2025 (2) TMI 1687 - AT - Income Tax

Prospective application of section 50C safe harbour tolerance bars retrospective relief for earlier assessment years.

The amended section 50C safe harbour tolerance was held to apply only prospectively from Assessment Year 2021-22 because the legislature fixed a specific ... Safe harbour tolerance u/s 50C - Long Term Capital Loss on sale of property - retrospective operation of amendment - curative amendment - difference between the transaction value and the stamp duty value HELD THAT: - Tribunal held that the benefit of the increased safe harbour could not be extended to the assessee for the relevant year merely on the plea that the amendment was curative. It reasoned that if the Legislature had intended the enhanced tolerance to operate for earlier assessment years, the amendment would have expressly so provided. Since the statute fixed a specific cut-off from which the higher limit would apply, and there was no express indication of retrospective operation, the Court could not enlarge the scope of the amendment by interpretation. On that basis, the computation made by applying the then prevailing limit was sustained. [Paras 7] The assessee was not entitled to claim the higher safe harbour limit for Assessment Year 2020-21, and the challenge to the capital loss computation on that basis failed. Final Conclusion: The Tribunal dismissed the appeal and upheld the view that the enhanced safe harbour tolerance introduced for later years was not available for Assessment Year 2020-21. Issues: Whether the amended safe harbour tolerance under section 50C could be applied retrospectively to Assessment Year 2020-21.Analysis: The increased tolerance was introduced from Assessment Year 2021-22 onwards. The amendment was not expressed to operate retrospectively, and the presence of a specific effective date indicated legislative intent to apply it prospectively only. In the absence of express retrospective operation, the Tribunal declined to enlarge the scope of the amendment by treating it as curative for prior years.Conclusion: The amended safe harbour limit could not be applied to Assessment Year 2020-21, and the assessee's challenge to the section 50C addition failed.Ratio Decidendi: A statutory amendment introducing a concession or tolerance is prospective where the legislature fixes a specific commencement date and does not expressly provide retrospective operation.