The Tax PublishersITA No. 4850/Mum/2019
2021 TaxPub(DT) 0386 (Mum-Trib) : (2021) 187 ITD 0738 : (2021) 085 ITR (Trib) 0674INCOME TAX ACT, 1961
Section 50C
Where the assessee, a non-resident, had sold her property and there was a difference/variation of 6.55 per cent in sale consideration as disclosed by her vis-a-vis value adopted by Stamp Duty Valuation Authority which, in the instant case, was less than 10% (the tolerance band for variations), therefore, the amendment in the scheme of section 50C(1) by inserting the third proviso thereto was held to relate back to date when the related statutory provision of section 50C itself was introduced i.e. 1-4-2003 and hence, addition made by AO under section 50C could not be sustained.
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Capital gains - Sale of property vis-a-vis stamp duty value - Retrospectivity of third proviso to section 50C -
Assessee, a non-resident, sold her property and it was established that there was a 6.55% variation in the sale consideration to the stamp duty value which was brought to tax by the AO and upheld by the Commissioner (Appeals). On higher appeal, it was the case of the assessee that the variation being only marginal to the tune of 6.55% the safe harbour limit of 5% and 10% subsequently introduced by the third proviso in the subsequent years be applied retrospectively in their case from a beneficial reading. Held: Certain important legislative amendments were made by the Finance Act, 2018 and Finance Act, 2020. By Finance Act, 2018, the third proviso to section 50C(1) was inserted. Thus, a variation of 5% with effect from 1-4-2019 (10% with effect from 1-4-2021 as per Act No. 12 of 2020) is permissible in the sale consideration vis-a-vis valuation adopted by stamp valuation authorities. The mechanism under section 50C proceeds on the assumption that when the sale consideration is less than the stamp duty valuation, the sale consideration is to be treated as understated. This assumption is, however, laid to rest when the variations between the stated consideration and the stamp duty valuation figure are treated as explained. The insertion of the third proviso to section 50C(1) provides for this tolerance band with respect to a certain degree of variations between the stamp duty valuation and the stated consideration of an immovable property. In other words, as long as the variations are within the permissible limits, the anti-avoidance provisions of section 50C do not come into play. Amendment in the scheme of section 50C(1), was made by inserting the third proviso thereto and by enhancing the tolerance and for variations between the stated sale consideration vis-a-vis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of section 50C itself was introduced, i.e. 1-4-2003. The third proviso to section 50C is to be read retrospectively thus the safe harbour has to be applied from the time the section itself was introduced with effect from 1-4-2003. Since the variation to the stamp duty value was only 6.55%, there can be no additions sustained on the assessee.
REFERRED : Rajeev Kumar Agarwal v. ACIT (2014) 45 taxmnann.com 555 (Agra) : 2014 TaxPub(DT) 2460 (Agra-Trib); CIT v. Ansal Landmark Township (P) Ltd. (2015) 61 taxmann.com 45 (Del) : 2015 TaxPub(DT) 3482 (Del-HC); Dharmashibhai Sonani v. ACIT (2016) 161 ITD 627 (Ahd) : 2016 TaxPub(DT) 4420 (Ahd-Trib); CIT v. Vummudi Amarendran ((2020) 429 ITR 97 (Mad) : 2020 TaxPub(DT) 4239 (Mad-HC)
FAVOUR : In assessee's favour.
A.Y. : 2011-12
IN THE ITAT, MUMBAI 'I' BENCH
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