Section 50C stamp valuation on agreement date applies when property consideration is fixed and advance paid earlier.

By | September 24, 2026
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Section 50C stamp valuation on agreement date applies when property consideration is fixed and advance paid earlier.

Issue

Whether the stamp duty value on the date when property consideration was fixed and advance paid through banking channels should be adopted under Section 50C, rather than the enhanced stamp value on the sale deed registration date.

Facts

  • The assessee-company transferred land to a purchaser-trust via two registered sale deeds for a declared aggregate consideration of ~Rs. 3.41 crores for AY 2014-15.
  • The transaction stemmed from a 1998 registered lease deed granting the purchaser-trust a first option to buy, followed by a BIFR in-principle approval in 2009 and approvals by the Boards of both entities.
  • The purchaser-trust paid advances towards the consideration through regular banking channels.
  • The final BIFR sanctioned scheme in 2012 confirmed the compensation, and sale deeds were subsequently executed for the exact same agreed consideration.
  • The Assessing Officer (AO) referred the valuation to the District Revenue Officer (Stamps), who fixed the land value at ~Rs. 7.89 crores as on the registration date, adding ~Rs. 4.48 crores as Long-Term Capital Gains under Section 50C.
  • The assessee contended that the consideration was fully crystallized and acted upon prior to the registration date, entitling it to the benefit of the proviso to Section 50C.

Decision

  • In Favor of Assessee: The cumulative sequence of events—registered lease option, BIFR proceedings, Board resolutions, advance payments via banking channels, and BIFR sanction—conclusively established that the transaction and consideration were crystallized well before the enhanced guideline value came into effect.
  • In Favor of Assessee: The assessee is entitled to the benefit of the proviso to Section 50C, meaning the stamp duty valuation as on the date the consideration was fixed and advance paid must be adopted rather than the higher value on the registration date.
  • In Favor of Assessee: The addition of ~Rs. 4.48 crores made by the AO to Long-Term Capital Gains by invoking Section 50C was directed to be deleted.

Key Takeaways

  • Applicability of Section 50C Proviso: Where the consideration for the transfer of immovable property is fixed prior to the date of registration and advance payment is received through banking channels, the stamp valuation relevant to the agreement date must be adopted.
  • Binding Effect of Prior Approvals: Approvals and schemes sanctioned by statutory bodies (such as BIFR) establishing property consideration and advance transfers serve as conclusive evidence of transaction crystallization date.
  • Protection Against Subsequent Rate Hikes: Taxpayers cannot be burdened with higher capital gains tax simply because official stamp/guideline rates increased between the agreement date and the ultimate execution of the sale deed.
IN THE ITAT CHENNAI BENCH ‘A’
Coimbatore Pioneer Trading & Warehousing Ltd.
v.
Deputy Commissioner of Income-tax
ABY T. VARKEY, Judicial Member
and S. R. RAGHUNATHA, Accountant Member
IT Appeal No. 920 (Chny) of 2026
[Assessment year 2014-15]
SEPTEMBER  2, 2026
B. Ramakrishnan and Ms. M. Lavanya, FCAs for the Appellant. Ms. Anshu Sharawat, Addl.CIT for the Respondent.
ORDER
S.R. Raghunatha, Accountant Member.- The present appeal has been preferred by the Assessee against the order dated 05.12.2025 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the Ld. CIT(A)”], arising from the assessment order dated 24.12.2019 passed by the Deputy Commissioner of Income-tax, Corporate Circle 2, Coimbatore [hereinafter referred to as “the AO”], u/s.143(3) r.w.s.147 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2014-15.
2. The assessee has raised the following grounds of appeal :-
“1 . The order of the Learned Commissioner of Income Tax (Appeals) is contrary to the law, facts and circumstances of the case.
2. The Learned Commissioner of Income Tax (Appeals) erred in not considering the fact that the initiation of the reassessment u/s 147 is solely based on a change of opinion.
3. The Learned Commissioner of Income Tax (Appeals) failed to consider the full disclosure made during the original assessment order passed us 143(3) dated 01.12.2016 vide para number 3.2 of the order wherein, the capital gain was arrived at Rs. 3,15,97,471/
4. The Learned Commissioner of Income Tax (Appeals) erred in ignoring the guideline value adopted by BIFR in its order as Rs. 65/- per sq.ft for computing the sale consideration.
5. The Learned CIT (Appeals) ignored the fact that the sale transaction is a single transaction executed vide two different sale deeds falling under different financial years and the guideline value has to be ascertained equally based on earlier sale deed.
6. The Learned Commissioner of Income Tax (Appeals) ought to have considered the fact that the pre-emptive right vested in the registered lease deed coupled with BIFR directions constitutes a valid sale agreement on passing a resolution in the board of both the parties to the agreement.
7. The Learned Commissioner of Income Tax (Appeals) ought to have considered the provisions of Section 50C and the subsequent amendments made to the provisions are curative and retrospective in nature for genuine transactions.
8. The Learned Commissioner of Income Tax (Appeals) ought to have considered the year of transfer as AY 2011-12 as per Section 2(47) r.w.s. 53A of Transfer of Properties Act, 1882 without considering the possession of the property and payment of advances by the purchaser evidenced with all approvals.
9. The Learned Commissioner of Income Tax (Appeals) ignored the fact that the property valuation referred as per Section 55A r.w.s. 50C of the Income Tax Act was not carried out properly and the report was not communicated for further consideration.
