CIT v. Khoobsurat Resorts Pvt. Ltd.

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The Tax Publishers2013 TaxPub(DT) 0236 (Del-HC) : (2013) 051 (I) ITCL 0320 : (2013) 256 CTR 0371 : (2012) 211 TAXMAN 0510 : (2013) 082 DTR 0290 INCOME TAX ACT, 1961 --Capital gains--Applicability of section 50C Valuation under stamp duty Act--Assessee acquired six properties and valuation declared by assessee and for stamp duty was for or less same and were it was low stamp duty was paid accordingly as per Stamp Duty Act. Assessing officer held that provision of section was applicable and consideration paid by assessee was much more and thus he added difference thereof as escaped consideration. *Held:* Provision of section 50C is not applicable in the case of acquisition of property in assessee's case it is applicable in seller's case only and also deemed fiction could not be added in assessee's had were stamp duty was paid by assessee according to Stamp Duty Act. The fiction created by virtue of section 50C applies only in respect of escaped income of a seller, for the determination of the true capital gain. Such a special provision has to be construed narrowly, having regard to the subject-matter, and the extension of the fiction or presumption in respect of any matter not covered by it is unauthorized by the law. [Para 13] This court is of the opinion that the express provision of section 50C enabling the revenue to treat the value declared by an assessee for payment of stamp duty, ipso facto, cannot be a legitimate ground for concluding that there was undervaluation, in the acquisition of immovable property. If Parliamentary intention was to enable such a finding, a provision akin to section 50C would have been included in the statute book, to assess income on the basis of a similar fiction in the case of the assessee who acquires such an asset. No doubt, the declaration of a higher cost for acquisition for stamp duty might be the starting point for an inquiry in that regard; that inquiry might extend to analyzing sale or transfer deeds executed in respect of similar or neighbouring properties, contemporaneously at the time of the transaction. Yet, the finding cannot start and conclude with the fact that such stamp duty value or basis is higher than the consideration mentioned in the deed. The compulsion for such higher value, is the mandate of the Stamp Act, and provisions which levy stamp duty at pre-determined or notified dates. In the present case, the revenue did not rely on any objective fact or circumstances; consequently, the court holds that there is no infirmity in the approach of the lower authorities and the Tribunal, granting relief to the assessee. [Para 15] The court notices that the findings of the Commissioner (Appeals) and the Tribunal are concurrent, and the question is purely factual, i.e. whether the assessee had disclosed relevant particulars in respect of the source of funds. The record would reveal that the PAN number and material particulars of the Director (of the assessee) and his proprietorship concern, was made available; even the IT Returns concerned, were filed. The Commissioner (Appeals) scrutinized this aspect in detail, after considering the record, and held that the assessee had discharged its onus of proving that the funds were received, and revealed particulars of the source. Therefore, the addition made by the assessing officer was held not justified. This finding of fact was affirmed by the Tribunal. This court finds no unreasonableness in regard to such findings, as to call for interference under section 260A. [Para 16] Income Tax Act, 1961 Section 50C SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0236 (Del-HC) : (2013) 051 (I) ITCL 0320 : (2013) 256 CTR 0371 : (2012) 211 TAXMAN 0510 : (2013) 082 DTR 0290

INCOME TAX ACT, 1961

--Capital gains--Applicability of section 50C Valuation under stamp duty Act--Assessee acquired six properties and valuation declared by assessee and for stamp duty was for or less same and were it was low stamp duty was paid accordingly as per Stamp Duty Act. Assessing officer held that provision of section was applicable and consideration paid by assessee was much more and thus he added difference thereof as escaped consideration. Held: Provision of section 50C is not applicable in the case of acquisition of property in assessee's case it is applicable in seller's case only and also deemed fiction could not be added in assessee's had were stamp duty was paid by assessee according to Stamp Duty Act.

The fiction created by virtue of section 50C applies only in respect of escaped income of a seller, for the determination of the true capital gain. Such a special provision has to be construed narrowly, having regard to the subject-matter, and the extension of the fiction or presumption in respect of any matter not covered by it is unauthorized by the law. [Para 13] This court is of the opinion that the express provision of section 50C enabling the revenue to treat the value declared by an assessee for payment of stamp duty, ipso facto, cannot be a legitimate ground for concluding that there was undervaluation, in the acquisition of immovable property. If Parliamentary intention was to enable such a finding, a provision akin to section 50C would have been included in the statute book, to assess income on the basis of a similar fiction in the case of the assessee who acquires such an asset. No doubt, the declaration of a higher cost for acquisition for stamp duty might be the starting point for an inquiry in that regard; that inquiry might extend to analyzing sale or transfer deeds executed in respect of similar or neighbouring properties, contemporaneously at the time of the transaction. Yet, the finding cannot start and conclude with the fact that such stamp duty value or basis is higher than the consideration mentioned in the deed. The compulsion for such higher value, is the mandate of the Stamp Act, and provisions which levy stamp duty at pre-determined or notified dates. In the present case, the revenue did not rely on any objective fact or circumstances; consequently, the court holds that there is no infirmity in the approach of the lower authorities and the Tribunal, granting relief to the assessee. [Para 15] The court notices that the findings of the Commissioner (Appeals) and the Tribunal are concurrent, and the question is purely factual, i.e. whether the assessee had disclosed relevant particulars in respect of the source of funds. The record would reveal that the PAN number and material particulars of the Director (of the assessee) and his proprietorship concern, was made available; even the IT Returns concerned, were filed. The Commissioner (Appeals) scrutinized this aspect in detail, after considering the record, and held that the assessee had discharged its onus of proving that the funds were received, and revealed particulars of the source. Therefore, the addition made by the assessing officer was held not justified. This finding of fact was affirmed by the Tribunal. This court finds no unreasonableness in regard to such findings, as to call for interference under section 260A. [Para 16]

Income Tax Act, 1961 Section 50C