The Income Tax Appellate Tribunal (ITAT) Bangalore, has deleted an addition made by the revenue department under section 50C of the Income Tax Act.
The assessee, Ayi Vaman Narasimha Acharya, filed return of income declaring a total income of ₹ 18,83,160 for Assessment Year 2011-12. This return was accepted under section 143(1) and subsequently, the assessment was reopened under section 148. The reasons so was that the Assessee sold two shops at Cavalry Road, Bangalore under a sale deed for a sale consideration of ₹ 32,27,010. The value adopted by the registering authority for the purpose of stamp duty and registration charges i.e., as per guideline valuation was ₹ 57,80,325. The Assessee had not disclosed the capital gain on sale of the property and so the Assessing Officer initiated proceedings for reassessment to assess capital gain that escaped assessment. The sale deed was executed by the Assessee on 10.08.2019 and was presented for registration on 10.08.2009. Since the parties disputed the value adopted by the registering authorities for the purpose of stamp duty and registration, the matter was referred to the District Registrar and determined the value of the property for the purpose of stamp duty and registration at a sum of Rs.57,80,325. The stamp duty as demanded by the registering authorities on 26.06.2010 and the document was registered on 26.06.2010. Since the sale deed was executed on 10.08.2009 which falls within the Financial Year 2009-10 relevant to the Assessment Year 2010-11,the assessee contended that the capital gain in question cannot be brought to tax in Assessment Year 2011-12.
Vice President N.V. Vasudevan allowed the appeal filed by the assessee and held, “The decision referred to by the learned DR in the case of J.Appa Rao(supra) is a case where it was held that applicability of the provisions of Sec.50C of the Act is mandatory w.e.f .1-4-2003. This decision does not in any way support the case of the revenue regarding the year in which capital gain is liable to be taxed. For the reasons given above, I hold that the capital gain in question cannot be brought to tax in Assessment Year 2011-12. The Revenue authorities erred in bringing to tax the capital gain in Assessment Year 2011-12. The addition made by the AO is accordingly directed to be deleted.”
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