For these grounds and such other grounds that may be adduced before or during the hearing of the appeal, it is prayed that the Hon’ble Tribunal may be pleased to quash the order of CIT(A) and/or provide such other relief as this Hon’ble Tribunal may deem fit.”
3. The brief facts of the case emanating from the records are that the assessee is an unlisted public company engaged in the business of textile manufacturing. The assessee filed its original return of income for the AY 201415 on 26.09.2014 declaring total income of Rs.1,33,00,940/-. The case was selected for Scrutiny through CASS and accordingly statutory notices were issued to the assessee. The assessment was completed u/s.143(3) of the Act on 01.12.2016. The AO made various additions totalling to Rs.1,01,72,091/-thereby raised a demand of Rs.65,33,190/- and recomputed Long Term capital gain at Rs.3,15,97,417/-.
4. Subsequently, the case was reopened for the following reasons:
• Understatement of profit on sale of land to the tune of Rs.4,48,06,356/-
• Non-disclosure of material facts by the appellant in relation to the value of sale consideration.
5. Thereafter, the AO issued notice dated 26.10.2018 u/s.148 of the Act asking the assessee to file return of income. In response to the said notice, the assessee had filed return of income on 18.01.2019. Later, the reasons for reopening the assessment was furnished to the appellant vide letter dated 06.09.2019. In response, the assessee had filed it objections for reopening on the ground that it had made full disclosure of information and material at the time of original assessment itself and that the new process of reassessment is only change of opinion.
6. Subsequently, a show cause notice was issued to the assessee on 18.10.2019 proposing to add the difference in value of sale consideration to the tune of Rs.4,48,06,356/- as adopted by DRO should be considered for the purpose of valuation as per 50C of the Act. In response to the said show cause notice, the assessee had filed it submissions stressing on following facts:
• Stamp value as on the date of agreement should be considered as full value consideration instead of date of registration.
• 2nd proviso to Section 50C(1) of the Act operates retrospectively
• The tenant has invoked a pre-emptive right to purchase the property.
7. However, without considering the submissions of the assessee, the AO completed the assessment u/s.143(3) r.w.s 147 of the Act, vide order dated 24.12.2019 by making an addition of Rs.4,31,39,853/- towards difference in Long-Term Capital Gains, thereby assessing the total income at Rs.3,25,14,753/-. Thereafter, the AO, issued notice dated 17.03.2020 u/s.154 of the Act proposing to rectify the mistake in the assessment order dated 24.12.2019, that while computing the assessed income, the LTCG assessed has been taken as at Rs.4,31,39,853/- instead of Rs.7,47,37,270/-. Aggrieved by the above reassessment order dated 24.12.2019, the assessee filed an appeal before the Ld.CIT(A) on 08.01.2020. The Ld.CIT(A), vide order dated 05.12.2025 had not accepted the assessee’s contentions that the BIFR Order and the Minutes of Board Meeting should be treated as agreement to sale.
8. Aggrieved by the Order of the ld.CIT(A), the assessee is in appeal before us.
9. The ld.AR for the assessee submitted that the reassessment proceedings initiated u/s.147 of the Act are without jurisdiction and bad in law, as the same amount to a mere change of opinion on the basis of material which was already available before the AO during the original assessment proceedings u/s.143(3) of the Act. The assessee filed its original return of income for AY 2014-15 on 26.09.2014 declaring total income of Rs.1,33,00,940/-. The case was selected for scrutiny and the assessment was completed u/s.143(3) of the Act on 01.12.2016. During the course of the original assessment proceedings, the AO examined the computation of Long-Term Capital Gain arising from the sale of land and called upon the assessee to furnish a revised computation. The assessee furnished the revised working, pursuant to which the Long-Term Capital Gain was recomputed at Rs.3,15,97,417/-. Thus, the sale transaction and the resultant capital gains were subject matter of examination during the original scrutiny assessment.
10. Subsequently, notice u/s.148 of the Act dated 26.10.2018 was issued proposing to reopen the assessment on the ground that the sale consideration adopted by the assessee was lower than the value determined by the stamp valuation authorities and that section 50C of the Act was attracted in respect of the sale of 12.07 acres of land. In response, the assessee filed the return of income on 18.01.2019. The reasons recorded for reopening were furnished on 06.09.2019 and the assessee filed detailed objections on 31.10.2019, specifically submitting that the relevant material relating to the sale transaction and computation of capital gains had already been disclosed and considered during the original assessment and that the reopening amounted to a mere change of opinion.
11. The AO rejected the objections and proceeded on the basis that the applicability of section 50C had not been examined during the original assessment. The AO relied upon the order of the District Revenue Officer (Stamps), Coimbatore dated 10.08.2016, determining the guideline value at Rs.150/- per sq.ft., and treated the same as fresh material warranting reopening.
12. The ld.AR further submitted that the said reasoning is contrary to the chronology of events. The original assessment u/s.143(3) was completed on 01.12.2016, whereas the order of the District Revenue Officer relied upon for reopening is dated 10.08.2016. Therefore, the alleged fresh material was already in existence prior to completion of the original assessment and cannot constitute subsequent tangible material for reopening a concluded assessment.
13. Further, the ld.AR stated that the transaction itself was not a subsequent or undisclosed transaction. The assessee had executed a registered Lease Deed dated 11.03.1998 in favour of Pioneer Trust, under which Pioneer Trust had the first option to purchase the property. Advances towards the proposed sale were received from Pioneer Trust beginning from June 2010 and the transaction was ultimately completed through sale deeds dated 18.10.2012 and 12.08.2013. The total consideration under the two sale deeds for the entire 19.44 acres was Rs.5,50,15,000/-. Thus, the material circumstances surrounding the transaction were not matters which came to the knowledge of the Department only after completion of the original assessment.
