Case Law Details
PCIT Vs Thomson Press (India) Ltd (Delhi High Court)
Delhi High Court on July 5, 2025, dismissed an appeal filed by the Principal Commissioner of Income Tax (PCIT) against Thomson Press (India) Ltd, affirming an earlier order by the Income Tax Appellate Tribunal (ITAT). The case, pertaining to Assessment Year 2014-15, centered on an addition of ₹20 crore made by the Assessing Officer (AO) under Section 50C of the Income Tax Act, 1961, related to the sale of an immovable property.
The dispute arose from a transaction involving M/s Living Media India Limited (which later merged with Thomson Press) and M/s Maccons Infra Private Limited. A property located in Noida, measuring 20,000 square meters, was sold at ₹18,000 per square meter. A search operation conducted on the Maccons group in November 2014 uncovered the sale deed dated October 11, 2013. The AO, noting that the circle rate for the area had increased to ₹28,000 per square meter as of August 1, 2013, initiated reassessment proceedings, leading to the addition of ₹20 crore based on the higher circle rate.
Thomson Press challenged this addition before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) ruled in favor of the assessee, finding that the addition under Section 50C was unsustainable. The CIT(A) observed that the agreement to sell between M/s Living Media India Limited and Maccons Infra Private Limited was registered on May 30, 2013, and stamp duty of ₹72 lakh was paid on the same date. At that time, the applicable circle rate was ₹18,000 per square meter, meaning the transaction value was not below the prevailing circle rate. Consequently, the CIT(A) set aside the AO’s addition.
The Revenue then appealed to the ITAT, arguing that since the circle rate increased to ₹28,000 per square meter effective August 1, 2013—prior to the execution of the sale deed on October 11, 2013—the addition under Section 50C was warranted. The ITAT, however, did not accept this contention. It noted that part of the sale consideration was received even before the transfer agreement, and it was undisputed that stamp duty was paid on the date of the agreement to sell, May 30, 2013. Thus, the ITAT concluded that the agreed sale consideration was in line with the circle rates applicable at the material time.
During the Delhi High Court proceedings, the senior counsel for Thomson Press presented a copy of the sale deed dated October 11, 2013, which explicitly referenced the agreement to sell dated May 30, 2013, and the payment of stamp duty on that date. This reinforced the argument that the transaction’s pricing was based on the circle rates prevalent at the time of the agreement.
The Delhi High Court, in its decision, stated that no substantial questions of law arose in the case. The court specifically addressed the Revenue’s argument regarding the retrospective applicability of the proviso to Section 50C of the Act, which was made applicable from April 1, 2017. However, given the clear finding that the transaction value was commensurate with the circle rate at the time of the agreement, the subsequent increase in circle rates had little bearing for the purposes of Section 50C.
The court further noted that the issue was covered by its earlier decision in Principal Commissioner of Income Tax-6 v. Modipon Limited (ITA No.543/2015). In that case, an agreement to sell was registered prior to a circle rate revision, and the sale deed was executed after the revision. The court in Modipon Limited had rejected the Revenue’s contention that the circle rate on the date of the sale deed should be considered for Section 50C purposes. It held that where external evidence, such as a registered agreement to sell, supports the transaction and payments align with the agreed schedule, the application of Section 50C would be unwarranted, particularly when circle rates increase in the interim. The court in Modipon Limited had also acknowledged that Parliament had recognized this “mischief” and added a proviso to Section 50C(1) with effect from April 1, 2017, to address such situations.
Drawing parallels to the Modipon Limited case, the Delhi High Court concluded that the appeal from the Revenue in the Thomson Press matter must meet the same fate. Therefore, the appeal was dismissed, as no substantial question of law arose for its consideration.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. For the reasons stated in the applications, the delays in re-filing and filing the captioned appeal stand condoned.
2. The applications are disposed of.
ITA 192/2025
3. The Revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 [the Act], inter alia, impugning an order dated 30.06.2023 [impugned order] passed by the learned Income Tax Appellate Tribunal [ITAT] in ITA No.9342/Del/2019 captioned ACIT Circle-25 (2) v. Thomson Press (India) Limited, in respect of Assessment Year [AY] 2014-15
4. The Revenue had preferred the aforesaid appeal against the order dated 27.09.2019 passed by the Commissioner of Income Tax (Appeals)– 9, New Delhi [CIT(A)] whereby the Assessee’s appeal against an order dated 05.12.2018 passed under Section 147 of the Act read with Section 143(3) of the Act was partly allowed.
5. The controversy in the present case relates to the addition of ₹20.00 Crores made by the Assessing Officer [AO] under Section 50C of the Act. The said addition relates to the transaction between M/s. Living Media India Limited and M/s. Maccons Infra Private Limited whereby the Vendor had sold the immovable property described as Plot No. 9, land measuring 20000 square meters located in Block-B, Sector 132, Noida, Gautam Budh Nagar, Uttar Pradesh [property in question] at the rate of ₹18,000/- per square meter. M/s. Living Media India Limited was subsequently merged with the Assessee.
