Prakash Chandra Mukherjee Vs ITO (ITAT Ranchi)
Agreement-Date Stamp Value Relief under Section 50C Is Not Retrospective: Ranchi ITAT Upholds ₹58.90 Lakh Addition
The Ranchi Bench of the Income Tax Appellate Tribunal has held that the proviso to Section 50C(1), permitting adoption of the stamp-duty value prevailing on the date of the agreement instead of the date of registration, cannot be applied retrospectively to Assessment Year 2013-14. The Tribunal rejected the assessee’s contention that the amendment introduced by the Finance Act, 2016 was curative and remedial and should therefore apply to earlier years. The addition of ₹58.90 lakh, representing the difference between the actual consideration and the stamp-duty valuation prevailing on the date of registration, was consequently upheld. The decision was rendered in Prakash Chandra Mukherjee v. ITO, Ward-2(1), Jamshedpur, ITA No. 317/Ran/2025, Assessment Year 2013-14, order dated 10 September 2026.
Facts of the case
The assessee earned income from the sale of building materials, house property and capital gains. The Assessing Officer received information that the assessee had transferred a plot of land to M/s Bravo Sponge Iron Limited for an actual consideration of ₹50 lakh, whereas the stamp-duty valuation of the property was ₹1,08,90,000. Based upon this information, the assessment was reopened under Section 147, and notice under Section 148 was issued on 15 February 2018. The Assessing Officer invoked Section 50C and adopted the stamp-duty value of ₹1.089 crore as the deemed sale consideration. The difference of ₹58.90 lakh was added as short-term capital gain. The total income, originally returned at ₹6,04,620, was accordingly assessed at ₹64,94,620.
Agreement preceded registration
According to the assessee, the sale consideration had been fixed much earlier through an agreement for sale. The assessee claimed that the relevant transaction unfolded as follows:
- ₹7 lakh was received by cheque dated 19 July 2012;
- ₹33 lakh was received by cheque dated 5 September 2012;
- ₹8 lakh was received by cheque dated 6 October 2012;
- an agreement for sale was executed on 15 October 2012, fixing the consideration at ₹50 lakh; and
- the sale deed was subsequently registered on 25 April 2013.
Thus, ₹48 lakh out of the agreed consideration of ₹50 lakh was received through banking channels even before the agreement was executed. The stamp-duty value of the property on the date of the agreement was stated to be only ₹24,45,290, which was substantially lower than the actual consideration of ₹50 lakh. However, by the time the sale deed was registered, the State Government had substantially enhanced the circle rate, resulting in a stamp-duty valuation of ₹1,08,90,000. The assessee therefore contended that the later increase in the circle rate should not result in taxation of an artificial capital gain which was neither received nor accrued.
CIT(A) treats amendment as prospective
The CIT(A) rejected the assessee’s contention. The proviso to Section 50C(1) was inserted by the Finance Act, 2016 with effect from 1 April 2017. It provides that where the agreement fixing the consideration and the registration of the property take place on different dates, the stamp-duty value on the date of the agreement may be adopted, provided the prescribed banking-channel condition is satisfied. According to the CIT(A), the proviso was applicable only from Assessment Year 2017-18. Since the assessee’s case related to Assessment Year 2013-14, the benefit could not be extended retrospectively.
Assessee argues that the proviso is curative
Before the Tribunal, the assessee argued that the proviso was introduced to correct an obvious hardship in the original Section 50C. Where the consideration is genuinely fixed through an earlier agreement and substantial payment is received through banking channels, the parties cannot control a subsequent enhancement of the circle rate before registration. Applying the registration-date value in such cases could result in taxation of notional income. The assessee relied, among others, upon:
- Dharamshibhai Sonani v. ACIT, where the Ahmedabad Tribunal treated the proviso as curative;
- Kishore Hira Bhandari v. ITO, where the Mumbai Tribunal applied the proviso retrospectively;
- Allied Motors (P.) Ltd. v. CIT and CIT v. Alom Extrusions Ltd., where the Supreme Court recognised that amendments intended to remove unintended hardship may operate retrospectively; and
- CIT v. Ansal Landmark Township (P.) Ltd., concerning retrospective operation of a remedial amendment.
The assessee submitted that every statutory condition was fulfilled because the consideration was fixed under a written agreement and substantial payments were received through account-payee cheques before the agreement date.
Alternative claim regarding rural agricultural land
Without prejudice, the assessee also claimed that the transferred property was rural agricultural land and therefore did not constitute a “capital asset” under Section 2(14). It was contended that if the land itself was outside the definition of a capital asset, Section 50C and the capital-gains charging provisions could not apply.
