Benefit of 10% limit of difference in stamp duty valuation and actual sales consideration shall be retrospective
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Case Name: |
Maria Fernandes Cheryl Vs. ITO |
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Case Details: |
ITA No. 4850/Mum/2019 |
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Assessment Year: |
2011-12 |
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Order Pronounced by: |
ITAT, Mumbai |
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In Favour of: |
Assessee |
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Date of Order: |
15-01-2021 |
Tribunal’s Verdict with brief summary:
- The 3rd proviso to section 50C (inserted by Finance Act, 2018) provides that w.e.f. 01-04-2019, section 50C will not apply if the difference between the stamp duty valuation and the actual sales consideration does not exceed 5%. This limit is increased to 10% by Finance Act, 2020 to take effect from 01-04-2021. The Tribunal held that though the amendments are stated to be prospective but they are curative in nature so the benefit of these amendments should be allowed retrospectively.
- CBDT circular No. 8 of 2018 explaining the reason for the insertion of the 3rd proviso to section 50C(1) has observed that “it has been pointed out that the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including the shape of the plot or location.” Once the CBDT itself accepts that these variations could be on account of a variety of factors, essentially bonafide factors, and, for this reason, section 50C(1) should not come into play, it was an “unintended consequence” of section 50C(1) that even in such bonafide situations, this provision, which is inherently in the nature of an anti-avoidance provision, is invoked. This situation needs to be addressed in entirety for the entire period in which such legal provisions had effect, and not for a specific time period only.
- Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of Section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti-avoidance provisions under section 50C could be pressed into service and thus remedied the law. Therefore, there is no good reason for holding the curative amendment to be only as a prospective in effect. Hence, these amendments are thus held to be retrospective in effect.
- Accordingly, if the valuation of the property, for the purposes of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked.
Case laws quoted in support:
Rajeev Kumar Agarwal Vs. ACIT (2014) 45 Taxmann.com 555 (Agra)In this case, the bench was dealing with the question whether insertion of a proviso to section 40(a)(ia) to cure intended consequence could have retrospective effect, even though not specifically provided for. The bench observed that “Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. |
CIT Vs. Ansal Landmark Township Pvt. Ltd. (2015) 61 taxmann.com 45 (Del)Hon’ble Delhi High Court approved the findings of above judgement and observed that the above reasoning of Agra Bench of ITAT as regards the rationale behind the insertion of the second proviso to section 40a(ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance. |
Dharmashibhai Sonani Vs. ACIT (2016) 161 ITD 627 (Ahd)The same observation was made by the Tribunal which has been approved by Hon’ble Madras High Court in the judgement reported as CIT Vs. Vummudi Amarendran (2020) 429 ITR 97 (Mad.) |
Click the following link for complete order: Maria Fernandes Cheryl Vs. ITO
