INCOME TAX ACT, 1961

Section 50C

Capital gains - Full value of consideration - Applicability of provision when assessee only transferred right to receive amount of compensation -

Assessee-HUF and along with another filed return of income, which were reopened on allegation that there was escapement of income since SRO value of the property sold jointly by them was higher than actual sale consideration received by both assessee's. AO alleged that purchaser of property paid deficit stamp duty and sale deed was registered. Therefore, applying provisions of section 50C, sale consideration was enhanced by adopting SRO value while computing capital gains in hands of both assessee's. Held: No compensation was paid by way of cash for acquisition of land in case of both assessee's. It was apparent that assessee's did not actually transfer their immovable property consisting of land and building but only transferred their right to receive amount of compensation and TDR rights and both assets did not fall under category of immovable property. There was no finding by revenue that market value of TDR rights received by assessee's coupled with amount was at par with SRO value of the property. It was also evident that transaction was a distress transaction causing mental agony due to loss arising out of land acquisition and wastage of land. Provisions of section 50C could not be invoked in hands of both assessee's.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

INCOME TAX ACT, 1961

Section 254 Rule 34(5)

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