Suvarna Chandrakant Bhojane Vs ITO (ITAT Mumbai)
The appeal by Suvarna Chandrakant Bhojane (Appellant) contested the Revenue’s application of Section 50C to cash compensation received under a Development Agreement.
Dispute and Lower Authority’s Action
The Appellant had entered into a Development Agreement to give her land to a builder, expecting a share of flats in return. When the builder failed to deliver the flats within the stipulated 44 months, the Appellant received Rs. 1.85 crore as full and final cash compensation (her 50% share of the total consideration). The Appellant offered this amount as Long Term Capital Gain (LTCG), declaring Rs. 9,37,701/- in her return.
The Revenue applied the deeming provisions of Section 50C, using the Stamp Duty Valuation (SDV) of Rs. 3,51,41,100/- as the sale consideration. This resulted in an addition of Rs. 80,32,610/- under the head of LTCG, which the Ld. CIT(A) upheld.
The Appellant argued that Section 50C was inapplicable because it is a deeming provision that applies only when immovable property is transferred, and the SDV was hypothetical as no agreement to transfer the flats was executed. The amount received was compensation, calculated at 12% per annum for delay, not the sale price of a transferred asset.
