Section 50C Income Tax Addition Not Applicable When Registered Sale Agreement Precedes Circle Rate Hike: Delhi HC [Read Order]
The Delhi High Court held that Section 50C addition cannot apply if a registered sale agreement was executed before a circle rate hike, even if the sale deed was registered later.
![Section 50C Income Tax Addition Not Applicable When Registered Sale Agreement Precedes Circle Rate Hike: Delhi HC [Read Order]](https://images.taxscan.in/h-upload/2025/07/11/2062837-incometax-addition-taxscan.webp "Section 50C Income Tax Addition Not Applicable When Registered Sale Agreement Precedes Circle Rate Hike: Delhi HC [Read Order]")
In a recent ruling, the Delhi High Court held that an addition under Section 50C of the Income Tax Act cannot be made when a registered sale agreement was executed before the circle rate was increased. The court dismissed the income tax department’s appeal, upholding the order of the Income Tax Appellate Tribunal (ITAT) in favour of the assessee. The Principal Commissioner of...
In a recent ruling, the Delhi High Court held that an addition under Section 50C of the Income Tax Act cannot be made when a registered sale agreement was executed before the circle rate was increased.
The court dismissed the income tax department’s appeal, upholding the order of the Income Tax Appellate Tribunal (ITAT) in favour of the assessee.
The Principal Commissioner of Income Tax, Delhi, filed an appeal against Thomson Press (India) Ltd regarding the assessment year 2014-15, challenging the ITAT’s decision to delete an addition of Rs. 20 crores made under Section 50C of the Income Tax Act.
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The dispute arose from a property transaction where Living Media India Ltd, later merged with Thomson Press, sold a property in Noida to Maccons Infra Pvt Ltd at Rs. 18,000 per square meter through a registered agreement to sell dated 30.05.2013, which was before the circle rate was increased to Rs. 28,000 per square meter on 01.08.2013. The sale deed was executed later on 11.10.2013.
The income tax department‘s counsel argued that the circle rate had increased before the sale deed was executed, so the higher rate should apply under Section 50C of the Income Tax Act, warranting the addition.
The assessee’s counsel argued that the registered agreement to sell and payment of stamp duty on 30.05.2013 fixed the transaction value at the prevailing circle rate, and the subsequent increase should not affect the assessment under Section 50C of the Income Tax Act.
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The bench led by Justice Vibhu Bakhru and Justice Tejas Karia observed that the transaction value matched the circle rate at the time of the registered agreement and that the later increase did not warrant the application of a higher value under Section 50C of the Income Tax Act.
The court referred to its earlier judgment in Principal Commissioner of Income Tax v. Modipon Ltd, which had held that Section 50C does not apply where the transaction is based on a registered agreement preceding a circle rate hike.
The court held that no substantial question of law arose in the department’s appeal and found that applying Section 50C in such cases would result in hardship to the assessee. The appeal was dismissed.
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