Section 50C is a limited deeming rule and cannot justify unsupported market-value enhancement in capital gains computation.

Section 50C applies only as a limited deeming provision where declared consideration is lower than the stamp valuation figure, and it cannot be extended to support an unsupported estimate of higher sale consideration without evidence of extra consideration. The Tribunal therefore rejected substitution of the recorded sale price with an estimated market value and treated stamp valuation as the governing mechanism for capital gains computation. For cost of acquisition, the assessee's approved valuer's report on the fair market value as on 01-04-1981 was accepted because the Revenue's lower comparable-based valuation was not adequately substantiated. The notes explain that credible valuation evidence may be adopted where the contrary material is weak.

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Issues: (i) Whether the sale consideration for computing capital gains could be substituted by an estimated market value higher than the consideration recorded in the sale agreement and the stamp valuation rate, and whether section 50C applied to the transaction; (ii) Whether the fair market value of the land as on 01-04-1981 for cost of acquisition could be taken at the rate adopted by the assessee's approved valuer.

Issue (i): Whether the sale consideration for computing capital gains could be substituted by an estimated market value higher than the consideration recorded in the sale agreement and the stamp valuation rate, and whether section 50C applied to the transaction.

Analysis: The transaction involved transfer of immovable property and the consideration recorded was not shown by the Revenue to be less than any higher actual consideration proved on record. The statutory scheme of section 50C creates a limited deeming fiction for substituting the consideration with the value adopted or assessed by the stamp valuation authority where the declared consideration is lower. Such fiction is confined to the purpose for which it is enacted and cannot be extended to support an arbitrary estimation of market value in the absence of evidence of extra consideration. The Tribunal also treated the transfer as falling within the capital gains regime and held that the stamp valuation mechanism, not an enhancement to Rs. 5,000 per sq. mtr., governed the computation.

Conclusion: The enhancement of sale consideration to Rs. 5,000 per sq. mtr. was not sustainable, and the assessee succeeded on this issue.

Issue (ii): Whether the fair market value of the land as on 01-04-1981 for cost of acquisition could be taken at the rate adopted by the assessee's approved valuer.

Analysis: The assessee's valuation was supported by a report of a registered valuer approved by the Department, whereas the lower rate adopted by the Assessing Officer was based only on limited comparable instances that were not shown to be reliable for the assessee's land. The Revenue did not substantiate the lower valuation with adequate material. On that basis, the Tribunal accepted the assessee's valuation for determining indexed cost of acquisition.

Conclusion: The fair market value as on 01-04-1981 was to be taken at Rs. 60 per sq. mtr. as claimed by the assessee, and the assessee succeeded on this issue.

Final Conclusion: The additions made in capital gains were deleted, the assessee's valuation was accepted for cost purposes, and the appeals were allowed.

Ratio Decidendi: Section 50C operates as a limited deeming provision for capital gains computation and cannot be extended to justify an unsupported estimate of sale consideration; where the assessee's valuation evidence is credible and the Revenue fails to disprove it, that valuation may be accepted for cost of acquisition.

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