14. The assessee, aggrieved by the reassessment order passed u/s.143(3) r.w.s.147 of the Act, preferred an appeal before the Ld.CIT(A) and specifically challenged the validity of the reopening. However, the Ld.CIT(A) rejected the contention of the assessee and held that the reopening was based on fresh material, namely, the order of the District Revenue Officer dated 10.08.2016, and that the issue relating to section 50C had not been examined during the original assessment proceedings.
15. The ld.AR submitted that the above finding of the Ld.CIT(A) overlooks the fact that the alleged fresh material itself pre-dated the original assessment order. Further, the original assessment order records that the AO had examined the computation of Long-Term Capital Gain, identified an error in the indexed cost adopted by the assessee, called for a revised computation and thereafter completed the assessment after considering the revised working. The subsequent reassessment is therefore in respect of the very same sale transaction, the same property, the same consideration disclosed by the assessee and the same capital gains computation which had already been placed before the Department. The reassessment merely seeks to substitute a higher value as deemed consideration u/s.50C and consequently recompute the Long-Term Capital Gain.
16. The ld.AR stated that it is settled law that the power of reassessment cannot be exercised merely to review an assessment already completed on the same set of facts. In CIT v. Kelvinator of India Ltd.  320 ITR 561 (SC), the Hon’ble Supreme Court held that there must be tangible material to come to the conclusion that income has escaped assessment and that reassessment cannot be undertaken merely on a change of opinion. The same principle has also been recognised by the Full Bench of the Hon’ble Delhi High Court in CIT v. Usha International Ltd.  348 ITR 485 (Delhi).
17. In the present case, no fresh tangible material came into the possession of the AO after completion of the original assessment. The order of the District Revenue Officer dated 10.08.2016 was already in existence before the original assessment order dated 01.12.2016. The subsequent proceedings, therefore, amount to a fresh application of mind to the material already available on record and a different view regarding the value to be adopted u/s.50C of the Act.
18. It is further submitted by ld.AR that the mere absence of an express discussion on a particular aspect in the original assessment order cannot, by itself, justify reopening when the underlying transaction and material were before the AO and the issue of capital gains was examined during the scrutiny assessment. The reassessment jurisdiction cannot be used as a means of reviewing the conclusion already reached in the original assessment.
19. The ratio of the aforesaid decisions applies to the facts of the present case. The relevant transaction and capital gains computation were before the AO during the original scrutiny assessment; the alleged fresh material relied upon for reopening was itself dated 10.08.2016 and was therefore available before completion of the original assessment on 01.12.2016. Consequently, there was no subsequent tangible material warranting assumption of jurisdiction u/s.147 of the Act.
20. Therefore, the ld.AR submitted that the reopening of the assessment u/s.147 of the Act amounts to a mere change of opinion and is therefore bad in law. Based on the above, it was prayed that the assessment u/s.147 of the Act may be quashed.
21. In respect of Addition of Rs.4,31,39,853/- towards difference in Long Term Capital Gains on sale of Land to Pioneer Trust (Ground no. 3 to 9) the ld.AR submitted that the AO observed that the assessee had sold 12.07 acres of land comprised in Survey Nos.387 and 397, Perianaickenpalayam Village, to Pioneer Trust on 12.08.2013 for a consideration of Rs.3,41,57,976/-, which worked out to Rs.64.85 per sq. ft. The AO noted that the online registration records initially reflected a guideline value of Rs.147/- per sq. ft. and, upon verification with the Sub-Registrar, the guideline value was stated to be Rs.220/-per sq. ft. for Survey No.397 and Rs.500/- per sq. ft. for Survey No.387. Since the purchaser did not agree to different rates for the same property, the matter was referred to the District Revenue Officer (Stamps), Coimbatore, who, vide order dated 10.08.2016, determined the guideline value at Rs.150/- per sq.ft. for both survey numbers. On this basis, the value of 5,26,205 sq.ft. was determined at Rs.7,89,30,750/-, as against the consideration of Rs.3,41,24,394/- adopted by the assessee, resulting in a difference of Rs.4,48,06,356/-. The AO accordingly formed the view that the assessee had understated the sale consideration and that income chargeable to tax had escaped assessment. The reassessment was therefore initiated and the value determined by the stamp valuation authority was adopted for the purposes of section 50C of the Act.
22. The AO rejected the assessee’s contention that the guideline value prevailing in 2010, when the transaction had been agreed upon and advances were received, ought to be considered. The AO held that the value determined by the Stamp Valuation Authority had to be adopted and that the assessee had not disclosed the DRO order during the original assessment proceedings. The AO further held that there was no change of opinion and that the reopening was based on fresh material.
23. In the reassessment proceedings, the AO also rejected the assessee’s reliance on the retrospective operation of the proviso to section 50C, observing that the amendment was introduced by the Finance Act, 2016 with effect from 01.04.2017. The Appellant’s submission that the property had been agreed to be sold to Pioneer Trust in 2010 and that advances had been received from 07.06.2010 was accordingly not accepted.
