👉 A recent ruling of the Income-Tax Appellate Tribunal (ITAT)’s Mumbai bench has come as a relief to taxpayers embroiled in litigation on capital gains arising out of sale of their flats due to the sale price being lower than the stamp duty valuation.
👉 ITAT has held that the benefit of a higher tolerance band of 10% for the difference between the sale price of a flat and the stamp duty valuation will apply with retrospective effect.
👉 The ITAT bench of vice-president Pramod Kumar and judicial member Saktijit Dey held this benefit would apply retrospectively from financial year 2002-03 (assessment year beginning April 1, 2003) when anti-abuse provisions were introduced in the income-tax Act.
👉 The ruling will help pending cases from these years when the acceptable variation rate was much lower or no such leeway was available.
👉 Tax experts said several such cases are pending at various levels, especially in larger cities such as Mumbai.
👉 To prevent tax abuse and deter the use of black money in property deals, Section 50C was introduced by the Finance Act, 2002.
👉 It provided that if the sale consideration claimed to be received by the seller is less than the stamp duty rate, the latter would be considered for determining capital gains.
