Section 50C, deemed transfer and share-loss allowance: tribunal distinguishes actual stamp value, holding-period rules and genuine capital loss.

Section 50C applies only where the stamp valuation authority actually adopts or assesses a higher value for the transfer; the Assessing Officer cannot substitute a notional stamp value, so the assessee succeeded subject to verification of the value actually adopted. For computing holding period, land given in possession under an agreement to sell in part performance is treated as transferred under section 2(47)(v) read with section 53A of the Transfer of Property Act, so the land was held to be a long-term capital asset. Capital loss on transfer of unquoted shares was allowable because the transfer was evidenced by the deed, share certificate and company records, and no defect in valuation or genuineness was shown.

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Issues: (i) Whether section 50C applied where the value declared in the transfer documents was accepted by the stamp valuation authority and no extra stamp duty was demanded; (ii) whether the land was a long-term capital asset from the date of the agreement to sell and possession, by reason of section 2(42A) read with section 2(47)(v) and section 53A of the Transfer of Property Act, 1882; (iii) whether the capital loss arising from the transfer of unquoted shares was allowable.

Issue (i): Whether section 50C applied where the value declared in the transfer documents was accepted by the stamp valuation authority and no extra stamp duty was demanded.

Analysis: Section 50C applies only when the consideration shown on transfer is less than the value adopted or assessed by the stamp valuation authority for the purpose of stamp duty in respect of that transfer. The Assessing Officer cannot substitute a notional value that the stamp authority ought to have adopted. The relevant enquiry is whether the stamp valuation authority actually adopted or assessed a higher value for the transfer in question.

Conclusion: The issue was decided in favour of the assessee and the matter was remitted to the Assessing Officer for verification of the value actually adopted or assessed by the stamp valuation authority.

Issue (ii): Whether the land was a long-term capital asset from the date of the agreement to sell and possession, by reason of section 2(42A) read with section 2(47)(v) and section 53A of the Transfer of Property Act, 1882.

Analysis: For computing the period of holding, the decisive factor is when the asset was held by the assessee. Where possession is given under an agreement to sell in part performance and consideration is partly paid, the transaction falls within the deeming provision of transfer under section 2(47)(v). On those facts, the asset is treated as held from the date of such agreement and possession, not merely from the later registered conveyance.

Conclusion: The issue was decided in favour of the Revenue, and the land was held to be a long-term capital asset.

Issue (iii): Whether the capital loss arising from the transfer of unquoted shares was allowable.

Analysis: The transfer deed, share certificate, and company records showed that the shares were actually transferred during the relevant accounting year. The shares were valued on a recognized basis by the auditor, and no infirmity in that valuation was shown. On the totality of the facts, the loss could not be disallowed merely because the transfer coincided with the assessee's capital gains on other assets.

Conclusion: The issue was decided in favour of the assessee, and the capital loss was allowed.

Final Conclusion: The assessee succeeded on the principal dispute under section 50C and on the claim for capital loss on shares, while the Revenue succeeded on the holding-period issue for the land; the matter was therefore disposed of with mixed results.

Ratio Decidendi: Section 50C operates only on the value actually adopted or assessed by the stamp valuation authority, and for capital-gains purposes an immovable property is deemed transferred when possession is given in part performance of the contract under section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882.

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