INCOME TAX ACT, 1994

Section 50C

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

Assessee sold a plot of land for Rs. 1,70,00,000. Its stamp duty value came to be Rs. 1,73,17,157. Accordingly, AO invoked section 50C and made addition of long-term capital gain on account of difference between actual sale price and stamp price of the land. Assessee contended that the impugned disallowance was very well within the tolerance margin of 5% as per 3rd proviso to section 50C inserted by the Finance Act, 2018 with effect from 1-4-2019, thus, the said disallowance would not be sustainable. However, Revenue contended that the said statutory proviso was prospective in nature and hence, the same was not applicable in instant case. Held: Tribunal in the case of Chandra Prakash Jhunjhunwala v. DCIT, ITA No. 2351/Kol/2017 dt. 9-8-2019: 2019 TaxPub(DT) 5432 (Kol-Trib) holds the third proviso to section 50C to be applicable with retrospective effect being declaratory and curative in nature. Further, as per the said proviso, where difference between stamp duty valuation and sale consideration was less than 5%, addition made by AO was to be deleted. In instant case since difference between stamp duty valuation and sale consideration of land was less than 5%, the impugned addition made by AO was liable to be deleted.

Relied:Chandra Prakash Jhunjhunwala v. DCIT, ITA No. 2351/Kol/2017 dt. 9-8-2019: 2019 TaxPub(DT) 5432 (Kol-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 50C

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