Section 50C Applies to Leasehold Rights; But Stamp Value to Follow Agreement Date-ITAT Grants Major Relief

Mahendra Silk Mills Pvt. Ltd Vs ITO (ITAT Mumbai)

Section 50C Applies to Leasehold Rights; But Stamp Value to Follow Agreement Date-ITAT Grants Major Relief

The core dispute was whether capital gains on transfer of leasehold land and building should be taxed in A.Y. 2009–10 using stamp duty value u/s 50C, and whether such provision applies to leasehold rights.

The ITAT delivered a balanced but significant ruling:

On applicability of Section 50C:

• The assessee argued that leasehold rights are outside 50C
• However, relying on the Bombay High Court ruling in Vidarbha Veneer Industries (2025), the ITAT held:
  • “Capital asset” includes property held in any manner (owner, lessee, etc.)
  • Transfer of substantial leasehold rights akin to ownership attracts Section 50C
• Accordingly, 50C was held applicable even to leasehold rights

On crucial relief (date of valuation):

• The assessee had entered into agreements in 2001–2002, received consideration through banking channels, and claimed capital gains in A.Y. 2003–04
• Registration happened later (A.Y. 2009–10), leading AO to adopt higher stamp value

The ITAT held:

• Proviso to Section 50C (agreement date vs registration date) is curative and retrospective
• Where consideration (or part) is received through banking channels, stamp value on agreement date must be adopted

Result:

• AO directed to recompute capital gains based on agreement date valuation
• Major relief granted to assessee
• Appeal allowed

Key takeaway:

Even though 50C now extends to leasehold rights, taxpayers still get strong protection-stamp duty valuation must align with the original agreement date where conditions are satisfied, preventing artificial inflation of capital gains.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal filed by the assessee challenges the order of the Learned Commissioner of Income Tax (Appeals), Mumbai (‘Ld. CIT(A)’ for short), National Faceless Appeal Centre (“NFAC” for short) passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), pertaining to the Assessment Year (‘A.Y.’ for short) 2009-10.

2. The assessee has raised the following grounds of appeal:

“1. The Learned Commissioner of Income Tax Appeal has erred in facts and in law in confirming the assessment of the capital gains arising from transfer of leasehold land and building thereon in Assessment Year 2009-10 as against in Assessment Year 2003-04 offered by the Appellant.

2. The Learned Commissioner of Income Tax Appeal has erred in accepting the findings of the Remand Report of learned Assessing Officer and thereby in not discussing and appreciating the facts brought out by the appellant in response to the Remand Report.

3. The Learned Commissioner of Income Tax Appeal erred in Law in confirming the application of the provisions of section 50C of the Income Tax Act, 1961 and thereby not appreciating the fact the subject of transfer is leasehold rights in the property and that section 50C do not apply to leasehold land.

4. The Learned Commissioner of Income Tax Appeal has erred in facts and in law in confirming the substitution of the market value of land in Assessment Year 2009-10 whereas the consideration was decided by the parties in Assessment Year 2003-04.

5. The Learned Commissioner of Income Tax Appeal erred in facts and in law in confirming the assessment of capital gains on transfer of leasehold rights in the land as short term capital gains when in facts of the appellant no depreciation was claimed on the leasehold land.

6. The Appellant reserves the right to add, delete or alter any of the above grounds of appeal.”

3. Brief facts of the case are that the assessee company filed its return of income dated 29.09.2009 declaring total income at Rs.7,23,990/- under the normal provisions and book profit of Rs.1,58,18,589/- u/s 115JB of the Act and the same was processed u/s 143(1) of the Act. The assessee’s case was reopened u/s 147 of the Act vide notice u/s 148 of the Act dated 11.01.2012 based on the information from ITO, Ward-11(3), Ahmedabad that the assessee has sold property to Mr. Rasulmiya H. Shaikh and two others for a consideration of Rs.1,24,84,085/-, which stamp duty value was Rs.4,36,45,790/- thereby resulting in under assessment of Rs.3,11,61,705/- u/s 50C of the Act where income has escaped assessment. After duly considering the assessee’s submission the Learned Assessing Officer (“Ld. AO” for short) passed the assessment order dated 18.03.2013 u/s 147 r.w.s 143(3) of the Act determining the total income at Rs.4,43,77,725/- under the normal provision after duly making an addition of Rs.4,36,45,790/- as Short Term Capital Gain (“STCG” for short) u/s 50C of the Act being the difference in the sale consideration as per the stamp duty valuation and book profits at Rs.17,92,246/- u/s 115JB of the Act.

