Sec 50C of Income Tax Act not Applicable to Assessees engaged Real Estate Business, says ITAT Delhi [Read Order]

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In Umesh Garg v. ITO, a division bench of the ITAT, New Delhi observed that section 50C of the Income Tax Act, 1961 special provision for full value of consideration in certain cases does not applicable to assesses who are engaged in the real estate.

In the instant case, assessee sold a property of Rs. 9570000/- on 20/03/2010 and rate for payment of stem duty was determined at Rs. 11484000/–. The Assessing Officer found a difference of Rs. 19.14 lacs and had applied the provisions of section 50C of the Income Tax Act.

The assessee’s claim that the above provision was not applicable to him was rejected by the Assessing Officer by pointing out that in the audited accounts of the assessee, no such mention was made and therefore assessee is not engaged in the business of real estate.

After hearing both the sides and perusing the evidence before it, the division bench observed that the assessee is engaged in the business of real estate. The income of these businesses also shown by the assessee in its computation of total income filed before the Ld. assessing officer. The accounts of the real estate business of the assessee are also audited therefore it is apparent that the assessee is carrying on business of real estate.

The bench further relied on the decision of the Bombay High Court in case of CIT Vs. Neelkamal Realtors and Erectors India Pvt. Ltd wherein it has been held that provisions of section 50C does not apply to an assessee engaged in the business of real estate.

In view of the above decision, the bench directed Assessing Officer to consider the sale consideration as per actual sale deed of the property instead of amount on which stamp duty has been paid, for the reason that assessee is engaged in the business of real estate and provisions of section 50C does not apply to him.

Read the full text of the Order below.

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