Section 50C valuation date and section 54F house test favoured relief where agreement preceded registration and units formed one residence.

Where an agreement for sale precedes registration and substantial consideration is received through banking channels before transfer, the proviso to section 50C(1) allows stamp duty valuation to be taken as on the agreement date rather than the registration date, relieving the taxpayer from substitution by a higher later valuation. For the pre-amendment period, multiple adjacent or integrated residential blocks used together as one residence can qualify as "a residential house" for section 54F relief, so exemption may extend to such unified residential arrangements.

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Issues: (i) Whether the stamp duty value could be adopted under section 50C of the Income-tax Act, 1961 by treating the sale deed date as the relevant date, and whether the proviso to section 50C(1) applied on the facts. (ii) Whether exemption under section 54F of the Income-tax Act, 1961 was available for multiple residential blocks forming one residential house.

Issue (i): Whether the stamp duty value could be adopted under section 50C of the Income-tax Act, 1961 by treating the sale deed date as the relevant date, and whether the proviso to section 50C(1) applied on the facts.

Analysis: The agreement for sale preceded the registration, part of the consideration had been received through banking channels before the transfer, and the transaction was supported by contemporaneous payments and surrounding material. In such a case, the proviso to section 50C(1) permits adoption of the stamp valuation on the date of agreement instead of the date of registration. The amendment was treated as curative and applicable to relieve the assessee from undue hardship. On these facts, the sale consideration declared by the assessee could not be substituted by the higher stamp valuation as on the registration date.

Conclusion: The issue was decided in favour of the assessee and against adoption of the higher stamp duty value for computation of capital gains.

Issue (ii): Whether exemption under section 54F of the Income-tax Act, 1961 was available for multiple residential blocks forming one residential house.

Analysis: The residential units were constructed at one place and functioned as a single residential arrangement with common access and common facilities. The pre-amendment legal position recognised that the expression "a residential house" could include more than one adjacent or integrated unit used as one residence. The later restrictive amendment was prospective and did not govern the year in question.

Conclusion: The issue was decided in favour of the assessee, and exemption under section 54F was allowable for the residential blocks as one house.

Final Conclusion: The additions sustained by the lower authorities were deleted and the assessee's appeal succeeded in full.

Ratio Decidendi: Where the agreement date and registration date differ and consideration has been substantially received through banking channels before registration, the proviso to section 50C(1) permits stamp valuation as on the agreement date; and for the relevant pre-amendment period, multiple integrated residential units used as one residence may qualify as a single residential house for section 54F relief.

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