Income Tax

Section 50 C of Income Tax Act – Sale Consideration Vs Stamp Valuation

Rebecca Ghomes 7 years ago 2 min read

Where assessee had offered actual amount received on sale of property for taxation, revenue authorities were not justified in passing penalty order under section 271(1)(c) by adopting higher sale consideration under section 50C on basis of stamp duty valuation of said property. CIT vs Madan Teatres Ltd. [2014] 42 taxmann.com 26 (Calcutta) Merely applicability of sec 50C will not prove escapement of Income. ITO vs Shri Haresh Chand Agarwal, HUF, Date of Order: ITA No.282/Agra/2013, Date of Order: , ITAT-Agra.

Section 50C of Income Tax Act states, “The AO is not entitled to make an addition to the sale consideration declared by the assessee if the difference between the valuation adopted by the Stamp Valuation Authority and that declared by the assessee is less than 10%” The following case and scenario helps to understand the law better:

In the case of Smt. Sita Bai Khetan vs. Income Tax officer considering the entire facts of the assessee’s case, the sale consideration of the 2 plots with Survey No. 22 and 42 – Rs.3,00,00,000/- is less than 10% the stamp valuation which is Rs.33,48,284/- the assessee should succeed in its appeal.

The Jaipur Bench in the case of Smt. Sita Bai Khetan vs. Income Tax officer, in ITA No. 823/JP/2013 dated 27/07/2016

Had heard rival contentions and perused the material available on record. They found that the Hon ‘ble coordinate Bench in ITA No. 1543/PN/2007 in the case of Rahul Constructions Vs. DCIT (Supra) , adopted the case of Asstt. CIT Vs Harpeet Hotels (P) LTd. Vide ITA No. 1156-1160/PnI2007. In this case, the Pune Bench of the Tribunal relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT (A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 per cent.

Similarly, in the case of ITO Vs. Kaaddu Jaygosh Appasahebh, the Learned Counsel for assessee following the decision of J&K High Court, they stated that ‘when the margin between the value as given by the assessee and the Department valuer is less than 10 per cent, the difference is liable to be ignored and the addition made by the AD cannot be sustained.’

In Smt. Sita Bai Khetan vs. Income Tax officer case also, the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10 %. Therefore, respectfully following the said decision the Bench directed AO to adopt the valuation of sale consideration as declared by the assessee. The additions made by the Assessing Officer under Section. 50C was deleted and as grounds raised by the assessee were allowed.