24. The ld.AR further submitted that in Paras 10.5 to 10.11, the Ld.CIT(A) considered the assessee’s contention regarding the advance payments, the date of agreement and the retrospective applicability of the proviso to section 50C of the Act. While the Ld.CIT(A) accepted, in principle, that the amendment to section 50C was beneficial and retrospective in nature, he held that the assessee’s case did not satisfy the factual requirement since, according to him, there was no agreement for sale and the payments were made only on the basis of the Board Minutes. The Ld.CIT(A) further held that the genuineness of the advance payments had not been established and that the Board Minutes could not be treated as an agreement for sale.
25. In Para 11.2, the Ld.CIT(A) considered the assessee’s reliance on the BIFR order and observed that the assessee had contended that the BIFR had fixed the total consideration for 19.44 acres at Rs.550.15 lakhs and that the proportionate value for 12.07 acres was Rs.341.24 lakhs, which was equal to the consideration stated in the sale deed. However, in Para 11.4, the Ld.CIT(A) held that the BIFR had directed adoption of the Government guideline value and, according to him, the subsequent guideline value determined by the DRO was therefore required to be adopted. The action of the AO was accordingly upheld.
26. In Para 12.1, dealing with section 2(47), the Ld.CIT(A) held that the assessee had not established with cogent evidence that the advance payments and possession were based upon an agreement. The Ld.CIT(A) observed that the assessee had relied upon the BIFR order and Board Minutes, but held that the same could not be treated as an agreement to sell. Accordingly, the contention regarding transfer u/s.2(47) of the Act was rejected.
27. In Para 13.1, the Ld.CIT(A) further held that the sale deeds were executed on 18.10.2012 and 12.08.2013 and that, prior thereto, there was no agreement except the Board Minutes. Accordingly, the Ld.CIT(A) held that the capital gains were taxable in AY 2013-14 and AY 2014-15 respectively and rejected the assessee’s contention that the transaction related back to the date of advance. In Para 14.2, the Ld.CIT(A), despite noting the amendment to section 50C of the Act, ultimately held that the assessee’s claim of retrospective applicability was not sustainable, essentially on the ground that the factual requirements for invoking the proviso were not satisfied in the absence of a valid agreement.
28. Thus, the principal basis on which the addition has been sustained by the Ld.CIT(A) is that the BIFR order and the Board Minutes cannot constitute an agreement fixing the consideration and, consequently, the guideline value applicable on the date of registration was required to be adopted.
29. In support of the grounds raised by the assessee, the ld.AR stated that the sale of the subject land to Pioneer Trust was not a transaction which originated only at the time of execution of the sale deeds. The transaction had its genesis in the long-standing relationship between the assessee and Pioneer Trust and the registered lease arrangement under which Pioneer Trust was already in possession of the property and had a contractual first option to purchase the property. The assessee had executed a registered lease deed in favour of Pioneer Trust on 11.03.1998 for a Lease period of 51 years, registered as Document No.1503 of 1998. The Clause 12 of the said registered lease deed specifically provided that the lessee, i.e., Pioneer Trust, would have the first option to purchase the property at the end of the lease period, if the price was acceptable to both parties. Thus, Pioneer Trust was not an unrelated purchaser who subsequently came forward to purchase the property; it was the existing lessee having a pre-existing contractual option/right in respect of the property. The registered lease deed is placed at Paperbook Page Nos. 54-65.
30. The aforesaid arrangement is also relevant in the context of the subsequent BIFR proceedings. Pioneer Trust was already occupying the property and had constructed and was running educational institutions thereon. The BIFR subsequently took note of the fact that the Trust had constructed educational infrastructure on the property and that the transfer of the property to the Trust formed part of the rehabilitation proposal of the assessee.
31. The ld.AR stated that the assessee subsequently faced severe financial difficulties and was declared a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. On 10.06.1998, BIFR declared the assessee as a sick industrial company and appointed State Bank of India as the Operating Agency under section 17(3) of SICA. Thereafter, on 23.04.2002, BIFR replaced State Bank of India with IDBI as the Operating Agency at the request of the assessee. In the course of the rehabilitation proceedings, various steps were taken for formulation of a Draft Rehabilitation Scheme (“DRS”). A joint meeting was convened by the Operating Agency on 13.10.2008, BIFR issued directions on 20.10.2008 regarding preparation of the DRS, the Operating Agency submitted the DRS to BIFR on 17.11.2008, and further information and clarifications were submitted on 27.02.2009.
32. Thereafter, a material and significant development took place on 08.06.2009, when BIFR granted in-principle approval to the Draft Rehabilitation Scheme. The said in-principle approval specifically contemplated the sale of 19.44 acres of land to Pioneer Trust for a consideration of Rs.5,50,15,000/-, which was the guideline value prevailing at that point of time. Thus, the proposed transfer of the subject property and the consideration payable therefor were brought within the framework of the rehabilitation scheme and received the approval of the BIFR much prior to the execution of the registered sale deeds.
33. The significance of the aforesaid BIFR approval is further evident from the final BIFR order dated 10.05.2012. In the said order, BIFR recorded that Pioneer Trust was already occupying the property, had constructed educational buildings thereon and had been requesting transfer of the 19.44 acres. BIFR further recorded that, although the Operating Agency and the Company had initially proposed collection of Rs.150 lakhs as token consideration, BIFR considered that the compensation to be offered by Pioneer Trust should not be less than the Fair Market Value of Rs.550.15 lakhs, which was based on the Government guideline value for the total area as assessed by the Operating Agency through its valuers.
