TaxTMI 
TaxTMI 
2025 (9) TMI 884
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....computation of income, books of accounts and reason for receipts as per Form 26AS being more than that shown in ITR. 3. The Assessee in response submitted various relevant details, on verification of the same, the Assessing Officer (AO) observed that the Assessee had purchased an immovable property at Village Juveli, Badlapur Gaon, Badlapur, Thaluka Amberntah, Thane for a total consideration of Rs. 1,50,00,000/- as against the Government valuation of Rs. 2,88,38,000/-. The agreement for sale was entered into on 30.07.2012, however, the sale deed was entered into on 05.12.2014. 4. The AO accordingly, show caused the Assessee "as to why the difference of Rs. 1,38,38,000/- (Rs. 2,88,38,000 Government valuation - Rs. 1,50,00,000/- consideration shown by the Assessee) should not be added to the total income of the Assessee as income from other sources". 5. The Assessee, in response to the same, vide letter dated 27.12.2017, claimed that the said property is agricultural land with encroachment by workers and with less buyers for the said land, hence there was a reason to purchase the property far below to the Government valuation. The Assessee also asked for the appointment of t....
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....he basis of report of Government Valuation Officer, the addition as restricted to the tune of Rs. 10,51,000/- by the AO and affirmed by the Ld. Commissioner, is lower than 10% of the amount of consideration of Rs. 1,50,00,000/- as paid/shown by the Assessee. And therefore question emerge whether such addition made on differential amount is sustainable or liable to be deleted. 11. We observe that the Hon'ble Co-ordinate Bench of the Tribunal in the case of Maria Fernandes Cheryl vs. ITO (International Taxation), Mumbai (2021) 123 taxmann.com 252 (Mumbai - Trib.) also dealt with identical issue and by taking into consideration the provisions of section 50C of the Act and the amendment made vide Finance Act, 2018, "whereby the limit of differential amount of 5% between the valuation determined by the valuation officer and the valuation offered by the Assessee, has been increased to 10%", has held that the enhancing tolerance band for variations between stated sale consideration vis-à-vis stamp duty valuation from 5% to 10% are curative in nature. For ready reference and brevity, the conclusion drawn by the Hon'ble Coordinate Bench of the Tribunal is reproduced as herein belo....
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.... the case of CIT Vs Ansal Landmark Township Pvt Ltd [(2015) 61 taxmann.com 45 (Del)], has approved this approach and observed that "(t)he Court is of the view that the above reasoning of the Agra Bench of ITAT as regards the rationale behind the insertion of the second proviso to Section 40(a)(ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance". The same was the path followed by another bench of this Tribunal in the case of Dharmashibhai Sonani Vs ACIT [(2016) 161 ITD 627 (Ahd)] which has been approved by Hon'ble Madras High Court in the judgment reported as CIT Vs Vummudi Amarendran [(2020) 429 ITR 97 (Mad)]. The question that we must take a call on, therefore, is as to what is the rationale behind the insertion of the third proviso to Section 50C(1), and if that rationale is to provide a remedy for unintended consequences of the main provision, we must hold that the third proviso to Section 50C(1) comes into force with effect from the same date on which the main provision, unintended provisions of which are sought to be nullified, itself was brought into effect. Let us underst....
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....as long as the variations are within the permissible limits, the anti-avoidance provisions of Section 50C do not come into play. As we have noted earlier, the CBDT itself accepts that there could be various bonafide reasons explaining the small variations between the sale consideration of immovable property as disclosed by the assessee vis-à-vis the stamp duty valuation for the said immovable property. Obviously, therefore, disturbing the actual sale consideration, for the purpose of computing capital gains, and adopting a notional figure, for that purpose, will not be justified in such cases. On a conceptual note, an estimation of market price is an estimation nevertheless, even if by a statutory authority like the stamp duty valuation authority, and such a valuation can never be elevated to the status of such a precise computation which admits no variations. The rigour of Section 50C(1) was thus relaxed, and very thoughtfully so, to take these bonafide cases of small variations between the stated sale consideration vis-à-vis stamp duty valuation, out of the scope of adjustments contemplated in the computation of capital gains under this anti-avoidance provision. In ....
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....ion 50 C(1), by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis-àvis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of Section 50C, i.e. 1st April 2003. In plain words, what is means is that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. 8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of Section 50 C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, antiavoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with effect from the date on which the related prov....