Case at a glance
Case Name: Chetana Resorts Pvt. Ltd. v. ITO, Circle 1, Aurangabad (ITAT Pune, 2026)
- Subject
- Section 50C agreement date stamp value: Chetana Resorts sold shops under a 1996 agreement but registered the sale deed only in 2015, nineteen years later
- Issue
- When the full price was paid and possession handed over under a 1996 agreement, but the sale deed was registered only in 2015, should Section 50C apply the stamp value on the agreement date or on the registration date?
- Appeal no.
- ITA Nos. 1481 to 1483/PUN/2026, order dated 12 October 2026
- Forum
- ITAT Pune, Bench “A” (Shri R.K. Panda, Vice President, and Shri Vinay Bhamore, Judicial Member)
- Assessment year
- 2016-17
- Provisions
- Sections 45, 50C (first proviso to sub-section (1)), 2(47), 147, 144, 271(1)(c) and 271D, Income-tax Act 1961
- Outcome
- Remanded to AO, favourable to assessee
Background
Facts of the Case
- On 4 October 1996, the assessee company signed an agreement to sell two shops (U-6 and U-7) in Manik Arcade, Chetana Nagar, Aurangabad, for a total of Rs.5,85,000. According to the assessee, the full price was received and possession was handed over in 1996 itself.
- The sale deed was registered only in November 2015, falling in AY 2016-17.
- The company had not filed a return for AY 2016-17. On information from the Investigation Wing on the department’s Insight portal, the case was reopened under Section 148, and the company filed a return declaring nil income.
- The company did not respond to the notices issued during reassessment. The AO found that the government value of the property on registration was Rs.92,76,884, and taxed that amount as short-term capital gain under Section 45 read with Section 50C in a best-judgment assessment.
- The CIT(A)/NFAC upheld the addition on 5 March 2026. Penalties under Sections 271(1)(c) and 271D were also levied and upheld, and the company appealed all three orders.
- Before the Tribunal, the company argued that the transfer had already happened in 1996 under Section 2(47)(v), that Section 50C (introduced in 2003) could not apply to a 1996 deal, and, alternatively, that the stamp value on the agreement date had to be used.
The ruling
Summary of Decision: What the Tribunal Held
- The agreement to sell was entered into on 4 October 1996, the entire consideration was received and possession was handed over that year, and only the execution and registration of the sale deed remained, which took place in 2015. [Para 7 of the order]
- Under the first proviso to Section 50C(1), where the date of the agreement fixing the consideration differs from the date of registration, the stamp duty value on the date of the agreement is to be taken. Since the full consideration was received by cheque in 1996, the stamp value as on 4 October 1996 has to be considered for computing the capital gain. [Para 8 of the order]
- The CIT(A)’s order was set aside and the matter sent back to the AO with a limited direction to verify the transactions in light of the proviso and recompute the capital gain. The other grounds became infructuous and were not decided. [Para 9 of the order]
- The penalties under Sections 271(1)(c) and 271D, being consequential, were also sent back to be decided after the quantum is recomputed. All three appeals were allowed for statistical purposes. [Paras 10 and 11 of the order]
Practice point
Key Takeaway: Section 50C Agreement Date Stamp Value
- An old agreement can save a large tax bill. Here the difference was between a 1996 stamp value and a 2015 stamp value of Rs.92.77 lakh on shops sold for Rs.5.85 lakh.
- Banking-channel payment is essential. The proviso works only where some or all of the price was paid by account payee cheque, bank draft or electronic transfer on or before the agreement date. Keep the bank proof along with the agreement.
- This is a remand, not a final win. The AO must still verify the agreement, the payments and the possession before recomputing the gain.
- The bigger argument is still open. The Tribunal did not decide whether the transfer happened in 1996 under Section 2(47)(v), which would mean nothing was taxable in AY 2016-17. Nor did it decide whether Section 50C can apply to a deal made before 2003.
- Watch the year of the proviso. The first proviso to Section 50C(1) was inserted by the Finance Act 2016 with effect from AY 2017-18, and this was AY 2016-17. The order does not discuss that point, though ITAT Ahmedabad in Dharamshibhai Sonani v. DCIT (2016) treated the proviso as curative and retrospective.
- One loose end in the order. It says the price was received by cheque, yet a Section 271D penalty, which usually concerns cash receipts, was also levied. The order does not reconcile the two, so expect the AO to look at this closely.
- Silence at assessment costs money. The company ignored the AO’s notices, which is why a Rs.92.77 lakh addition was made in the first place.
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