34. Thus, the BIFR proceedings did not merely record a general proposal for sale. The rehabilitation scheme specifically contemplated transfer of the subject property and the consideration of Rs.5,50,15,000/- was identified with reference to the prevailing Government guideline value. This forms the first important link in the chain of events leading to the eventual sale of the property. Pursuant to the aforesaid in-principle approval granted by BIFR, the Board of Directors of the assessee Company, at its meeting held on 03.05.2010, approved the transfer of the entire 19.44 acres of land to Pioneer Trust for a consideration of Rs.5,50,15,000/-, in terms of the Draft Rehabilitation Scheme. Copy of the relevant Board Minutes/resolution of the assessee dated 03.05.2010 forms part of Paperbook Page Nos. 66 to 68.
35. Thereafter, the Board of Pioneer Trust, at its meeting held on 31.05.2010, resolved to purchase the said land for Rs.5.50 crores and authorised payment of advance to the assessee. Copy of the relevant Board Minutes/resolution of Pioneer Trust dated 31.05.2010 forms part of Paperbook Page Nos.69 to 70. The resolutions of both parties are therefore contemporaneous with each other and are consistent with the consideration of Rs.5,50,15,000/- contemplated in the BIFR rehabilitation scheme. The subsequent conduct of the parties also demonstrates that the arrangement was acted upon and was not merely a proposal on paper. Pursuant to the above understanding and resolutions, Pioneer Trust commenced payment of the consideration by way of advances through banking channels as follows:
Date Cheque No. Amount (in Rs.)
07.06.2010 935711 50,00,000
14.06.2010 935712 15,00,000
15.07.2010 935800 25,00,000
15.07.2010 938801 10,00,000
Total 1,00,00,000

 

36. Thus, an aggregate amount of Rs.1,00,00,000/- was paid by Pioneer Trust to the assessee in advance towards the proposed transfer of the property. The aforesaid advance payments were made by Pioneer Trust to the assessee through banking channels. To substantiate the same, the following documents were filed as Additional Evidence.
• Bank Statement for the month of June 2010 – Page No. 4 to 6 of the Additional Evidence Petition.
• Bank Statement for the month of July 2010 – Page No. 7 to 9 of the Additional Evidence Petition
• Audited Balance Sheet along with relevant schedules as on 31.10.2011 and Audited Income & Expenditure Account for the year ending 31.03.2011 of M/s. Pioneer Trust – Page Nos. 10 to 14
37. The aforesaid payments were therefore not isolated or unexplained payments. They were made pursuant to the BIFR rehabilitation process, the resolutions of the respective Boards and the understanding between the assessee and Pioneer Trust for transfer of the property for the consideration contemplated under the rehabilitation scheme.
38. The ld.AR further submitted that the BIFR proceedings thereafter continued in respect of the rehabilitation scheme. On 22.09.2010, BIFR approved the modified Draft Rehabilitation Scheme and directed release of the sanctioned scheme. Subsequently, the Hon’ble Madras High Court, vide its order dated 19.12.2011 in W.P. No.25558 of 2011, directed BIFR to release the final order of the sanctioned rehabilitation scheme. Finally, on 10.05.2012, BIFR issued the final sanctioned rehabilitation scheme. The said order specifically fixed the compensation to be paid by Pioneer Trust to the Appellant at Rs.550.15 lakhs, being the amount based on the Government guideline value for the total area as assessed by the Operating Agency through its valuers. Copy of the BIFR Order dated 10.05.2012 forms part of Paperbook Page Nos.71 to 97, with the relevant valuation/compensation discussion appearing at Para 11.8 of the BIFR Order (Page 91 of the Paperbook).
39. The final BIFR order thus confirmed the consideration which had already been acted upon by the parties through their respective Board resolutions and the advance payments made in 2010. The consideration of Rs.550.15 lakhs was not determined for the first time on the date of execution of the sale deeds; rather, it was part of the rehabilitation scheme and was subsequently confirmed in the final sanctioned scheme.
40. Pursuant to the aforesaid BIFR proceedings and the arrangement acted upon by the parties, the assessee executed two sale deeds in favour of Pioneer Trust covering the entire 19.44 acres. The first sale deed was executed on 18.10.2012 for transfer of 7.37 acres for a consideration of Rs.2,08,57,024/-. The said sale deed was executed pursuant to the BIFR directions. Thereafter, the second sale deed was executed on 12.08.2013 for transfer of the remaining 12.07 acres for a consideration of Rs.3,41,57,976/-. The sale deed itself records that amounts had already been paid prior to its execution. In particular, Page 106 of the sale deed records payment of Rs.2,46,25,000/- prior to execution of the sale deed. Copy of the sale deed dated 12.08.2013 forms part of Paperbook Page Nos. 98 to 117.
41. The ld.AR stated that the consideration under the two sale deeds aggregates exactly to Rs.5,50,15,000/-, as under:
Particulars Acres Consideration Amount (in Rs.)
Sale deed dated 18.10.2012 7.37 acres 2,08,57,024
Sale deed dated 12.08.2013 12.07 acres 3,41,57,976
Total 19.44 acres 5,50,15,000

 

42. The aforesaid aggregate consideration is exactly the amount contemplated in the BIFR rehabilitation scheme and subsequently confirmed in the final BIFR sanctioned scheme. The chronology is therefore complete and consistent from the BIFR approval, through the Board resolutions and advance payments, to the eventual registered sale deeds.
