September 2019

Section 50C – Third proviso to section 50C inserted w.e.f. 1st April, 2019 providing for a safe harbour of 5%, is retrospective in operation and will apply since date of introduction of section 50C, i.e., w.e.f. 1st April, 2003, since the proviso is curative and removes an incongruity and avoids undue hardship to assessees

Jagdish D. Shah | Jagdish T. Punjabi
Chartered Accountants

13.  Chandra Prakash Jhunjhunwala vs. DCIT (Kol.) Members: A.T. Varkey (JM) and Dr. A.L. Saini (AM) ITA No. 2351/Kol./2017 A.Y.: 2014-15 Date of order: 9th August, 2019; Counsel for Assesssee / Revenue: Manoj Kataruka / Robin Chowdhury

 

Section 50C – Third proviso to section 50C inserted w.e.f. 1st April, 2019 providing for a safe harbour of 5%, is retrospective in operation and will apply since date of introduction of section 50C, i.e., w.e.f. 1st April, 2003, since the proviso is curative and removes an incongruity and avoids undue hardship to assessees

 

FACTS

The assessee in his return of income declared total income to be Nil and claimed current year’s loss to be Rs. 1,19,46,383. In the course of assessment proceedings, the AO noticed that the assessee had on 14th December, 2013 transferred his property at Pretoria Street, Kolkata for a consideration of Rs. 3,15,00,000 and had declared long-term capital gain of Rs. 1,22,63,576 on transfer thereof. The stamp duty value (SDV) of this property was Rs. 3,27,01,950. In response to the show cause notice issued by the AO as to why the SDV should not be adopted as full value of consideration, the assessee asked the AO to make a reference to the DVO to ascertain the fair market value of the property. Accordingly, the reference was made but the DVO did not submit his report within the specified time and the AO completed the assessment by adopting SDV to be the full value of consideration.

 

Aggrieved, the assessee preferred an appeal to the CIT(A) who confirmed the action of the AO. The assessee then preferred an appeal to the Tribunal.

 

HELD

The Tribunal observed that:

(i) the fundamental purpose of introducing section 50C was to counter suppression of sale consideration on sale of immovable properties, and this section was introduced in the light of the widespread belief that sale transactions of land and buildings are often un

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