By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi, Chartered Accountants
Section 50C – Provisions of section 50C are
applicable to sale by a registered un-possessory sale-cum-GPA.
FACTS
The assessee, a
doctor by profession, filed his return of income for the assessment year 2007-08.
The assessment was completed u/s. 143(3) of the Act. Subsequently, the
assessment was re-opened, after recording reasons, u/s. 148 of the Act. In the
course of re-assessment proceedings, the Assessing Officer (AO) noticed that
the assessee has sold a residential house property at Dr.No.32-7- 3A, P.S.
Nagar, Vijayawada for a consideration of Rs. 60 lakh by way of registered
un-possessory sale-cum-GPA vide document no.52/2007. As per the said
document, the market value of the property for the purpose of payment of stamp
duty has been fixed at Rs. 82,04,000/-. However, since the assessee had
computed capital gains by adopting sale consideration of Rs. 60 lakh and
claimed exemption u/s. 54 of the Act towards construction of another
residential house property, the AO asked the assessee to show cause why
provisions of section 50C should not be applied and capital gain computed with
reference to value determined by Stamp Valuation Authorities. In response, the
assessee submitted that the provisions of section 50C of the Act are not
applicable since the assessee has transferred property by way of registered
un-possessory sale-cum-GPA. According to the assessee, the provisions of
section 50C of the Act apply where the property has been transferred by way of
registered sale deed. The AO rejected the contentions of the assessee and
computed capital gains by applying the provisions of section 50C of the Act.
Aggrieved, the
assessee preferred an appeal to CIT(A) who held that the provisions of section
50C of the Act have no application when the property has been transferred by
way of un-possessory sale-cum-GPA. He further held that the provisions of
section 50C of the Act are applicable when the property has been transferred
for a consideration which is less than that of the guidelines value payable as
per SRO, then the value as per the SRO has to be adopted on which stamp duty is
payable by the transferor. Since, the impugned property was not registered,
value as per SRO is not applicable. He allowed the appeal
Aggrieved, the
revenue preferred an appeal to the Tribunal.
HELD
It is an
admitted fact that the assessee has transferred property by way of registered
sale-cum-GPA has transferred property by way of registered sale-cum-GPA and
that the sale-cum-GPA is registered in the office of the SRO. The stamp duty
authority has determined the market value of the property at Rs. 82,04,000/-
and has collected ad hoc stamp duty of Rs. 50,000/-. The assessee has computed
long-term capital gain by adopting sale consideration of Rs. 60 lakh shown in
the sale deed. The only dispute is that whether the provisions of section 50C
are applicable or not when the property is transferred by sale-cum-GPA. The
Tribunal observed that in this case, the assessee himself has admitted
long-term capital gain on transfer of asset. This clearly shows that the
transfer took place within the meaning of section 2(47)(v) of the Act. The
moment transfer took place within the meaning of section 2(47)(v) the deeming
fiction provided u/s. 50C is applicable, when the sale consideration shown in
the sale deed is less than the market value determined by the stamp duty
authority for the purpose of payment of stamp duty. Since, there is a
difference between consideration shown in the sale deed and the value
determined by the SRO, the deeming provisions of section 50C are clearly
applicable. It observed that it is illogical and improper on the part of the
assessee to say that the transfer within the meaning of section 2(47)(v) takes
place, but the provisions of section 50C are not applicable when the property
has been transferred by way of un-possessory sale-cum-GPA.
The Tribunal
allowed this ground of appeal filed by the revenue.