43. It is further submitted by the ld.AR that the consideration of Rs.5,50,15,000/- was linked to the Government guideline value prevailing at the relevant point of time. The Dates & Events chart records that the BIFR inprinciple approval dated 08.06.2009 contemplated the sale of 19.44 acres at Rs.5,50,15,000/-, which was the guideline value as at that date. The assessee has also placed on record the extract/screenshot from the TNREGINET portal showing the guideline value of the property at Rs.65/- per sq. ft. The said document forms part of Paperbook Page Nos. 118 to 120.
44. Importantly, the guideline value was subsequently increased by the Tamil Nadu Government with effect from 01.04.2013. Thus, the second sale deed dated 12.08.2013 was executed after such revision in guideline value. The increase in guideline value, however, occurred after the consideration for the entire property had already been identified pursuant to the BIFR rehabilitation process, approved by the respective Boards and acted upon by the parties through advance payments. The increase in guideline value subsequent to the fixing of consideration cannot, therefore, by itself alter the consideration which had already been agreed upon and acted upon.
45. In the aforesaid factual background, the ld.AR submitted that the BIFR proceedings, the in-principle approval dated 08.06.2009, the subsequent Board resolutions dated 03.05.2010 and 31.05.2010, the advance payments commencing from 07.06.2010 and the final sanctioned rehabilitation scheme dated 10.05.2012 cannot be viewed in isolation. The said chronology demonstrates that the sale deeds were the formal registered instruments through which the transfer contemplated and acted upon pursuant to the BIFR rehabilitation scheme was ultimately completed. The consideration was not negotiated or determined afresh on the dates of registration.
46. The existence of the registered lease, the first option in favour of Pioneer Trust, the BIFR proceedings, the specific in-principle approval dated 08.06.2009, the Board resolutions, the advance payments through banking channels, the final BIFR sanction and the ultimate sale deeds, when considered together, establish a clear and contemporaneous chain of events concerning the transfer of the property for the consideration of Rs.5,50,15,000/-.
47. Further, the ld.AR argued that Section 50C provides for substitution of the declared consideration by the value adopted or assessed by the stamp valuation authority in certain circumstances. At the same time, the proviso to section 50C(1) specifically recognises a situation where the date of agreement fixing the amount of consideration and the date of registration are not the same, and permits the stamp valuation as on the date of agreement to be considered for determining the full value of consideration. An extract of the said 2nd proviso to section 50C(1) of the Act is reproduced here as under:
“50C. (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 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, the value so adopted or assessed or assessable 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 :
Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer:
Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, on or before the date of the agreement for transfer”
48. The ld.AR stated that the present case is precisely a situation where the consideration was fixed and acted upon much before the execution of the registered sale deeds. The BIFR rehabilitation proceedings had contemplated the transfer of the property at Rs.550.15 lakhs; the assessee and Pioneer Trust thereafter approved the transaction at the corresponding consideration through their respective Board resolutions; and Pioneer Trust commenced payment of the consideration through banking channels in June 2010.
49. Further, the second proviso to section 50C(1) recognises the importance of receipt of the consideration, or part thereof, through account-payee cheque, account-payee bank draft or electronic clearing system on or before the date of agreement. In the present case, the contemporaneous bank records demonstrate receipt of Rs.1 crore from Pioneer Trust through banking channels during June and July 2010. The subsequent sale deed dated 12.08.2013 itself also records substantial payment having been made prior to its execution. Thus, the factual circumstances contemplated by the provisos to section 50C(1) of the Act are materially present in the case of the assessee. The consideration had been fixed prior to registration, the arrangement was acted upon, and part consideration was received through banking channels prior to registration.
50. The fact that the formal registered instruments were executed subsequently cannot, in the facts of the present case, result in ignoring the earlier date on which the consideration had been fixed and acted upon, particularly when the subsequent sale deeds themselves reflect the very same aggregate consideration of Rs.5,50,15,000/-.
51. It is further submitted by the ld.AR that the amendment to 2nd proviso to section 50C(1) of the Act introducing the mechanism for considering the stamp valuation as on the date of agreement is a beneficial provision intended to avoid hardship to an assessee where there is a time gap between the fixing of consideration and the subsequent registration of the property. In this regard, the ld.AR relied on the decision of Hon’ble Madras High Court in the case of CIT v. Vummudi Amarendran 429 ITR 97 (Madras) (Paperbook Page Nos.137 to 142) wherein it was held that as per proviso to section 50C(1) where date of agreement, fixing amount of consideration and date of registration for transfer of capital assets are not same, value adopted or assessed or assessable by stamp valuation authority on date of agreement may be taken for purposes of computing full value of consideration for such transfer and, thus, amendment by insertion of said proviso seeks to relieve assessee from undue hardship and proviso to section 50C(1) should be taken to be effective from date when proviso introduced.
52. The ld.AR also relied on the following decisions:
• Decision of Hon’ble Chennai ITAT in the case of Smt. Rajeswari Iyer v. ITO International Taxation  (Chennai – Trib.) – Paperbook Page Nos.143 to 150
• Decision of Hon’ble Chennai ITAT in the case of S. Bhuvaneswari v. DCIT [IT Appeal No. 2944 (CHNY) of 2017, dated 27-10-2021] – Paperbook Page Nos.151 to 173
53. She further stated that the object of the proviso is to ensure that an assessee is not subjected to tax on an artificial enhancement in consideration merely because the stamp valuation has increased between the date on which the consideration was fixed and the date on which the formal document came to be registered. In the present case, this principle assumes particular significance because the consideration of Rs.5,50,15,000/- had already been identified in the BIFR rehabilitation process and was acted upon through the Board resolutions and advance payments before the subsequent increase in guideline value with effect from 01.04.2013. Therefore, the subsequent guideline value relied upon by the AO cannot be mechanically substituted for the consideration which had already been fixed and acted upon by the parties pursuant to the BIFR rehabilitation scheme.
