Section 50C safe harbour applies when stamp value stays within 105% of actual consideration, requiring adoption of actual sale price.

Where the stamp valuation does not exceed 105% of the actual consideration, the third proviso to section 50C(1) operates as a safe harbour and the actual sale consideration must be adopted for capital gains computation. The tribunal treated this proviso as retrospective from 1 April 2003 and applied it to the assessee's case, where the stamp value exceeded the stated consideration by only about 1.19%. On that basis, invoking section 50C to substitute the stamp valuation was unsustainable, and the full value of consideration had to be taken at the actual amount received.

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Issues: Whether the difference between the actual sale consideration and the stamp valuation, being within 5%, required adoption of the stamp value under section 50C(1), or whether the third proviso to section 50C(1) exempted the assessee from its application.

Analysis: The actual consideration attributable to the assessee was Rs. 42,00,000, while the stamp valuation attributable to the assessee was Rs. 42,50,000, resulting in a difference of about 1.19%. The third proviso to section 50C(1) provides a safe harbour where the stamp value does not exceed 105% of the consideration received or accruing. The proviso was treated as applicable retrospectively from 01.04.2003, and the difference in the present case fell within the permitted tolerance.

Conclusion: The invocation of section 50C to adopt the stamp valuation was unsustainable, and the full value of consideration had to be taken at Rs. 42,00,000. The issue is decided in favour of the assessee.

Ratio Decidendi: Where the stamp valuation does not exceed 105% of the actual consideration, the third proviso to section 50C(1) applies as a safe harbour and the actual consideration must be adopted for computing capital gains.

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