Findings of the Tribunal
The Tribunal rejected the principal argument regarding retrospective application of the proviso. It observed that the amendment was specifically effective from Assessment Year 2017-18 and found no justification to apply it retrospectively to Assessment Year 2013-14. The Tribunal described the assessee’s request for retrospective application as “far-fetched.” The order of the CIT(A) was upheld and the assessee’s appeal was dismissed. Consequently, the addition of ₹58.90 lakh under Section 50C remained undisturbed.
Author’s comments
The decision is important because it takes a view contrary to certain earlier Tribunal rulings which have treated the agreement-date proviso to Section 50C as curative and therefore retrospective. However, the order is extremely brief on this crucial controversy. Though the assessee cited several decisions supporting retrospective application, the Tribunal neither discussed nor distinguished those rulings. It simply concluded that there was no reason to give the amendment retrospective effect. The absence of a detailed examination is particularly significant because the amendment addresses a genuine mismatch: the consideration is fixed and substantially received on one date, while the formal registration occurs later after the circle rate has increased. In such a case, adopting the later value may tax a gain which the seller never negotiated or received. The order also does not separately decide the assessee’s alternative contention that the property was rural agricultural land. If factually established, that contention went to the root of taxability because Section 50C operates only where the transferred property is a capital asset. A reasoned finding on this alternative ground would therefore have been appropriate. There also appear to be factual date inconsistencies requiring caution. The order initially refers to a sale on 30 March 2013, whereas the assessee’s written submissions mention registration on 25 April 2013. The latter date would ordinarily fall in the following financial year. The assessee also claimed to have purchased the land on 12 October 2012, although substantial sale advances were reportedly received in July and September 2012. These discrepancies should have been reconciled before determining the correct assessment year and applying Section 50C. Therefore, although the ruling is adverse to the assessee, its precedent value may be debatable because the competing decisions, alternative ground and significant factual inconsistencies were not examined in detail. The order adds to the conflicting Tribunal views on whether the agreement-date proviso to Section 50C is merely prospective or remedial and retrospective.
Cases Discussed
- Dharamshibhai Sonani v. ACIT – ITAT Ahmedabad; relied upon for the proposition that the proviso to Section 50C(1), inserted by the Finance Act, 2016, is curative and has retrospective application.
- Kishore Hira Bhandari v. ITO – ITAT Mumbai, ITA No. 370/Mum/2018; relied upon for the proposition that the proviso to Section 50C is effective retrospectively from 01.04.2003.
- CIT v. Alom Extrusions Ltd. – Supreme Court, (2009) 319 ITR 306; cited for the principle that amendments removing unintended hardship may operate retrospectively.
- Allied Motors (P.) Ltd. v. CIT – Supreme Court, (1997) 224 ITR 677; cited for the principle that remedial provisions introduced to cure defects may have retrospective operation.
- CIT v. Ansal Landmark Township Pvt. Ltd. – Delhi High Court, (2015) 377 ITR 635; cited in support of retrospective operation of beneficial or remedial amendments.
- NTPC Ltd. v. CIT – Supreme Court; relied upon by the assessee for the proposition that a pure question of law can be raised at any stage of appellate proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, RANCHI BENCH
1. This appeal by the assessee is directed against the order of the ld. Addl/JCIT(A)-4, Mumbai [in short, the ld. CIT(A)] dated 29/07/2025 for the Assessment Year (AY) 2013-14.
2. Facts of the case, in brief, are that the assessee has earned income from sale of building materials, house property and capital gains. During the assessment year under consideration, the Assessing Officer received information that the assessee has sold a plot of land to M/s Bravo Sponge Iron Ltd. on 30/03/2013 for a sale consideration of ₹ 50,00,000/- whereas the circle rate fixed by the government was at ₹ 1,08,90,000/-. On the basis of this information, the case of the assessee was reopened under Section 147 of the Act and notice under Section 148 of the Income Tax Act, 1961 (in short, the Act) was issued on 15/02/2018.
2. The Assessing Officer added a sum of ₹ 58,90,000/- being the difference in the consideration received and the stamp duty valuation of the property.
3. Aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the ld. CIT(A), who vide the impugned order dated 29/07/2025 confirmed the addition made by the Assessing Officer on the ground that as per proviso to Section 50C(1) introduced by the Finance Act, 2016 w.e.f. 01/04/2017 (i.e. A.Y. 2017-18) it allows adoption of agreement value instead of stamp duty value, provided, consideration was received partly by account payee cheque/draft or through electronic mode before the date of execution of the agreement. However, in the present case, the relevant assessment year 2013-14, thus, this proviso cannot be applied in the case of the assessee and therefore, the Assessing Officer has rightly added the difference between the stamp duty valuation and the actual consideration.
