The Income Tax Appellate Tribunal (ITAT), Jaipur bench, held that the purchase/sale of immovable property for business purposes did not attract Section 50C of the Income Tax Act, 1961. Therefore, the bench deleted the addition made by the assessing officer.
Assessee Rajkumari Gupta filed the return of income, and during the assessment proceedings, it was noticed that the assessee had sold an immovable property without declaring capital gain on the transfer of the property.
Accordingly, a notice under Section 148 of the Income Tax Act was issued to the assessee, and thereafter, the assessee’s Chartered Accountant (CA) filed the return electronically. The reassessment proceedings started against the assessee.
It was observed that the assessee bought the property for a consideration of Rs. 16.50 lakhs. The property was assessed at Rs. 20,97,780/- by the stamp valuation authority. Therefore, considering the provisions of Section 50C, the full value of consideration under Section 48 is to be considered at Rs. 20,97,780/-. Thereafter, the reassessment order was passed.
Aggrieved by the order, the assessee filed an appeal before the CIT(A), who dismissed the appeal of the assessee. Thereafter, the assessee filed an appeal against the CIT(A) order before the tribunal.
P. C. Jain, Counsel for the assessee, argued that the assessee had purchased the property as a business asset for conducting the sale and purchase of the business property and it was not for investment purposes; therefore, the provision of Section 50C is not applicable.
Monisha Choudhary, Counsel for Revenue, supported the decision of the lower authorities.
It was observed by the tribunal that the provision of Section 43CA of the Income Tax Act was made applicable from the assessment year 2014-15, and since this transaction is duly accounted for as an adventure in the nature of trade, and the profit from this is already included while filing the return of income, the addition under Section 50C of the Income Tax Act could not be made in the hands of the assessee.
After considering the facts submitted and the circumstances, the two-member bench of Rathod Kamlesh Jayantbhai (Accountant Member) and Dr. S. Seethalakshmi (Judicial Member) concluded that the purchase/sale of immovable property for business purposes did not attract Section 50C of the Income Tax Act.
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