54. Further the ld.AR stated that the AO has relied upon the order of the District Revenue Officer (Stamps), Coimbatore dated 10.08.2016 determining the value at Rs.150/- per sq. ft. and has adopted the same for the purposes of section 50C of the Act. The BIFR order itself records that the Rs.550.15 lakhs represented the Fair Market Value based on the Government guideline value for the total area as assessed by the Operating Agency through its valuers as on the agreed upon date. Therefore the ld.AR submits that the consideration determined in the BIFR proceedings was itself linked to the prevailing Government guideline value and cannot be disregarded merely because the stamp valuation authority subsequently adopted a higher value in 2016.
55. Further ld.AR stated that the subject property was already occupied by Pioneer Trust, which had a first option to purchase under the registered lease deed and had constructed educational buildings and facilities on the property. The BIFR itself took note of the fact that the Trust had constructed educational infrastructure on the property and that vacating the property was not considered desirable in the circumstances. Further, the AO referred the matter to the Valuation Officer on 06.11.2019. A copy of the AO’s reference letter to valuation officer forms part of Paperbook Page Nos. 121 to 122. A notice dated 11.09.2020 fixing inspection on 12.09.2020 forms part of Paperbook Page Nos. 123 to 124. The inspection was ultimately carried out from outside the premises on 12.09.2020, as the institutional premises were closed owing to Covid-19 restrictions. No valuation report was furnished thereafter. Considering the above factual background, it is submitted that the consideration reflected in the registered sale deeds is fully consistent with the consideration determined under the BIFR rehabilitation scheme. There is no variation between the consideration contemplated in the BIFR proceedings, approved by the respective Boards, acted upon through advance payments and ultimately recorded in the registered instruments. The subsequent increase in guideline value with effect from 01.04.2013 and the subsequent DRO determination dated 10.08.2016 cannot retrospectively alter the consideration which had already been fixed and acted upon. The beneficial proviso to section 50C of the Act is intended precisely to address such a situation where there is a difference between the date on which the consideration is fixed and the subsequent date of registration.
56. In view of the above submissions, arguments and judicial precedents, the ld.AR prayed that the addition made in the assessment may kindly be deleted.
57. The ld. DR, on the other hand, supported the orders of the authorities below and submitted that the assessee had not entered into any formal agreement with the buyers prior to execution of the sale deeds. Therefore, according to the ld. DR, the proviso to section 50C of the Act is not applicable to the facts of the present case. The ld.DR further contended that, in respect of the second sale deed executed subsequently, there was no agreement entered into between the parties at all and, consequently, the benefit of the proviso to section 50C could not be extended to the assessee. Accordingly, the ld.DR prayed that the order of the ld.CIT(A) be upheld and the appeal filed by the assessee be dismissed.
58. We have heard the rival submissions perused the material available on record and gone through the orders of the authorities along with judicial precedents relied on. The assessee has challenged both the validity of the reopening of assessment u/s.147 of the Act as well as the addition of Rs.4,31,39,853/- made towards difference in Long-Term Capital Gains by invoking the provisions of section 50C of the Act.
59. The undisputed facts emerging from the record are that the assessee had transferred a total extent of 19.44 acres of land to Pioneer Trust through two registered sale deeds, the first dated 18.10.2012 covering 7.37 acres for a consideration of Rs.2,08,57,024/- and the second dated 12.08.2013 covering 12.07 acres for a consideration of Rs.3,41,57,976/-. The aggregate consideration under both the sale deeds is exactly Rs.5,50,15,000/-. The said consideration corresponds with the consideration contemplated under the BIFR rehabilitation scheme and subsequently confirmed in the final sanctioned scheme.
60. It is equally evident from the material placed on record that the transaction did not originate on the respective dates of execution of the sale deeds. The assessee had executed a registered lease deed dated 11.03.1998 in favour of Pioneer Trust for a period of 51 years, containing a first option in favour of the lessee to purchase the property. Subsequently, the transfer of the property to Pioneer Trust became an integral part of the rehabilitation proceedings before the BIFR. The BIFR, in its in-principle approval dated 08.06.2009, specifically contemplated sale of the entire 19.44 acres to Pioneer Trust for a consideration of Rs.5,50,15,000/-.
61. Thereafter, the respective parties acted upon the aforesaid arrangement. The Board of Directors of the assessee, in its meeting dated 03.05.2010, approved the transfer of the entire property to Pioneer Trust for Rs.5,50,15,000/-, while the Board of Pioneer Trust, on 31.05.2010, resolved to purchase the property for the said consideration and authorised payment of advance. Pursuant thereto, Pioneer Trust made advance payments aggregating to Rs.1 crore through banking channels during June and July 2010. These payments were duly supported by bank statements and the financial records of Pioneer Trust.
62. The final BIFR sanctioned rehabilitation scheme dated 10.05.2012 further confirmed the compensation payable by Pioneer Trust at Rs.550.15 lakhs, based on the Government guideline value for the entire property. The subsequent sale deeds merely formalised and completed the transfer which had already been contemplated, approved and acted upon by the parties pursuant to the rehabilitation proceedings. Significantly, there is no variation between the consideration contemplated in the BIFR proceedings, approved by the respective Boards, partly paid in advance and ultimately recorded in the registered sale deeds.
