Section 50C cannot govern compulsory land acquisition, and a coal shortage addition falls when books support the assessee's explanation.

Section 50C does not apply to compulsory acquisition of land for NHAI because the transfer occurs by operation of law, not by a negotiated sale, and stamp valuation has no relevant role; the capital gains computation therefore could not be based on deemed consideration under that provision. The article also notes that an addition for alleged coal shortage was unsustainable on the facts, as the appellate record showed the quantity was accounted for in the books and the factual explanation was accepted. The result described is that the assessee obtained relief on both issues and the appellate orders were left undisturbed.

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Issues: (i) Whether section 50C of the Income-tax Act, 1961 could be invoked for determining capital gains where the land was compulsorily acquired for NHAI under the acquisition law. (ii) Whether the addition made towards alleged shortage of coal was sustainable on the facts found by the appellate authorities.

Issue (i): Whether section 50C of the Income-tax Act, 1961 could be invoked for determining capital gains where the land was compulsorily acquired for NHAI under the acquisition law.

Analysis: Section 50C is intended to address suppression of consideration in transfers where stamp valuation serves as a benchmark for the declared sale consideration. In a case of compulsory acquisition, the transfer takes place by operation of law, not by a negotiated transaction between private parties. The payment of stamp duty in respect of such transfer does not arise in the same manner, and the mischief targeted by section 50C is absent. The compensation received under the acquisition regime, read with the exemption framework under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and CBDT Circular No. 36/2016, could not be subjected to deemed consideration under section 50C.

Conclusion: Section 50C could not be applied to the compulsory acquisition of the land, and the deletion of the addition was in favour of the assessee.

Issue (ii): Whether the addition made towards alleged shortage of coal was sustainable on the facts found by the appellate authorities.

Analysis: The dispute turned on the actual coal position reflected in the financial statements, notes to accounts, and board resolution. The figures showed that the quantity treated by the assessing officer as shortage was accounted for in the books, and the appellate authorities had accepted the assessee's factual explanation. The record therefore supported the view that the alleged shortage was not established as an addition warranting interference.

Conclusion: The deletion of the coal shortage addition was justified and is in favour of the assessee.

Final Conclusion: The revenue's appeal failed, and the appellate orders granting relief to the assessee were left undisturbed.

Ratio Decidendi: Section 50C applies only where the transfer is of the kind for which stamp duty valuation is relevant, and it does not extend to compulsory acquisition where the transfer occurs by operation of law and stamp duty valuation has no application.

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