INCOME TAX ACT, 1961

Section 50C

Capital gains - Capital gain computation - Justification in adopting the value under section 50C - Property not sold for the market rate

Assessee had sold a property for Rs. 50,01,000. However, for computation of capital gain, assessee had taken the sale consideration at Rs. 57,00,000. He also obtained report from the registered valuer, and estimated the market value at Rs. 57,00,000. The value estimated by the registered valuer was a distress sale value, however the guideline value of Registration Department was Rs. 72,50,000 the difference of Rs. 15,05,000 was taken as sale consideration for computing the capital gain. According to assessee, the property was mortgaged to bank. One of assessee was suffering due to Kidney failure therefore, they could not effectively negotiate the sale of the property to obtain the correct market value. Assessee submitted that when he encumbered the property, the market value of the property need not be taken for computing the capital gain by applying section 50C. AO was not justified in adopting the value under section 50C. Held: Property was admittedly mortgaged with a Bank and it was also not in dispute that one of the assessee was suffering from Kidney failure. Therefore, the contention of the assessee that the property could not be sold for the market rate might have some justification. In the case of G. Anitha [(2015) 55 taxmann.com 538 (Hyd) : 2015 TaxPub(DT) 1935 (Hyd-Trib)] it was found that wherever there was an encumbrance, the value under section 50C need not be applied. When assessee mortgaged property to a Bank and could not effectively negotiate for sale of property due to Kidney failure of one of assessee, the provisions of section 50C were not be applicable.

Followed:Smt. D. Anitha v. ITO (2015) 55 taxmann.com 538 (Hyd) : 2015 TaxPub(DT) 1935 (Hyd-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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