Section 50C valuation did not apply to transfer of an allotment right in an unfurnished flat, so the capital gains addition fell

Section 50C of the Income-tax Act did not apply to the transfer of an allotment right in an unfurnished flat, because the assessee had transferred only a contractual allotment right and not land or building registered in his name. As section 50C is a deeming valuation provision confined to land or building or both, the stamp duty valuation could not be substituted for the transfer consideration in this transaction. The addition made on that basis for long-term capital gains was therefore deleted.

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Issues: Whether section 50C of the Income-tax Act, 1961 applied to the transfer of an allotment right in an unfurnished flat, and whether the resulting addition towards long-term capital gains was sustainable.

Analysis: The assessee had transferred only an allotment right in a flat that was neither registered in his name nor transferred as land or building. Section 50C, being a deeming provision for valuation of land or building or both, was held inapplicable to such a transfer. Accordingly, the addition made by adopting the stamp duty valuation could not survive.

Conclusion: The addition towards long-term capital gains was deleted and the issue was decided in favour of the assessee.

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