What the courts have decided on section 50C(1), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Vidarbha Veneere Industries Ltd v ITO
High CourtHelps departmentHigh Courts differ
The Tribunal orders say s.50C does not touch leasehold rights. Is that still safe advice?
No, not in Bombay. The High Court held that leasehold rights in land are a capital asset, because s.2(14) speaks of property held by an assessee and not of property owned by him, and that s.50C accordingly applies to the transfer or assignment of leasehold rights in land allotted by MIDC. The Court said it was not in agreement with the Mumbai Tribunal's decision in Atul G. Puranik, which cannot be considered good law, and that CIT v. Greenfield Hotels & Estates is of no assistance once that decision goes.
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Limbabhai Ishwarbhai Jodhani v ACIT (Gujarat High Court) — section 50C fixes the stamp valuation authority's value; the Assessing Officer cannot assume a higher one
High CourtHelps taxpayerNo later treatment found
The stamp authority accepted my sale deed at the agricultural land rate and passed a final order on it. The Assessing Officer has reopened on the basis that the open land rate should have applied. Can he assume a valuation above the one the stamp authority itself adopted?
No. The Gujarat High Court quashed the reopening. Section 50C substitutes the value adopted or assessed or assessable by the stamp valuation authority, and the Explanation defines 'assessable' as the price that authority would have adopted or assessed if the transfer had been referred to it. On the record the sale deed described the property as agricultural land, the stamp paid had been accepted by the Deputy Collector, Stamp Valuation Department in an order dated 16 October 2017, and the government resolution prescribed a lower rate for agricultural land than for open plots; the officer was therefore trying to assume a valuation beyond the value prescribed by the stamp valuation authority.
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Joseph Mudaliar v DCIT (ITAT Mumbai) — the section 50C tolerance band read into the buyer's charge under section 56(2)(vii)(b), and applied to AY 2015-16
ITATHelps taxpayer
I bought flats slightly below the stamp duty value and the Assessing Officer has added the difference in my hands under section 56(2)(vii)(b). There is no tolerance band in that clause. Can I still claim the section 50C margin?
The Tribunal held that you can. It read the exception in the third proviso to section 50C(1), and the corresponding exception in section 56(2)(x)(b)(B) and the first proviso to section 43CA, into section 56(2)(vii)(b)(ii), on the reasoning that the buyer and the seller stand on the same footing and there cannot be two different fair market values for the same property. It then applied a ten per cent margin to AY 2015-16, holding the Finance Act 2018 amendments curative and beneficial and therefore retrospective, and deleted the whole addition of Rs.23,30,694.
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Noida Cyber park P Ltd v ITO
ITATHelps taxpayerUnder appeal
I assigned my leasehold plot for less than the circle rate. Can the officer substitute the stamp duty value under s.50C?
No, on this Tribunal's reasoning. Section 50C(1) is worded 'land or building or both' and not 'any right in land or building', and the Delhi Tribunal held the two expressions are distinct, so a transfer of leasehold rights in land or building falls outside the section and the stamp duty value cannot be substituted. Read this together with the Bombay High Court decision in Vidarbha Veneere Industries, which has since taken the opposite view.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