4. Aggrieved, the assessee was in appeal before the first appellate authority who vide order dated 30.07.2025 upheld the addition made by the Ld. AO on various grounds.

5. Aggrieved, the assessee is in appeal before us, challenging the order of the Ld. CIT(A) on the abovementioned grounds.

6. The Learned Authorized Representative (“Ld. AR” for short) for the assessee contended that the assessee has sold the property during the A.Y. 2003-04 and had given possession to the transferees on 22.11.2002 which is duly reflected in the supplementary and possession deed executed by the assessee and the transferees dated 22.11.2002. The Ld. AR further contended that the assessee has furnished various documentary evidences to establish the fact that payments were received in A.Y. 2003-04 itself and possession was also delivered simultaneously. The Ld. AR further stated that the conveyance deed executed in A.Y. 2009-10 does not relate to the assessee as the assessee is not a party to it and the lower authorities have also failed to consider the audited accounts of the assessee for A.Y. 2003-04 which consists of the working of capital gains on the consideration received on sale of the said property duly reported. The Ld. AR further contended that the assessee had filed affidavit of the buyers stating that the possession of the property was taken over by them in the year 2002 itself. Without prejudice, the Ld. AR contended that the property was a leasehold land for which section 50C of the Act would not be applicable and even otherwise the lower authorities have not given the benefit of cost of acquisition of the land and the index cost as per the provisions of law. The Ld. AR further stated that the assessee has not claimed depreciation on the leasehold land and hence the determination of STCG on transfer of leasehold rights was faulted by the lower authorities. The Ld. AR relied on a catena of decisions.

7. The Learned Departmental Representative (“Ld. AR” for short), on the other hand, controverted the said fact and contended that as per the conveyance deed the assessee was to give possession of the property only when the total sale consideration was paid which was only during the impugned assessment year and not in A.Y. 2003-04. The Ld. DR further pointed out that in the audited financials of the assessee there was addition in fixed asset in A.Y. 2007-08 for the said property for which the assessee has also claimed depreciation which evidences the fact that the assessee was still in possession of the property during A.Y. 2007-08. The Ld. DR stated that the transferors have not furnished any documentary evidences to substantiate that possession was taken by them prior to the impugned assessment year except the affidavits. The Ld. DR relied on the order of the lower authorities.

8. We have heard the rival submissions and perused the materials available on record. The first contention of the assessee is that the property in dispute pertains to leasehold land and building for which section 50C of the Act was not applicable as per ground No.3 raised by the assessee. For this, it is trite to reproduce the provisions of section 50C of the Act for ease of reference:

“[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 or assessable] 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 so adopted [or assessed or assessable] 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.] [Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer:

Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer.] [Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent. of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.]

(2) Without prejudice to the provisions of sub-section (1), where—

(a) the assessee claims before any Assessing Officer that the value adopted [or assessed or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;

(b) the value so adopted [or assessed or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court,

the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub­section (1) of section 16A of that Act.

[Explanation 1.]—For the purposes of this section, “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). 4

[Explanation 2.—For the purposes of this section, the expression “assessable” means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.]

(3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted [or assessed or assessable] by the stamp valuation authority referred to in sub-section (1), the value so adopted [or assessed or assessable] by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.]”

