• 9863020202    
  • contact@financeseva.in

FA, 2020 amendment increasing safe harbor limit u/s 50C to 10% is applicable retrospectively: ITAT

The assessment sold a flat for a value that was less than its stamp duty value. The variation in the sale consideration as disclosed by the assessee vis-à-vis the valuation adopted by the Stamp Duty Valuation authority was 6.55%.

The assessee submitted that amendment to Section 50C by the Finance Act, 2020 enhancing the tolerance limit from 5% to 10 is retrospective in nature, thus provisions of section 50C weren’t applicable. However, the Assessing Officer (AO) rejected the contention of assessment.

On appeal, Mumbai ITAT held that there is no particular reason to justify any particular time frame for implementing the enhancement of tolerance band or safe harbour provision prescribed under Section 50C.

The reasons assigned by the CBDT, i.e., "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," was as much valid in 2003 as it is in 2021. There is no variation in the material facts in this respect in 2021 vis-à-vis the material facts in 2003. What holds good in 2021 was also good in 2003.

If variations up to 10% need to be tolerated and need not be probed further, under section 50C, in 2021, there were no good reasons to probe such variations, under section 50C, in the earlier periods as well.

Therefore, amendment in Section 50C(1), by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis-à-vis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of Section 50C, i.e. 1st April 2003.