Appeal partly allowed, section 50C amendment retrospective, capital gains computation based on stamp duty valuation

The appeal was partly allowed for statistical purposes, with the issue of addition of long term capital gain under section 50C being restored to the Assessing Officer for further adjudication based on the retrospective application of the relevant provisions. The ITAT Surat held that the amendment to section 50C was retrospective in nature, following decisions of the ITAT Ahmedabad Bench, and directed verification and computation of capital gains based on stamp duty valuation as on the date of the sale agreement.

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Issues:
1. Jurisdiction of Assessing Officer under section 147 of the Income Tax Act.
2. Addition of long term capital gain under section 50C of the Income Tax Act.

Analysis:

Issue 1: Jurisdiction of Assessing Officer under section 147 of the Income Tax Act
The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-II, Surat, dated 14.06.2016, for Assessment Year 2012-13. The Assessing Officer initiated proceedings under section 147 of the Income Tax Act as the assessee had not shown capital gains from property transactions in the Return of Income. The assessee contended that the original return filed could be treated as a response to the notice under section 148 of the Act. The Learned Authorised Representative submitted that Ground No.1 challenging the assumption of jurisdiction under section 147 was not pressed and was dismissed accordingly.

Issue 2: Addition of long term capital gain under section 50C of the Income Tax Act
The Assessing Officer computed taxable long term capital gain at Rs.47,16,905 under section 50C of the Act after noticing discrepancies in the valuation of property sold by the assessee. The assessee, in response, argued that the valuation was based on the Jantri Value prevailing at the time of the agreement to sell and that the actual consideration remained Rs.4,13,00,000 as reflected in the Return of Income. The assessee relied on the provisos to section 50C inserted by the Finance Act, 2016, effective from 01.04.2017, which allowed for retrospective application from 01.04.2003. The ITAT Surat, following the decisions of the ITAT Ahmedabad Bench in various cases, held that the amendment to section 50C was retrospective in nature. The matter was restored to the Assessing Officer for verification and computation of capital gains based on stamp duty valuation as on the date of sale agreement.

In conclusion, the appeal of the assessee was partly allowed for statistical purposes, with the issue of addition of long term capital gain under section 50C being restored to the Assessing Officer for further adjudication based on the retrospective application of the relevant provisions.

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