TaxTMI 
TaxTMI 
2025 (7) TMI 2044
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....f the property acquired by the assessee at Rs. 81,75,000/- and value adopted by the stamp duty authority at Rs. 88,69,500/- amounting to Rs. 6,94,500/-, invoking the provisions of section 56(2)(vii)(b) of the Act. 4. The assessee thereafter carried the matter in appeal before the Ld. CIT(A), who has since sustained the said order and the findings of the AO and against the said order, the assessee is in appeal before us. 5. On perusal of the grounds of appeal taken by the assessee, it is noticed that in one of the grounds of appeal, the assessee has challenged the action of the Ld. CIT(A) in sustaining the action of the AO stating that since the difference between apparent consideration and stamp duty valuation is less than 10%, the same is within the tolerance limit as prescribed under 3rd proviso to Section 50C(1) of the Act where it equally applies in the context of section 56(2)(vii) of the Act and no addition should therefore be made in the hands of the assessee. 6. In this regard, during the course of appellate proceedings before the Ld. CIT(A), the assessee has submitted that since the apparent consideration is Rs. 81,75,000/- and the stamp duty value is Rs. 88,69,50....
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....rd, we can gainfully refer to the decision of the Coordinate Mumbai Benches in case of Maria Fernandes Cheryl (supra) and the relevant findings therein read as under: "7. These submissions, however, do not impress us. As noted by the Central Board of Direct Taxes circular # 8 of 2018, explaining the reason for the insertion of the third proviso to Section 50C(1), has observed that "It has been pointed out that the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including the shape of the plot or location". Once the CBDT itself accepts that these variations could be on account of a variety of factors, essentially bonafide factors, and, for this reason, Section 50C(1) should not come into play, it was an "unintended consequence" of Section 50(1) that even in such bonafide situations, this provision, which is inherently in the nature of an anti-avoidance provision, is invoked. Once this situation is sought to be addressed, as is the settled legal position- as we will see a little later in our analysis, this situation needs to be addressed in entirety for the entir....
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....ate on which the main provision, unintended provisions of which are sought to be nullified, itself was brought into effect. Let us understand what the nature of the provisions of Section 50C is. In terms of this provision, if the property is sold below the stamp duty valuation rate, which is often called circle rate, this stamp duty valuation report is assumed as sale consideration for the property in question, and, accordingly, capital gains tax is levied. This deeming fiction to substitute apparent sale considerations by notional consideration computed on the basis of a stamp duty valuation rate, was thus to address the issue with respect to potential evasion of taxes by understating the sale consideration amount in a sale deed. As noted by the CBDT, while explaining the justification for insertion of Section 50 C, "(r)he Finance Act, 2002, has inserted a new section 50C in the Income-tax Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property". Section 50C, thus, on a conceptual note, is a provision to address capital gains tax evasion on account of understatement of the consideration. Of course, the law provides....
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.... of adjustments contemplated in the computation of capital gains under this anti-avoidance provision. In our humble understanding, it is a case of a curative amendment to take care of unintended consequences of the scheme of Section 50C. It makes perfect sense, and truly reflects a very pragmatic approach full of compassion and fairness, that just because there is a small variation between the stated sale consideration of a property and stamp duty valuation of the same property, one cannot proceed to draw an inference against the assessee, and subject the assessee to practically prove his being truthful in stating the sale consideration. Clearly, therefore, this insertion of the third proviso to Section 50C(1) is in the nature of a remedial measure to address a bonafide situation where there is little justification for invoking an anti-avoidance provision. Similarly, so far as enhancement of tolerance band to 10% by the Finance Act 2020, is concerned, as noted in the CBDT circular itself, it was done in response to the representations of the stakeholders for enhancement in the tolerance band. Once the Government acknowledged this genuine hardship to the taxpayer and addressed the i....