9. On perusal of the above provision it is observed that Finance Act, 2002 had inserted section 50C of the Act as a special provision for full value of consideration in certain cases where consideration for transfer of a capital asset being land or building received or accruing, which is less than the value adopted by the stamp duty valuation authority for payment of stamp duty pertaining to the said transfer, then in which case the said value shall be deemed to be the full value of consideration for such transfer for the purpose of determining the capital gains as per section 48 of the Act. From this, it can be inferred that there is no embargo on applying the said provision for transfer of leasehold property when the transferor has substantial ownership right in the land or building or both and not merely transfer of leasehold rights or interest. Though the decisions of the Hon’ble Bombay High Court in the case of Atul G. Puranik vs. ITO [2011] 11 taxmann.com 92 (Mumbai)[13-05-2011] and Commissioner of Income-tax, Central-II, Mumbai vs. Greenfield Hotels & Estates (P.) Ltd. [2017] 77 taxmann.com 308 (Bombay) has held that section 50C of the Act being a deeming provision is not applicable to leasehold rights in land or building, the recent decision of the Hon’ble Jurisdictional Bombay High Court in the case of Vidarbha Veneere Industries Ltd. vs. Income-tax Officer [2025] 174 taxmann.com 223 (Bombay) has iterated the fact that holding of a property can be in any manner as an owner, lessee, sub lessee, allottee, tenant, licencee, gratuitous licencee etc. which is permissible by law for the purpose of attracting the provision of section 50C of the Act thereby reversing the findings of the earlier decisions of the Hon’ble High Court. The relevant extract of the said decision is cited herein under for ease of reference:

“6. The expression used in Section 50C of the IT Act is ‘consideration received or accruing as a result of transfer of a capital asset, being land or building or both’. This will have to be related to the definition of ‘capital asset’, as occurring in Section 2(14) of the IT Act. A perusal of the definition of ‘Capital Asset’ as contained in Section 2(14) of the IT Act would indicate, that it includes property of any kind, “held by an assessee”. What is material to note is, that the expression is “held by an assessee” and not owned by an assessee. Insofar as the immovable property, i.e. land or building is concerned, there are number of ways, in which it can be held. The holding can be either as an owner, lessee, sub-lessee, allottee, tenant, licensee, gratuitous licensee or any other mode, permissible or recognized by law. The expression “held by an assessee” therefore does not restrict the manner in which the land or building can be held. The holding of land, is merely a method in which rights to the land, can be held or acquired, by a person. That cannot be in any manner equated with land or building, but rather, would be a species of the right to hold it, which as indicated above, are of multiple nature.

7. We, therefore, find that merely because the land was originally allotted by the MIDC by way of a lease to the predecessor of the appellant, who in turn has received the same by way of an assignment, that being one of the modes of transfer, of land or building, the mere use of a particular mode of transfer, cannot create any exception vis-a-vis the holding of the land or building by the Assesee. The word ‘transfer’ as used in Section 50C(1) of the IT Act, also cannot be used in a restricted sense and will have to be given widest amplitude, considering the nature and purpose of the section and thus would include all modes and methods of transfer as are permissible and recognizable in law.

8. Atul Puranik (supra) relied upon by the learned counsel for the appellant does not consider the effect and import of Section 2(14)(a) in conjunction with the language used in section 50C of the IT Act, and merely goes on to hold, that since the land is held in a leasehold right, it cannot be equated with land or building, which does not address the issue altogether, neither does it consider the position, that mode of holding of a property, cannot be equated with the property itself, as against which what Section 50C read with Section 2(14) of the IT Act speaks about, is the property. We are therefore, not in agreement with what has been held in Atul Puranik (supra). In Commissioner of Income-tax, Central-II, Mumbai v. Greenfield Hotels & Estates (P.) Ltd. [2017] 77 com 308/245 Taxman 125/[2016] 389 ITR 68 (Bombay), all that has been said, is that since the Tribunal did not challenge its earlier view, it was binding upon it. As indicated above, Atul Puranik (supra), does not address the issue at all in light of the language of the statutory provision and therefore cannot be considered as a good law, in view of which, Greenfield Hotels and Estates Pvt. Ltd. (supra) would also be of no assistance. In view of the above discussion, we do not see any reason to entertain the appeal. The same is therefore dismissed.”

