TMI Blog2007 (3) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... MI 51 - SUPREME COURT] has held that 'legal fiction are only for a definite purpose and they are limited to the purpose for which they are created and should not be extended beyond the legitimate field'. It is wholly irrelevant to consider the assessed value of another property for stamp duty purposes as full value of consideration by making reference to the Valuation Officer u/s 55A. Unless the property transferred has been registered by sale deed and for that purpose the value has been assessed and stamp duty has been paid by the parties, section 50C cannot come into operation. In such a situation, the position existing prior to section 50C would apply and the onus would be upon the revenue to establish that sale consideration declared by the assessee was understated with some clinching evidence. The relevant judgments discussed above viz., K.P. Varghese [ 1981 (9) TMI 1 - SUPREME COURT] and Shivakami Co. (P.) Ltd.[ 1986 (3) TMI 2 - SUPREME COURT] would come into operation and govern the determination of full value of consideration. It is noticed that the assessee transferred the property in question by executing an agreement which was not registered with the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. I have heard the rival submissions and perused the relevant material on record. The ld. A.R. has vehemently argued that section 50C is not applicable to this case as the sale was made through agreement without getting it registered. It is further noted that this contention was also raised before the ld. CIT(A) who has recorded the assessee's submission on this count in the impugned order but had not adjudicated upon this aspect. At this juncture, it would be relevant to consider the relevant provision, which runs as under: 50C. Special provision for full value of consideration in certain cases.- (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the 'stamp valuation authority') for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. 5. It is observed that secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp duty purposes, the Assessing Officer shall not adopt such fair market value and will take the full value of consideration to be the value adopted or assessed for stamp duty purposes. It is also proposed to provide that if the value adopted or assessed for stamp duty purposes is revised in any appeal, revision or reference, the assessment made shall be amended to recompute the capital gains by taking the revised value as the full value of consideration. These amendments will take effect from 1-4-2003, and will, accordingly, apply in relation to the assessment year 2003-04 and subsequent years. 7. From the perusal of Notes on clauses and Memorandum explaining the provisions in the Finance Bill, 2002, it becomes explicitly clear that if the consideration declared to be received on sale of land or building or both is less than the value adopted or assessed by any authority of the State Government for the purposes of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of consideration and capital gain shall be computed accordingly under section 48 of the Act. 8. Here it is relevant to note that prior to the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration received as a result of transfer and capital gain has to be computed accordingly. The rigor of sub-section (1) of section 50C has been toned down by sub-section (2), the relevant portion of which provides that: where the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and then proceed accordingly. 10. Sub-section (3) further provides that: where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1). the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. 11. The net effect of section 50C is that the value adopted or assessed by the authorities of the State Government for the purpose of payment of stamp duty shall be considered as full value of consideration and if the assessee disputes it to be higher, the procedure prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substituted with the sale consideration of the 'such property'. But for section 50C, there is absolutely no warrant for replacing the value adopted by the stamp valuation authority with the actual sale consideration for the purposes of computing capital gain. Thus it is clear that the property in respect of which valuation is made for purposes of stamp duty must be the very same property, which is the subject-matter of transfer for calculating capital gain by invoking the provisions of this section. It is wholly irrelevant to consider the assessed value of another property for stamp duty purposes as full value of consideration by making reference to the Valuation Officer under section 55A. Unless the property transferred has been registered by sale deed and for that purpose the value has been assessed and stamp duty has been paid by the parties, section 50C cannot come into operation. In such a situation, the position existing prior to section 50C would apply and the onus would be upon the revenue to establish that sale consideration declared by the assessee was understated with some clinching evidence. The relevant judgments discussed above viz., K.P. Varghese and Shivaka ..... X X X X Extracts X X X X X X X X Extracts X X X X
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