Recently, the Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) in the case of Monica Bibbly Sood, has ruled that for the purposes of Section 50C of the Income-tax Act (dealing with deemed valuation of immovable property), the “appointed date” for determining stamp duty valuation shall be the date of agreement to sell, and not the date of registration of the sale deed, where part consideration has been received through banking channels in accordance with the provisions of Section 50C.
The assessee executed an agreement to sell an industrial shed for Rs. 4.80 crore on March 12, 2012, received over Rs. 1.80 crore as an advance through multiple account payee cheques by March 15, 2012. However, the stamp duty authority adopted a value of Rs. 4.97 crore at the time of registration. The Assessing Officer invoked Section 50C and made an addition on account of the differential value.
On appeal, the ITAT after examining the deeming fiction, observed that the first and second proviso of Section 50C states that, where the date of agreement fixing consideration and the date of registration are not the same, the stamp duty value as on the date of agreement must be considered, provided part consideration has been received by way of an account payee cheque or by use of electronic clearing system through a bank account. The Tribunal emphasized that the legislative intent behind the provisos was to protect genuine transactions, where consideration is fixed earlier and registration occurs subsequently.
This ruling reinforces that the first and second provisos to Section 50C are substantive safeguards and must be applied where their conditions are fulfilled. Taxpayers entering into property transactions with staggered execution and registration should ensure receipt of consideration through banking channels to avail this protection.
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