 (SC) : 2009 TaxPub(DT) 2109 (SC),Allied Moters (P) ltyd. 91 Taxman 205 (Sc) : 1997 TaxPub(DT) 1147 (SC) and Jphn Flower (India) (P) Ltd. ITA No. 7545/Mum/2014, for assessment year 2010-11, Order, dated 15-1-2017.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 45 Section 111A

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