The Mumbai ITAT set aside the order passed by CIT(A) and emphasized the safe harbour limit, stating that the assessee is entitled to the benefit of Section 50C of the Income Tax Act, 1961. It was observed that there can be genuine variance between the stamp duty value and the actual consideration received for similar properties, depending on various factors. Section 50C(1) is an anti-avoidance provision to prevent tax evasion by showing lesser consideration in transactions. The proviso introduced by the Finance Act 2018 from A.Y. 2019-20 establishes a “safe harbour limit” of 5%. The AO added back the difference in amount between sale consideration and market value, invoking the provisions of section 50C, which was brought to tax as per the order passed u/s. 143(3). The CIT(A) refused to give benefit of the proviso introduced by Finance Act, 2018, applying from A.Y. 2019-20 onwards.
Interpreting the Safe Harbour Limit of Income Tax Section 50C in Recent Mumbai ITAT Ruling
