2026 (2) TMI 357 - AT - Income Tax

Stamp duty valuation under Section 50C: agreementdate banked payment qualifies, AO must seek valuation officer only if stamp value exceeds consideration.

Where the agreement date and registration date differ, the sale consideration ascertained on the agreement date is to be treated for deeming full value of ... Income chargeable under the head ‘capital gains’ - addition by treating the stamp duty valuation as the full value of consideration under Section 50C - HELD THAT:- A bare perusal of the provisions would indicate that where date of agreement fixing the amount of consideration and the date of registration of the transfer of the capital asset are not the same, then for the purpose of deeming the full sale consideration, the sale consideration available on the date of Agreement would be taken. The only condition is that consideration or part consideration should have been received by assessee through a banking channel or electronic mode. In the present case, assessee has received more than Rs.1,80,00,000/- through Account Payee Cheques in the month of March, 2012 at the time of Agreement. Therefore, benefit of this proviso ought to have been given to the assessee. The appointed date for the purpose of considering Stamp Duty valuation is 12.03.2012 and not May, 2012 when Sale Deed was registered. The reason for introduction of this proviso was that if a valid agreement, being entered between the party and a vendor did not execute the Sale Deed, then vendee can file a suit for specific performance of the contract and persuade the vendor to execute the Sale Deed. It can be vice-versa, i.e. vendor can file a suit for specific performance of contract and persuade the vendee to purchase the property. In such situation, where Sale Deeds are being executed with the help of Court, then no money would be exchanged over and above the one stated in the Agreement. Thus, Legislature thought it to introduce the scheme in Section 50C also. Therefore, we are of the view that ld. Revenue Authorities have committed a grave error by not accepting the contention of the assessee. AO is directed to identify the Stamp Duty valuation rate on 12.03.2012 and if it happened more than Rs.4,80,00,000/-, then only explore the exercise contemplated in sub-clause (ii) of Section 50C, namely, he will refer the case to the DVO and find out what was the value of the industrial plot on 12.03.2012. Only thereafter, he will decide whether any addition deserves to be made in the hands of the assessee. Appeal allowed. Issues: Whether the addition of Rs.17,80,299/- by treating the stamp duty valuation as the full value of consideration under Section 50C of the Income-tax Act, 1961 is sustainable in view of the agreement date and receipt of part consideration by account payee cheques prior to the agreement date.Analysis: Section 48 prescribes computation of capital gains by reference to the full value of consideration. Section 50C operates as a deeming provision replacing the actual sale consideration with the stamp duty valuation where the latter is higher. The first proviso to Section 50C permits use of the stamp valuation as on the date of the agreement (instead of date of registration) where the date of agreement and date of registration differ, provided that the amount or part thereof has been received by the assessee by account payee cheque, bank draft or electronic clearing system on or before the date of the agreement. The record shows an Agreement to Sell in March 2012 and receipt of more than Rs.1,80,00,000/- by account payee cheques in March 2012 before registration in May 2012. Accordingly, the proviso to Section 50C is engaged and the relevant stamp duty valuation date for comparison is the date of the agreement (12.03.2012). If the stamp valuation on that date exceeds the contract price, the AO may then, in accordance with sub-clause (ii) of Section 50C, obtain a valuation by the DVO to determine the appropriate deemed value.Conclusion: The addition is not sustainable as made; benefit of the first proviso to Section 50C applies. The impugned orders are set aside, the additions deleted, and the matter is remitted to the AO to identify the stamp duty valuation as on 12.03.2012 and, if necessary, obtain DVO valuation and recompute the tax consequences.