63. In this factual backdrop, the objection of the Revenue that there was no formal agreement for sale prior to the execution of the registered sale deeds requires careful consideration. It is true that the assessee did not execute a conventional bilateral agreement for sale in the form ordinarily contemplated in a property transaction. However, section 50C has to be applied having regard to the substance and contemporaneous conduct of the parties and not merely by adopting a hyper-technical approach to the form of the document.
64. In the present case, the BIFR proceedings, the specific in-principle approval for transfer of the property for Rs.5,50,15,000/-, the corresponding resolutions of both parties approving the transaction at the same consideration, the actual receipt of Rs.1 crore through banking channels pursuant to such resolutions and the subsequent confirmation of the same consideration in the final BIFR sanctioned scheme constitute a continuous and contemporaneous chain of evidence establishing that the consideration for the transfer had been fixed substantially prior to the execution of the registered sale deeds. The transaction was not negotiated afresh at the time of registration.
65. We also find considerable force in the contention of the assessee that the subsequent increase in guideline value cannot, by itself, result in an artificial enhancement of the deemed sale consideration when the consideration had already been fixed and acted upon much earlier. The material on record shows that the consideration of Rs.5,50,15,000/- was identified in the BIFR rehabilitation process and acted upon by the parties through their respective resolutions and advance payments commencing from June 2010. The second sale deed was executed only subsequently, on 12.08.2013, after the revision of guideline values with effect from 01.04.2013.
66. The second proviso to section 50C(1), as reproduced in the submissions, provides that where the date of agreement fixing the amount of consideration and the date of registration are different, the stamp value as on the date of agreement may be taken for determining the full value of consideration, subject to the prescribed mode of receipt of consideration. The legislative intent behind the proviso is to prevent an assessee from being subjected to tax on an artificial enhancement in the deemed consideration merely because of an increase in stamp valuation between the date on which the consideration was fixed and the subsequent date of registration.
67. The Hon’ble Madras High Court in the case of Vummudi Amarendran(supra) has held that the proviso to section 50C(1), which enables adoption of the stamp valuation as on the date of agreement where the date of agreement and registration are different, is a beneficial provision intended to relieve hardship and is to be given retrospective effect. The said principle supports the assessee’s contention that the substance of the transaction and the date on which the consideration was fixed and acted upon are material considerations while applying section 50C of the Act.
68. In the present case, the Revenue has primarily proceeded on the premise that the Board resolutions and BIFR proceedings cannot constitute an agreement for sale and, therefore, the benefit of the proviso cannot be extended. We are unable to accept such a narrow approach in the peculiar facts of the present case. The BIFR proceedings were not unilateral or tentative internal records. They formed part of a statutory rehabilitation process, specifically identified the property proposed to be transferred and the consideration payable, and were followed by corresponding resolutions of both the transferor and transferee and actual payment of substantial consideration through banking channels. The final BIFR sanctioned scheme also confirmed the same consideration.
69. More importantly, the assessee has demonstrated that the entire transaction was ultimately completed for exactly the consideration fixed under the rehabilitation scheme. The first sale deed for 7.37 acres and the second sale deed for 12.07 acres together aggregate to Rs.5,50,15,000/-, without any variation in the agreed consideration. This subsequent conduct of the parties lends substantial corroboration to the assessee’s case that the consideration had been fixed much before the formal registration of the sale deeds.
70. We also note that the AO himself referred the matter to the Valuation Officer during the reassessment proceedings; however, no valuation report was ultimately furnished, the inspection having been carried out from outside the premises owing to the prevailing Covid-19 restrictions. Therefore, there is no independent valuation material on record establishing that the actual fair market value of the property was in fact substantially higher than the consideration recorded in the sale deeds.
71. Further, the DRO order dated 10.08.2016 relied upon by the AO was subsequent to the relevant transfers and, in any event, the consideration under the transaction had already been fixed, acted upon and substantially paid much earlier. The subsequent determination of guideline value cannot retrospectively alter the consideration which had been agreed upon and ultimately incorporated in the registered sale deeds.
72. In our considered view, the cumulative effect of the registered lease deed containing the first option in favour of Pioneer Trust, the BIFR proceedings, the in-principle approval dated 08.06.2009, the resolutions of the respective Boards dated 03.05.2010 and 31.05.2010, the advance payments through banking channels commencing from 07.06.2010, the final BIFR sanctioned scheme dated 10.05.2012 and the ultimate execution of the sale deeds for the very same consideration establishes that the transaction and its consideration had been crystallised well before the subsequent increase in guideline value.
73. We therefore hold that, on the peculiar and undisputed facts of the present case, the assessee is entitled to the benefit of the proviso to section 50C(1) and the stamp valuation relevant to the date on which the consideration was fixed and acted upon has to be considered rather than the subsequent enhanced valuation relied upon by the AO. The very foundation for adopting the enhanced value of Rs.7,89,30,750/- and making the consequential addition of Rs.4,31,39,853/- towards Long-Term Capital Gains therefore does not survive.
74. Accordingly, the addition of Rs.4,31,39,853/- made by the AO towards difference in Long-Term Capital Gains by invoking section 50C of the Act and sustained by the ld.CIT(A) is hereby deleted. Consequently, the grounds raised by the assessee on the merits of the addition are allowed.
75. Since the appeal of the assessee is allowed on merits, the legal grounds challenging the validity of reopening of assessment u/s.147 of the Act are not adjudicated, as the same have become academic in the facts and circumstances of the present case.
76 In the result, the appeal filed by the assessee is allowed.