As per section 50C, in case of sale of capital asset being land or building, if the stamp duty value of such asset exceeds the sale consideration fixed, by such percentage as is prescribed under the Income Tax Act, then the Stamp Duty Value so determined by the stamp valuation authority shall be deemed to be the sale consideration for the purpose of computing capital gain. The aforementioned percentage was fixed at 5%. However, the same was later increased to 10% by Finance Act, 2020 whereby it was explicitly stated that the same shall come into effect from 1.04.2021.
In this regard, it has been held in the case of Maria Fernandes Cheryl Vs ITO dated 15.01.2021 that the said amendment whereby the tolerance band was increased from 5% to 10% is curative in nature. The said amendment was made keeping in mind the fact that variation in stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of facts, including the shape of the plot/ location. Thus, the intent behind the amendment was to cure a defect in the provision which was originally drafted for the avoidance of tax evasion but unintentionally brought within its ambit even bonafide cases.
Hence, it was held that considering the intent of the legislature, there is no particular reason to justify any particular time frame for implementing this enhancement of tolerance brand. The rationale of CBDT behind such amendment was as much valid in the past as it was at the time the said amendment was made. Thus, it shall have a retrospective effect i.e. it should be taken into consideration with effect from the date when Section 50C came into existence (1.04.2003).
