Stamp valuation dates for s.50C LTCG in land sale deals: agreement/MOU date prevails; remaining plots use registered deed date.

For computing LTCG under the deeming fiction in s.50C, the dominant issue was whether the stamp valuation (SRO value) should be adopted as on the date of registered sale deeds or as on the date of the underlying agreement/settlement fixing consideration. The ITAT held that, subject to statutory preconditions, s.50C requires adoption of the SRO value prevailing on the date of the "agreement to sell"/compromise/MOU that governs the transfer, because it is that instrument which crystallizes the bargain; accordingly, SRO values as on 23.11.2013 (court-recorded compromise) and 12.08.2013 (MOUs) were directed for the covered land. For the balance land not traceable to those instruments, SRO value as on the dates of the last registered sale deeds in 11/2015 was to be adopted. The CIT(A)'s order was set aside and the AO was directed to recompute LTCG accordingly.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the first and second provisos to Section 50C(1) (permitting adoption of stamp value as on the agreement date where consideration/part consideration is received through banking channels) apply retrospectively to the relevant year.

(ii) Where there are multiple subsequent settlements/understandings and the original agreement fixing consideration is no longer acted upon, which "date of agreement" governs adoption of stamp valuation under Section 50C for computing long-term capital gains, including for any land transferred beyond what is covered by such later agreements.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Retrospective applicability of provisos to Section 50C(1)

Legal framework: The Court examined Section 50C and specifically the provisos inserted w.e.f. 01.04.2017, which allow stamp valuation on the date of agreement (instead of registration) where the agreement date and registration date differ, provided consideration/part consideration was received through specified banking modes on or before the agreement date.

Interpretation and reasoning: The Court accepted that the provisos were introduced to cure hardship where consideration is fixed earlier but registration occurs later, and treated the amendment as curative, thereby applicable to the transaction under consideration even though the registration occurred prior to the stated effective date.

Conclusion: The provisos to Section 50C(1) were held applicable to the relevant transaction on a retrospective/curative basis, subject to satisfaction of the stipulated conditions (including receipt through banking channels).

Issue (ii): Correct "agreement date" for adopting stamp valuation under Section 50C where original agreement is superseded/abandoned and land transferred differs from later settlement documents

Legal framework: Applying the provisos to Section 50C(1), the Court focused on identifying the operative "agreement fixing the amount of consideration" corresponding to the land actually transferred, and whether the transfer was referable to that agreement/settlement.

Interpretation and reasoning: Although an initial agreement existed with early banking receipts, the Court found that it "did not hold the ground anymore" and was not acted upon after disputes arose, followed by a later compromise recorded by a court order and later MOUs which re-defined the land to be transferred. The land ultimately transferred exceeded the aggregate land covered by the compromise and MOUs. Therefore, the Court held that the stamp valuation date cannot be uniformly pegged to the original agreement date; it must align to the specific later instrument that actually governed the transfer of each identifiable portion. For land transferred outside the scope of the compromise/MOUs, the proviso-based agreement-date substitution was not available, so the registration-date stamp value had to apply for that excess portion.

Conclusions: (a) For the portion covered by the compromise, the stamp valuation as on the date of the compromise order was directed to be adopted as deemed consideration under Section 50C. (b) For the portion covered by the later MOUs, the stamp valuation as on the dates of those MOUs was directed to be adopted. (c) For the balance land transferred beyond what was covered by the compromise/MOUs, the Court directed adoption of stamp valuation as on the dates of the last sale deeds (registration dates) for computing capital gains under Section 50C. The order allowing uniform adoption of the original agreement-year valuation was set aside and recomputation was directed accordingly.

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