4. Further aggrieved by the order of the ld. CIT(A), the present appeal has been filed before this Tribunal.
5. During the appellate proceedings before us, the appellant has submitted a written submission as under:
“I. PRE FACTS OF THE CASE.
1. The Appellant is a law-abiding individual Assessee who has regularly complied with statutory obligations under the Act.
2. The return of income for Assessment Year 2013-14 was duly filed declaring total income of ₹6,04,620/-, which was processed without demand.
3. Subsequently, proceedings under Sections 147/148 were initiated and assessment was completed under Sections 143(3)/147 determining total income at ₹64,94,620/-.
4. The sole addition relates to alleged Short-Term Capital Gain of ₹58,90,000/- computed under Section 50C by adopting stamp duty value as on the date of registration instead of the agreement date.
5. The issue involved is purely legal and revolves around interpretation of Section 50C and its proviso (effective from A.Y. 2017-18), and therefore squarely falls within the jurisdiction of this Hon’ble Tribunal to consider curative nature of amendment with retrospective effect which the Ld. CIT(A) had not considered.
6. The case pertains to A.Y. 2013-14, whereas the proviso to Section 50C has been made effective from A.Y. 2017-18. It is respectfully submitted that the said amendment is curative and remedial in nature, intended to remove unintended hardship; therefore, it ought to be applied retrospectively. It is a well-settled principle that beneficial and curative amendments operate retrospectively, as consistently upheld by various decisions of the Hon’ble ITATs and the Hon’ble High Court and Hon’ble Supreme Court. Accordingly, the benefit of the proviso to Section 50C deserves to be granted for the year under consideration. (8 Case laws are enclosed as reference)
II. DETAILED FACTUAL MATRIX
1. The Appellant purchased the land on 12.10.2012 for an aggregate cost (including incidental expenses and improvements) of ₹46,58,403/-.
2. Due to urgent financial requirements, the Appellant agreed to sell the said land.
3. Substantial payments were received from the proposed purchaser through account payee cheques prior to the execution of the written agreement, namely:
- ₹7,00,000/- (Cheque dated 19.07.2012)
- ₹33,00,000/- (Cheque dated 05.09.2012)
- ₹8,00,000/- (Cheque dated 06.10.2012)
- Total: ₹48,00,000/-
4. A written Agreement for Sale was executed on 15.10.2012 fixing total consideration at ₹50,00,000/-.
5. On 15.10.2012 (date of agreement), the stamp duty valuation of the land was 24,45,290/- as certified by the competent authority.
6. The sale deed was executed subsequently on 25.04.2013.
7. Between the agreement date and registration date, the circle rate was substantially enhanced by the State authorities, resulting in stamp duty valuation of 1,08,90,000/- on 25.04.2013.
8. The Learned Assessing Officer adopted the enhanced circle rate on the date of registration and computed the difference of ₹58,90,000/- as deemed Short-Term Capital Gain under Section 50C.
III. STATUTORY FRAMEWORK – SECTION 50C
Section 50C was introduced to prevent understatement of sale consideration in real estate transactions.
However, the legislature recognized hardship arising where:
- Sale consideration is fixed earlier through agreement;
- Registration is delayed;
- Stamp duty value increases subsequently due to policy decisions of Government of Jharkhand.
To address this anomaly, the proviso to Section 50C(1) was inserted by the Finance Act, 2016.
The proviso states that where:
1. The date of agreement fixing consideration and date of registration differ, and
2. Consideration or part thereof has been received through account payee cheque, draft, or electronic mode before the agreement date,
Then the stamp duty value as on the date of agreement may be adopted.
IV. CONDITIONS OF PROVISO FULLY SATISFIED
The Appellant’s case satisfies every statutory requirement:
- Agreement fixing consideration executed on 15.10.2012.
- Substantial part of consideration received through banking channels prior to agreement.
- Documentary evidence on record.
- No dispute regarding genuineness of transaction.
Therefore, the Appellant is legally entitled to benefit of the proviso.
V. PROVISO IS CURATIVE AND RETROSPECTIVE
1. Nature of Amendment
The proviso was introduced to remove hardship and correct an incongruity in the original provision.
It does not create new rights; rather, it clarifies and rationalizes the computation mechanism.