10. In the present case in hand, it is evident that the assessee has transferred the permanent leasehold rights of land and sale of superstructure in favour of the transferee which is not merely a right or interest in the leasehold but the substantial ownership right both in the land and building which clearly attracts the provision of section 50C of the Act. We are conscious of the fact that the provision is generally not applicable to a simple transfer of leasehold rights in land/building, but being a deeming provision the same would be applicable to transfer of “capital asset” even on leasehold properties which are akin to ownership rights. On perusal of the recitals of the deeds executed by the assessee and the transferee there is no iota of doubt that these are permanent leasehold rights which relates to “capital asset” defined in section 2(14) of the Act which includes property of any kind held by the assessee and does not imply that the same should be owned by an assessee giving a wider interpretation to the term by respectfully following the decision of the Hon’ble High Court in the case of Vidarbha Veneere Industries Ltd. (supra).

11. On this observation, we deem it fit to dismiss the ground No.3 raised by the assessee.

12. The second leg of argument of the Ld. AR is that if section 50C of the Act was applicable in assessee’s case then the proviso to the said provision which was inserted in 2017 by way of Finance Act, 2016 was to be applicable retrospectively, if the date of agreement fixing the amount of consideration and the date of registration are different for transfer of capital asset, then the stamp valuation has to be adopted as on the date of agreement for the purpose of determining the full value of consideration and not the date of registration of sale. It further emphasizes that the consideration or part consideration has to been received by any other mode other than cash as per the second proviso. In the present case in hand, the assessee contends that the assessee has entered into three agreements in 2001 and 2002 where the consideration was fixed to be Rs.14,01,000/-, Rs.18,68,000/- and Rs.1,24,84,084/- vide sale agreement dated 05.10.2001 for the first two properties and 22.11.2002 for the third property respectively for which the assessee has received substantial payments through banking channel which is also mentioned in the alleged sale deed dated 19.07.2008. On perusal of the said sale deed it is observed that there is no ambiguity on the fact that the assessee has received payments starting from 22.11.2002 on various occasions till the last payment being 17.07.2009 aggregating to Rs.1,24,61,085/- for the land and Rs.14,01,000/- and Rs.18,68,000/- for sub plot 2A and 2B aggregating to Rs.1,57,53,084/- which was the consideration fixed as per the original sale agreement executed in the year 2001. Further, the assessee is said to have declared Long Term Capital Loss (“LTCL” for short) of Rs.1,15,90,502/- towards the sale of the said property in A.Y. 2003-04. The Ld. AO determined the valuation of the property as on the date of the registration of agreement which was during the impugned assessment year. The Ld. AR relied on the decision of the co-ordinate Bench in the case of ITO vs. Meelendra Deependra Singh [2024] 164 taxmann.com 8 (Mumbai – Trib.) which had in turn relied on the decision of the Hon’ble Madras High Court in the case of Commissioner of Income Tax, Chennai vs. Vummudi Amarendran [2020] 120 taxmann.com 171 (Madras) wherein it was held that the proviso to section 50C of the Act was applicable retrospectively. The relevant extract of the said decision of the Hon’ble High Court of Madras is cited herein under for ease of reference:

“9. Therefore, in our considered view the Assessing Officer could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance. Having observed so we need to take note of the next issue would be as to whether the proviso to Section 50C could be read to be prospective or retrospective. Section 50C(1) proviso reads as follows:

“Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capita asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer.”

