TMI Blog2015 (8) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... value’ with the ‘actual purchase price, in excess of ₹ 50,000/-’ has been made effective in the hands of the buyer only where any immovable property is purchased after 1.10.2009. As the assessee before us is a buyer, naturally, his case will not be covered u/s 50C but will be governed by section 56(2)(vii). Since section 56(2)(vii) is applicable on cases in which the individual or HUF receives immovable property on or after 1.10.2009 and we are dealing with a case in which the property has been purchased by the assessee in the financial year 2007-08, the mandate of section 56(2)(vii) cannot apply retrospectively. Once this provision is not applicable, the ratio decidendi in the case of K.P. Varghese (1981 (9) TMI 1 - SUPREME Court ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rival submissions and perused the relevant material on record. It is noticed that the extant addition was made by the AO u/s 69B of the Act. The relevant part of this section stipulates that: Where in any financial year the assessee has made investments or and the Assessing Officer finds that the amount expended on making such investments or . exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. The pre-requisite condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several factors affecting valuation or the price finally bargained. Valuation is not a fool-proof scientific tool of the measurement of the cost of construction. Ordinarily, there arises difference in two valuations. Even rates for valuation under CPWD and State PWD for estimating the cost of construction differ. As regards the price settled in a transaction, here again we find that there are several factors affecting the same. The price finally bargained depends upon a host of factors, such as, terms and conditions of payment, need and capacity of the buyer or seller to buy/sell, peculiar features attached to property suiting or not suiting a particular customer etc. The crux of the matter is that the value of a property estimated by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases of such understatement of consideration yielding less than the due collection of tax, the legislature stepped in by inserting section 50C which is a Special provision for full value of consideration in certain cases . This section came to be inserted by the Finance Act, 2002 w.e.f. 1.4.2003. Relevant part of sub-section (1) of this section provides that : 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 or assessable 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only for some definite purpose and these must be limited to that purpose and should not be extended beyond their legitimate field. 9. Coming back to our context, we find that section 50C is a deeming provision, which is applicable only for the purpose of section 48. The latter section spells out the mode of computation of capital gain. To put it simply, the substitution of full value of consideration received with the stamp value in terms of section 50C, is applicable in the hands of the seller of the property who has to compute capital gains u/s 48 pursuant to the transfer of a capital asset in the nature of land or building or both. On the contrary, section 69B, which is again a deeming provision, governs the cases in which invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eller by virtue of section 50C, the substitution of the stamp value with the actual purchase price, in excess of ₹ 50,000/- has been made effective in the hands of the buyer only where any immovable property is purchased after 1.10.2009. As the assessee before us is a buyer, naturally, his case will not be covered u/s 50C but will be governed by section 56(2)(vii). Since section 56(2)(vii) is applicable on cases in which the individual or HUF receives immovable property on or after 1.10.2009 and we are dealing with a case in which the property has been purchased by the assessee in the financial year 2007-08, the mandate of section 56(2)(vii) cannot apply retrospectively. Once this provision is not applicable, the ratio decidendi i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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