2. Judicial Recognition of Retrospective Operation
The retrospective nature of curative amendments has been consistently upheld through various case Law (Copy Attached)
- Dharam Shibhai Sonani vs. ACIT ITA No. 1237/Ahd/2013 (ITAT Ahmedabad) Held that the proviso to Section 50C is curative and applicable retrospectively.
- CIT vs. Alom Extrusions Ltd. (2009) 319 ITR 306 (SC) Supreme Court held that amendments removing unintended hardship are retrospective.
- Allied Motors (P) Ltd. vs. CIT-(1997) 224 ITR 677 (SC) Remedial provisions inserted to cure defects are retrospective.
- CIT vs. Ansal Landmark Township Pvt. Ltd. – (2015) 377 ITR 635 (Delhi HC) Beneficial amendments operate retrospectively.
- Kishore Hira Bhandari vs. ITOITA No. 370/Mum/2018 (ITAT Mumbai) Categorically held that proviso to Section 50C is effective from 01.04.2003.
Thus, the proviso applies to Assessment Year 2013-14.
VI. ERRONEOUS FINDING OF CIT(A)
The Learned CIT(A) rejected the claim solely on the ground that the proviso is applicable from A.Y. 2017-18.
Such interpretation:
- Defeats legislative intent;
- Ignores binding precedents;
- Results in unjust enrichment of revenue;
- Leads to taxation of notional income rather than real income.
The settled principle is that taxation must be based on real income and not hypothetical or artificial figures.
VII. WITHOUT PREJUDICE: LAND NOT A CAPITAL ASSET
Without prejudice:
1. The land transferred was rural agricultural land.
2. Under Section 2(14) of the Act, rural agricultural land is excluded from the definition of “capital asset”.
3. Consequently, no capital gains tax is leviable.
In NTPC Ltd. vs. CIT, the Hon’ble Supreme Court held that a pure question of law can be raised at any stage. Further, under Article 265 of the Constitution of India, no tax can be levied except by authority of law. A mistaken admission does not confer jurisdiction to tax a non-taxable transaction.
VIII. PRINCIPLES OF REAL INCOME THEORY
Tax can only be imposed on real income.
The Appellant received ₹50,00,000/- as actual sale consideration.
Adopting 1,08,90,000/- (circle rate at registration) results in taxation of income never earned or received.
Such artificial enhancement violates:
- Principle of equity:
Doctrine of fairness;
Legislative intent behind Section 50C.
IX. PRINCIPLES OF NATURAL JUSTICE
The lower authorities failed to:
- Properly examine agreement date evidence;
- Consider bank payment proofs;
- Appreciate circle rate certificate as on agreement date;
- Apply binding judicial precedents.
Non-consideration of material evidence renders the impugned order unsustainable.
X. SUMMARY OF LEGAL PROPOSITIONS
1. The proviso to Section 50C is curative.
2. Curative provisions operate retrospectively.
3. The Appellant satisfies all statutory conditions.
4. Tax cannot be levied on notional income.
5. Rural agricultural land is not a capital asset.
6. Mistaken declaration does not create tax liability.
XI. PRAYER
In view of the above submissions, it is most respectfully prayed that this Hon’ble Tribunal may kindly:
a. Hold that the proviso to Section 50C(1) is curative and retrospective;
b. Direct adoption of stamp duty value as on 15.10.2012;
c. Delete the addition of ₹58,90,000/-
d. Alternatively hold that no capital gain arises on transfer of rural agricultural land; and
e. Grant such other relief as deemed fit in the interest of justice.”
6. On the other hand, the ld. Sr.DR supported the orders of the lower authorities.
7. We have considered the rival submissions. It is the contention of the ld. AR of the assessee that in the present case, the assessment year involved is 2013-14, the assessee has raised a ground which is, according to him, is purely a legal ground and revolves around interpretation of Section 50C of the Act and its proviso which was made effective from A.Y. 2017-18 and thus, the Tribunal is competent to apply this amendment retrospectively even in the A.Y. 2013-14 which is the relevant assessment year under consideration. The ld. Counsel of the assessee also placed reliance on various decisions where the Tribunal has exercised its jurisdiction to consider curative nature of the amendment.
8. We have considered the above submissions of the appellant, however, we are not in agreement with him that in the present case, the Tribunal can apply a retrospective effect of the amendment which was effective from the A.Y. 2017-18. The prayer made by the assessee is farfetched. In the present case, there is no reason to apply the amendment retrospectively by the Tribunal on the given set of facts and the legal position. We, therefore, reject this prayer made by the assessee and uphold the impugned order passed by the ld. CIT(A) as we find no infirmity in the said order.
9. In the result, this appeal of the assessee is dismissed.
Order pronounced in open court on 10/09/2026.
