Deemed Valuation u/s 50 C of Income Tax Act Applicable to Seller of Property, Not to Buyers: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the provisions of section 50C of the Income Tax Act, 1961 is applicable only to the seller of the property, not to the buyers.

The facts in brief are the Assessee firm is a Limited Liability Partnership firm engaged in the business of Real Estate Developers and other related activities.The assessee firm made investment by purchase of property in N- 94, Panchsheel Park, New Delhi for Rs.4,50,00,000/- during the year, which was duly reflected in the sale deed submitted before the Assessing Officer and duly recorded in the books of the assessee firm. The assessee firm paid stamp duty of Rs.72,05,000/- on the property value arrived by the Registrar of Documents for stamp duty value purpose.While processing the returns, the department observed that when the circumstances of distress sale are not justified from record thus, the sale consideration of 4,50,00,000/- could not have been accepted.

A Two-Member-bench comprising Sh. Anil Chaturvedi, Accountant Member and Sh. Anubhav Sharma, Judicial Member observed that the relevant Section 50C cannot be invoked as the said section is applicable in the case of seller of the property only while the appellant is a buyer.

“Section 56(2)(vii)(a) and Section 56(2)(vii)(b) of the Act are also not applicable in case of partnership firm or LLP and the assessee is a LLP. The Section 56(2)(x) which may be applicable in case of partnership firm or LLP was introduced with effect from A.Y. 2018-19 while the present case is with regard to A.Y. 2015-16. Thus, in the absence of any statutory presumption the Ld. AO was under obligation to establish by definite evidence that purchaser had made more payment then stated in sale deed. Circumstances of distress sale are on record and there was no attempt of ld. AO to discredit the same. The Ld CIT(A) has rightly taken all these aspects into consideration while allowing the relief of deletion and no interference is required,” the Tribunal said.

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