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TMI Blog2012 (11) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... led its return of income for assessment year 2007-2008, on 30.01.2008 declaring NIL income after adjusting unabsorbed depreciation of Rs.3,15,666/-. The assessment was taken up under Section 143 (3) by the A.O. The assessee had purchased during the period in consideration six properties. The declared value of the property at Gram Mangupura, Moradabad was Rs.20,00,000/- whereas stamp duty on a value of Rs.20,34,000/- was paid for that acquisition. Similarly for other three properties in the same village the declared consideration was Rs.20.10 lakhs, Rs.9.75 lakhs and Rs.15 lakhs whereas stamp duty was paid on Rs.20.05 lakhs, Rs.9.78 Lakhs and Rs.15.75 lakhs each respectively. For the last item of property at Gram Manoharpur, Moradabad for a declared consideration of Rs.4 lakhs, stamp duty was paid on Rs.9.70 lakhs. In view of these facts the A.O. affirmed the opinion that the market value declared by the assessee for the purpose of stamp duty was more than the consideration alleged by it. The A.O. accordingly, directed adding back of the difference between the consideration mentioned in the sale deed and the consideration for the purpose of stamp duty i.e. Rs.12,22,000/-. 3. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged by the local authority/sub registrar based on broad parameters fixed by the state government for a particular area from time to time. However, such parameters do not necessarily suggest that any amount over and above the consideration disclosed in the sale deeds has been paid. To buttress his arguments, the Ld. Counsel has invited my attention to the transactions made by the appellant during the year under consideration and pointed out that in some cases the value disclosed in sale deeds is more than the value determined by the Registering Authority. Therefore, the Ld. Counsel submits that the addition in question has been made by the Ld. AO without any credible material and the same needs to be deleted." 5. As far as the amount of Rs.45,87,350/- was concerned, the assessee argued that Mr. Waseem Ahmad Khan, one of its directors, had paid that amount to the sellers of the land. It was also urged that during the assessment proceedings that confirmation from Mr. Waseem Ahmed Khan, the lender, was forthcoming and that he had signed the balance-sheet of the assessee. The CIT (Appeals) also noted that:- "the assessee also filed certified copies of his ITR, ledger accounts in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of any other evidence, the A.O. could not have concluded that the assessee had paid more than what was shown in the sale deed and its books of accounts. The Tribunal also noticed that Section 50C had been introduced by the Finance Act, 2002 w.e.f. 01.04.2003 and it acted on a limited presumption to work out capital gains in the hands of the seller. So far as the addition of Rs.45,87,350/- was concerned the Tribunal also took into account the fact that all the necessary documents including confirmation PAN and full complete address, copy of return and sources of investment made by Shri Waseem Ahmad Khan had been made available to the Assessing Officer. In these circumstances, the question of adding back amounts under Section 68 as unexplained source of income did not arise. 8. Counsel for the revenue argued that as far as the findings with respect to value of the immovable property purchased is concerned, the AO was justified in determining the true market on the basis of the higher valuation disclosed by the assessee, while paying stamp duty for the two properties. In the two cases selected by the AO, there was and there could be no dispute that the assessee chose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 12. As far as the first question is concerned, this Court notices that with the amendment to the Act, and insertion of Section 50-C, a presumption can be drawn that property was sold for a higher value for determining capital gains, in case of the valuation indicated by the assessee to the stamp authorities, being higher than the consideration disclosed in the sale deed or conveyancing instrument. That provision reads as follows: "50C. Special provision for full value of consideration in certain cases, - (1) Where the consideration received o 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 (hereinafter 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. (2) Without prejudice to the provisions of sub-section (1), where - (a) the assessee claimed before any Assessing Officer that the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer is more than the value adopted or assessed by the stamp duty authority, the Assessing Officer shall adopt the market value as determined by the Stamp duty authority. Thus, a complete foolproof safeguard has been given to the assessee to establish before the authorities concerned the real value. Thus, what is stated in Section 50C as a real value cannot be regarded as a notional or artificial value and such real value is determinable only after hearing the assessee as per the statutory provisions stated supra. There is no indication either in the provisions of Section 50C of Income-tax Act or Section 47A of the Stamp Act or rules made thereunder about the adoption of the guideline value. Hence, the contention that the Section 50C is arbitrary and violative of Article 14 cannot be accepted." The fiction created by virtue of Section 50C applies only in respect of escaped income of a seller, for the determination of the true capital gain. Such a special provision has to be construed narrowly, having regard to the subject matter, and the extension of the fiction or presumption in respect of any matter not covered by it is unauthorized by the law. There is a body of judicial aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipt. It does not deem as receipt something which is not in fact received. It merely provides a statutory best judgment assessment of the consideration actually received by the assessee and brings to tax capital gains on the footing that the fair market value of the capital asset represents the actual consideration received by the assessee as against the consideration untruly declared or disclosed by him. This approach in the construction of sub-section (2) falls in line with the scheme of the provisions relating to tax on capital gains. It may be noted that section 52 is not a charging section but is a computation section. It has to be read along with section 48 which provides the mode of computation and under which the starting point of computation is "the full value of the consideration received or accruing". What in fact never accrued or was never received cannot be computed as capital gains under section 48. Therefore, sub-section (2) cannot be construed as bringing within the computation of capital gains an amount which, by no stretch of imagination, can be said to have accrued to the assessee or been received by him and it must be confined to cases where the actual considera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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