10. Reading of the above proviso would show that the legislature took note of the fact that there are several occasions where the Agreements are entered into between a willing vendor and willing purchaser on an agreed sale consideration, the Agreement is reduced into writing and in many a cases a substantive portion of the sale consideration is given to the vendor as advance on the date of execution of the Agreement. There are other types of transaction where the vendor executes Power of Attorney in favour of the intending purchaser empowering him to sell the property at any time he proposes to do so. In fact this was also a subject matter of consideration, when the legislature though to introduce the amendment to section 50C of the Act. There may be cases where the sale consideration will be taken as deferred payment subject to certain contingencies. However the case on hand is very straight forward case, where there is an Agreement for Sale, agreeing to sell the property at Rs. 19 Crores and a sum of Rs. 6 Crores has been received as advance sale consideration. The proviso to Section 50C(1) of the Act deals with cases where the date of the agreement, fixing the amount of consideration and the date of registration for the transfer of the capital assets are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer. Thus an amendment by insertion of proviso seeks to relieve the assessee from undue hardship.

11. The Hon’ble Supreme Court in CIT v. Calcutta Export Co. [2018] 93 com 51/255 Taxman 293/404 ITR 654, considered the question as to whether the amendment made by the Finance Act 2010 to Proviso of Section 40(a)(ia) of the Act is curative in nature and it has to given retrospective operation from the date of insertion of the said proviso i.e., with effect from Assessment Year 2005-06. It was pointed out that the purpose of the amendment made by the Finance Act 2010 is to solve the anomalies with the instrument of section 40(a)(ia) of the Act, caused to the bona fide tax payer. It was further held that the amendment even if not given any operation retrospectively, may not materially to be of consequence to the Revenue when the tax rates are stable and uniform or in cases of big assesses having substantial turnover and equally huge expenses and necessary cushion to absorb the effect; however a marginal and medium tax payer who work at low gross product rate and when expenditure becomes subject matter of an order under section 40(a)(ia) is substantial, can suffer severe adverse consequence if the amendment made in 2010 is not given retrospective operation i.e., from the date of substitution of the provision. Thus, the amendment made by the Finance Act 2010 being curative in nature was held to be retrospective in operation. In the above decision, the Hon’ble Supreme Court took note of the fact that the statutory amendment was being made to remove undue hardship to the assessee or held to be retrospective.

12. The Honble Supreme Court in Kolkata Export Company took note of the earlier decisions on the same issue in the case of Allied Motors (P.) Ltd. v. CIT [1997] 91 Taxman 205/224 ITR 677, Whirlpool of India Ltd. v. CIT [2000] 245 ITR 3, CIT v. Amrit Banaspati Co. Ltd. [2002] 123 Taxman 74/255 ITR 117 (SC) and CIT v. Alom Enterprises [2009] 185 Taxman 416/319 ITR 306 and held that the new proviso should be given retrospective effect from the insertion on the ground that the proviso was added to remedy unintended consequences and supply an obvious omission. The proviso ensured reasonable interpretation and retrospective effect would serve the object behind the enactment. Thus by taking note of the above decisions, we have no hesitation to hold that the proviso to Section 50C(1) of the Act should be taken to be retrospective from the date when the proviso exists. The CIT(A) while allowing the assessee’s appeal vide order dated 25-7-2019, took note of the submissions made by the assessee wherein they placed reliance on the decision of the Ahmadabad Bench of the Tribunal in the case of Dharamshibhai Sonani v. Asstt. CIT [2016] 75 taxmann.com 141/161 ITD 627, order of the Delhi Bench of the ITAT in the case of Income tax Officer v. Modipon Ltd. [2015] 57 taxmann.com  360/154 ITD 369.

13. On a reading of the order passed by the CIT(A), it is interesting to note the report submitted by the Income-tax Simplification Committee set up in 2015, headed by a Former Judge of the High Court, Delhi.

14. Mr. T. Ravikumar, learned Senior Standing Counsel is right in a submission that this report is not binding or cannot be taken to have a statutory force. Nevertheless Simplification Committee was consisted of experts in the field of taxation and it would be worthwhile and interesting to note as to why they have considered the insertion of the proviso to section 50(C) of the Act should be held to be retrospective; In the report there is an extract of Memorandum explaining provisions of Finance Bill 2016 which reads as follows:

“Rationalization of section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property.

