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2017 (8) TMI 956 - HC - Income TaxApplication of the provisions of section 50C - Addition on account of suppression of sale value of flats - gross variation in the sale price of the flats even on the same floor in the same direction - invoking section 50C to arrive at full consideration of sale of business asset - ITAT deleted the addition - Held that:- It is self evident from reading of section 50C of the Act that it would not have any application while determining 'Profits and gains of business or profession'. This is so as its application is only limited to computation of income chargeable under the head 'Capital gains' as is evident from specific reference in sub-section (1) of section 50 of the Act to section 48 of the Act i.e. mode of computation of capital gains. In fact section 50C of the Act as observed by the impugned order is placed as part of the Chapter IV-E under the head 'capital gains', it can only govern the valuation of the property to determine capital gains and cannot govern valuation of transfer of assets (other than a capital asset) i.e. stock in trade. This view is further strengthened by the fact that section 43CA has been introduced into the Act w.e.f. 1st April, 2014 which governs taking of full value of consideration for transfer of assets other than capital assets on the basis of stamp duty valuation. This section 43CA of the Act finds a place as a part of Chapter IV-D - Profits and gains of business or profession. Therefore, with effect from 1st April, 2014 the stamp duty valuation of assets sold could be taken as full value of consideration. Our above view that section 50C of the Act has no application to value stock in trade is also a view taken by Allahabad High Court in CIT v. Ken Construction and Colonizers (P.) Ltd. [2012 (5) TMI 145 - ALLAHABAD HIGH COURT]. So far application of section 56(2)(vii)(b)(ii) of the Act is concerned, it is self evident that it only applies to individuals and Hindu Undivided Family. Moreover, it seeks to tax the transferee of the property for having given consideration for which is less than the stamp value by ₹ 50,000/- or more for purchase of the property. Thus, the observations of the Tribunal that it has no application is unexceptional. Lastly, the finding of Tribunal that the Assessing Officer did not deal with explanation offered by the assessee justifying the difference in prices of similar flats, is a finding of fact. This has not been shown to be perverse. - ITAT truly deleted the addition - Decided in favour of assessee. Stock computation - Unsold area at end of previous year considered as part of closing stock of the respondent - assessee - liability towards MHADA on the assessee - Tribunal holding that stock was not included in stock in trade - Held that:- The impugned order of the Tribunal has on the basis of facts available before it held that it is not disputed that the respondent - assessee was obliged to handover 1797 sq. mtrs. of area to MHADA in lieu of permission to develop the project. Therefore, it was obligation of the respondent - assessee to make aforesaid area available/allotted to MHADA. Consequently, the cost incurred in making this area 1797 sq. mtrs. available to MHADA free of cost would have the effect of reducing the value of its closing stock. Consequently the cost incurred on this area of 1797 sq. mtrs. could not be valued as stock in trade of the respondent - assessee. As observed by the Tribunal, in any view of the matter the area of 1797 sq. mtrs. never belong to the respondent - assessee as it had to be given free of cost to MHADA. In case the above 1797 sq. mtrs. is to be offered in another building, then its cost of such area will reduce its profits from this project because of the existing liability attached to this project. Impugned order of the Tribunal has taken a possible view
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