Unreported Decisions – August 2021

By Ajay R. Singh, Advocate and CA Rohit Shah

1. S. 50C: Capital Gains-Full value of consideration-Applicability of section 50C-Stamp value as on date of agreement or date of registration :

The case of the assessee was that he had entered into an agreement to sell the land. This agreement was executed on 30-12-2010 and consideration was settled at ₹ 46,54,000/- . On 31-12-2010 the value of the land for the purpose of stamp duty was fixed at ₹ 140 per sq.meter by the stamp valuation authority. The assessee has agreed to sell at the rate of ₹ 200 per sq.meter. According to the assessee, he received ₹ 5.00 lakhs as token consideration and ₹ 41,54,000 on 26-4-2011. The sale deed was registered on 23-11-2011. The State of Gujarat for the purpose of charging stamp duty has re-determined the value of the property in this year, and new rates were notified on 18-4-2011. Since the assessee presented the sale deed on 24-5-2011 for registration before the sub-Registrar, Sanand, but was not registered on account of insufficiency of stamps put on it. The purchaser has paid stamp duty at ₹ 200 per sq.meter whereas according to the stamp duty valuation officer rates have been revised to ₹ 1670 per sq.meter. This rate was erroneously fixed, and it was revised subsequently by reducing it to ₹ 618 per sq.meter. In other words, on the date when sale deed was presented for registration, i.e., 24-5-2011, Jantri rate for the purpose of payment of stamp duty was ₹ 618 per sq.meter. The dispute between the assessee and the Revenue was, for the purpose of section 50C, which rate is to be deemed as full consideration for the sale of this property for purpose of section 48 of the Act.

Hon’ble ITAT allowing appeal of the assessee held that Agreement was dated 31-12-2010 and sale deed was presented for registration on 24- 5-2011. Section 50C was amended and second proviso was brought on the statute book, which authorized an assessee to argue that where amount of consideration or part thereof was received by way of account payee cheque, then the appointing day for the purpose of valuation of the property for the purpose of section 50C was to be taken as the date of agreement. Assessee had placed copies of the sale deed before Revenue authorities, but in spite of that, even under section 50C(2), this aspect was not appreciated. Thus, purpose of computation of long-term capital gain on sale of land, value shown by assessee at rate of ₹ 200 per sq.meter was to be adopted and accordingly AO was directed to take value disclosed at the rate of ₹ 200 per sq.meter, and thereafter calculate the long-term/short-term capital gain.

Ashok Vadilal Patel v. ITO 3(3)(1), Ahmedabad [ITA NO.: 427/AHD/2018, A.Y. 2012-13, Bench A; Dated: 29/1/2021]