Under the existing provisions contained in section 50C, in case of transfer of a capital asset being land or building on both, the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty shall be taken as the full value of consideration for the purposes of computation of capital gains. The Income-tax Simplification Committee (Easwar Committee) has in its first report, pointed out that this provision does not provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property and the sale consideration is fixed in such agreement, whereas similar provision exists in section 43CA of the Act i.e. When an immovable property is sold as a stock-in-trade. It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration. It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property. These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years.”

15. Taking note of the above Memorandum, it was pointed out that once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. The report also referred to the decision in the case of Alom Enterprises (supra).

16. Reverting back to the decisions relied on by the Revenue, the decision in Bagri Impex (P.) Ltd. (supra) is distinguishable on facts as the assessee therein contended that the date of agreement should be taken as date on which the property was transferred by bringing the same within the ambit of section 2(47) of the Act, which is not the case before us. In Ambattur Clothing Co. Ltd. (supra), the assessee contended that since the buyer wanted the Sale Deed to be released after registration, they had paid stamp duty as per the guideline value which is higher than the sale consideration agreed to be paid on the instruments. This explanation offered by the assessee was found to be factually incorrect and rejected and in the background of the said facts, the Honble Supreme Court observes that the Assessing Officer was justified in treating the value adopted by the stamp valuation authority as the deemed sale consideration, received/accruing as a result of transfer.

17. On going through the facts of the case on hand, we find that no such observation was made by the Assessing Officer. The assessee’s consistent case was that the sale consideration agreed to be paid to him by the purchaser was Rs. 19 crores and Rs. 6 crores was received as advance on the date of entering into the Agreement for Sale. However, the Assessing Officer disbelieved the same and applied the guideline value at Rs. 27 crores on the date when the Sale Deed was executed and registered. Therefore, in our considered view, the decision in Ambattur Clothing Co. Ltd. (supra) cannot be applied with the facts and circumstances of the case on hand.

18. Mr. T. Ravikumar, learned counsel is right in a submission that the observations made by the Tribunal qua the decision of the Honble Supreme Court in Vatika Township (supra) is incorrect. In fact we find that the Tribunal did not assign any reasons as to why the decision in Vatika Township do not apply to the facts of the case. In fact the decision in Vatika Town Ship should be referred for the purpose as to when a Statute can be treated to be clarificatory and when not?. The legal principle laid down therein ought to have been taken note of by the Tribunal. Therefore, the Tribunal may not be fully right in stating that the judgment in Vatika Township (supra) will not be applicable to the facts as the judgment needs to be looked into to consider the legal principle of retrospectivity, retro activity or prospectivity. In any event, the ultimate conclusion arrived at by the Tribunal confirming the above order passed by the CIT(A) cannot be found faulted with.”

13. From the above observation, it is evident that when proviso to a section is inserted which is curative in nature, the same would be applicable retrospectively when the provision of law was introduced for the reason that a statutory amendment is made only to remove any undue hardship or incongruity in applying the provision as there was perennial anomaly in deciding whether the date of agreement or the date of transfer of property should be considered for the purpose of applicability of section 50C, the proviso was inserted for the purpose of removing the hardship caused to the assessee in adopting the stamp valuation when there are two different dates vis-à-vis. the agreement and the actual sale. On the observation given by the Hon’ble High Court, we deem it fit to allow ground No.4 raised by the assessee on this issue.

14. We, therefore, direct the Ld. AO to determine the capital gain in accordance with the said provision taking into consideration the date of agreement as per the proviso to section 50C of the Act. Further, ground No.1 raised by the assessee is rendered academic as we have already directed the Ld. AO to recompute the capital gains as per our findings given in the preceding paragraphs. Accordingly, the appeal filed by the assesse is allowed on the above terms.

15. In the result, the appeal filed by the assessee is hereby allowed.

Order pronounced in the open court on 30.03.2026