By K. B. Bhujle | Advocate
New Page 1
Reported
:
56 Full value of consideration: S. 50C of I. T. Act, 1961: A.
Y. 2004-05: Section 50C providing for deeming the value for stamp duty purposes
as full value of consideration is applicable only for capital assets and not for
business assets
[CIT Vs. Thiruvengadam Investments P. Ltd.; 320 ITR 345
(Mad)]
The assessee was engaged in the business of
investment in shares and property development. In the relevant year, i.e. A. Y.
2004-05, the assessee had sold a property held as business asset for a
consideration of Rs. 5 crores. The Sub-Registrar took the guideline value of Rs.
6,94,45,920/-. The Assessing Officer invoked the provisions of section 50C of
the Income-tax Act, 1961 and substituted the stamp duty value of Rs.
6,94,45,920/- for the consideration of Rs. 5 crores. The Tribunal held that the
invocation of the provisions of section 50C was not warranted as the property
was never held by the assessee as capital asset and as per the accounts also the
amount given to the owner of the property has been shown as loans and advances
thereby the property had been treated as a business asset and not as a capital
asset.
On appeal by the Revenue, the Madras High Court upheld the
decision of the Tribunal and held as under:
“i) Since the property in the hands of the assessee was
treated as a business asset and not as a capital asset, there was no question
of invoking the provisions of section 50C which pertains to determining the
full value of the capital asset.
ii) The Tribunal had come to the correct
conclusion”
Editor’s Note: The Finance Bill 2010 has proposed an
amendment which accepts this ratio
