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  • 2009

Applicability of section 50C of IT Act in case consideration declared by assessee is accepted by Stamp Valuation Authority

Posted In Income Tax Case Laws | | 4 Comments » Print Friendly and PDF

CASE DETAILS
ITAT, AMRITSAR BENCH, AMRITSAR
Punjab PolyJute Corporation v. ACIT Appeal No. : ITA NO. 425 (ASR)/2007, Decided on : APRIL 11, 2008

RELEVANT PARAGRAPHS:

4. We have heard both the parties and perused the material on record. Relevant paragraph of section 50C reads as under :

“50C Special provision for full value of consideration in certain cases – (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereinafter in this section referred to as the `Stamp Valuation authority’ for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to, be the full value of the consideration received or accruing as a result of such transfer.”

It is observed that section 50C by the Finance Act, 2002 came into force with effect from 1-4-2003. Clause 24 of the Finance Bill as per Notes on Clauses states that the insertion of this provision is to provide for a special provision for the full value of consideration in certain cases. It has been provided that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land and building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value sol adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

Memorandum Explaining Provisions of Finance Bill, 2002, states in this regard as under :

“The Bill proposes to insert a new section 50C in the IT Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property.

It is proposed to provide that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed by any authority of State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration and capital gains shall be computed accordingly under section 48 of the IT Act.

It is further proposed to provide that where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer and he has not disputed the value so adopted or assessed in any appeal or revision or reference before any authority or Court the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A of the IT Act. If the fair market value determined by the Valuation Officer is less than the value adopted for stamp duty purposes, the Assessing Officer may take such fair market value to be full value of consideration. However, if the fair market value determined by the Valuation Officer is more than the value adopted or assessed for stamp duty purposes, the Assessing Officer shall not adopt such fair market value and will take the full value of consideration to be the value adopted or assessed for stamp duty purposes.

It is also proposed to provide that if the value adopted or assessed for stamp duty purposes is revised in any appeal, revision or reference, the assessment made shall be amended to recompute the capital gains by taking the revised value as the full value of consideration.

These amendments will take effect from 1-4-2003, and will, accordingly, apply in relation to the Assessment year 2003-04 and subsequent years.”

From the perusal of Notes on Clauses and Memorandum Explaining the Provisions in the Finance Bill, 2002, it becomes explicitly clear that if the consideration declared to be received on sale of land or building or both is less than the value adopted or assessed by any authority of the State Government for the purposes of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of consideration and capital gain shall be computed accordingly under section 48 of the Act.”

In the present case, the property registered at Rs.16.34 lacs @ Rs.220.81 per sq. yd. The contention of the Department is that the value of the land is at Rs. 500A per sq. yd., since there is a difference, section 50C is applicable. In our opinion, the argument of the Department is misconceived. Section 50C comes into play only when there is valuation at a higher value for stamp valuation purposes by the State Authority than declared by assessee in the sale deed. When there is such difference noticed, valuation adopted by the stamp valuation authority has to be substituted with the sale consideration of such property mentioned in the sale deed. In the present case, the property registered at particular rate, which is adopted for registration purpose and there is no question of replacing the valuation adopted by the stamp valuation authority with the DVO for the purpose of computing the capital gain. The purpose of section 50C is that the property, which is under transfer from the assessee to another person, should have been assessed at higher value for stamp valuation purpose than that received by the assessee. Since the stamp valuation authority had accepted the consideration declared by the assessee in sale deed, there is no question of once again referring the matter to the DVO. Accordingly, we allow the ground taken by the Assessee.

In the result, the appeal of the assessee is allowed.


4 Responses to “Applicability of section 50C of IT Act in case consideration declared by assessee is accepted by Stamp Valuation Authority”

  1. kanishk says:

    compensation received after the compromise between two parties in a civil title suit A party receives compensation while party B writes the registry in favour to C who is purchaser of the property ………

    Q-whether party A receiving compensation will attract sec. 50 c of the Indian income tax act?

  2. Pawan Arora says:

    whether section 50C is applicable on the depreciable immmovable property used in business sold for a value less than the value taken for stamp duty.

  3. Amit Agrawal says:

    i want to knoe that if a lessor sold the property alongwith lease to any third person at a value lower than market value, authority will charged stamp duty on full amount thereafter third party also sale the leased property to another person. what is valuation of property and who will liable to pay tax, if lessor and third person not paid the same.

  4. R.K. GURTOO says:

    Are there any High Court cases on applicability of sec 50C. I have only found various ITAT decisions

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