6. Search and seizure operation was conducted under Section 132 of the Act at the residential and business premises of Maccons group on 27.11.2014. During the course of said search, the sale deed dated 11.10.2013 executed by M/s. Living Media India Private Limited in respect of the property in question was found. The circle rate of the area where the property in question was located as on the date of the Sale Deed was ₹28,000/- per square meter and therefore, the total sale value is required to be computed at ₹56.00 Crores. This information was received by the AO. On the basis of the said information, the AO took steps for initiating the reassessment proceedings. The reassessment proceedings culminated into the assessment order dated 05.12.2018.
7. The said order was challenged by the Assessee before the CIT(A). The CIT(A) found that the addition of ₹20.00 Crores under Section 50C was not sustainable as the date on which the transaction for sale and purchase of the property in question was entered into was prior to the date of enhancement of the circle rate. It was noted that the transacting parties, that is M/s Living Media India Limited and Maccons Infra Private Limited, had entered into the registered agreement to sell on 30.05.2013 and on the same date stamp duty of ₹72.00 Lakhs was paid by the Maccons Infra Private Limited.
8. Undisputedly, the circle rate applicable to the property in question at the material time was ₹18,000/- per square meter and thus, the transaction entered into was not a value, which was below the circle rate. Consequently, the addition made by the AO was set aside.
9. It is the Revenue’s case that since circle rate had increased to ₹28,000 per square meter with effect from 01.08.2013 – which was prior to the execution of the sale deed on 11.10.2013 – the addition under Section 50C of the Act was warranted.
10. The learned ITAT did not accept the said contention. It noted that part of the sale consideration was received even before the date of the transfer agreement and there was no dispute that the stamp duty had been paid on the date of the agreement to sell, that is, on 30.05.2013. Thus, the sale consideration as agreed was at the circle rates, which were applicable at the material time.
11. Aggarwal, the learned Senior Counsel appearing for the Assessee has also handed over a copy of the sale deed dated 11.10.2013 and has drawn the attention of this Court to the following recital in the sale deed:
“And whereas, both the parties have already entered into an agreement to sell dated 30/05/2013, and the same was duly registered in the office of Sub-Registrar, Noida Vide Book No. I, Volume No. 5071 on pages 341 to 916 Document No. 6280 Dated 30/05/2013 on which a stamp duty of ₹72,00,000/- has already been paid by the Transferee aforesaid.”
12. In view of the above, there is no dispute that the transaction in question was prior to the increase in the stamp duty and was at the value, as computed in accordance with the prevalent circle rate. However, the Revenue has projected the following questions for consideration of this Court:
“A. Whether on the facts and circumstances of the case, the Hon’ble ITAT justified in deleting the addition of Rs. 20 Crores made on account of Capital Gains u/s 50C of the Act on the basis of the information received from Investigation Wing of the Income Tax Department, Noida?
B. Whether on the facts and circumstances of the case, the Hon’ble ITAT is justified in giving relief to the assessee on the basis of Proviso to 50C of the I.T. Act, 1961 which was made applicable from 01.04.2017, whereas the case is related for F.Y 2013-14?”
13. It is at once clear that no substantial questions of law arise in the facts of the present case. The issue sought to be raised on behalf of the Revenue is whether the proviso to Section 50C of the Act is applicable retrospectively. However, in view of the express finding that the transaction was at the value which is commensurate with the Circle rate at the material time, the fact that the circle rate had been increased subsequently would have little effect for the purposes of Section 50C of the Act.
14. The issue involved in the present case is also covered by an earlier decision of this Court in ITA No.543/2015 captioned Principal Commissioner of Income Tax-6 v. Modipon Limited. In the said case, the parties had entered into an agreement to sell, which was duly registered prior to 16.09.2004. The said agreement stipulated a schedule for payment of consideration of the subject immovable property. The parties had adhered to the said schedule and had thereafter entered into a sale deed on 16.09.2004. However, on 16.09.2004, the circle rate was revised upwards. In the aforesaid context, the Revenue had contended that the circle rate, as on the date of the sale deed, was required to be considered for the purposes of Section 50C of the Act. This Court had rejected the said contention in the following words:
“This Court is of the opinion that where there is adequate external evidence supporting the assessee’s case that the transaction has been recorded and been reflected objectively in the form of a registered instrument (agreement to sell dated 27.05.2004), and all subsequent payments made have adhered to the time schedule agreed upon in respect of the amounts, the application of Section 50(C) would be unwarranted. The ITAT’s conclusion that the transaction was covered by two deeds, both of which characterised as sale deeds though not strictly correct in one sense, describes the nature of the agreements between the parties. Quite possibly there can be a situation like the present one where transaction recorded in the agreement to sell are acted upon over a period of time – and in the interregnum the circle rates are increased. Application of Section 50(C) in such cases would result in extreme hardship. Parliament has recognized this mischief and has added proviso to Section 50 (C) (i) w.e.f. 01.04.2017. Having regard to the forgoing reasons, the Court is of the opinion that no question of law arises; the appeal is accordingly dismissed.”
15. We are of the view that the present appeal must bear the same fate as the case in Principal Commissioner of Income Tax-6 v. Modipon Limited (supra).
16. No substantial question of law arises for consideration of this court. The appeal is accordingly dismissed.
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