Delhi High Court Rejects Income Tax Department's Appeal Against Thomson Press Over Alleged Transaction Of Property Below Circle Rate
The Delhi High Court has dismissed an appeal preferred by the Income Tax Department against Thomson Press (India) over the sale of a property in Noida back in 2013, allegedly at a price much lower than the prevailing circle rate.A division bench of Justices Vibhu Bakhru and Tejas Karia noted that the registered agreement to sell and payment of stamp duty with respect to the property...
The Delhi High Court has dismissed an appeal preferred by the Income Tax Department against Thomson Press (India) over the sale of a property in Noida back in 2013, allegedly at a price much lower than the prevailing circle rate.
A division bench of Justices Vibhu Bakhru and Tejas Karia noted that the registered agreement to sell and payment of stamp duty with respect to the property transaction were already completed by the date when the circle rate of the area in question was enhanced.
“In view of the express finding that the transaction was at the value which is commensurate with the Circle rate at the material time, the fact that the circle rate had been increased subsequently would have little effect for the purposes of Section 50C of the Act,” it observed.
Section 50C of the Income Tax Act applies to the sale of capital assets like land and buildings. It provides that where the consideration received by an assessee on transfer of a capital asset is less than the value adopted by the State for the purpose of payment of stamp duty, the Assessee will be deemed to have received full value as per the rate adopted by the State for the purpose of calculating capital gain.
Thus, in the facts of the case, the Department alleged that M/s. Living Media India Limited (which owns and runs Thomson Press) sold the property in question to M/s. Maccons Infra Private Limited at the rate of ₹18,000/- per square meter, whereas the actual circle rate was ₹28,000/- per square meter. The latter soon thereafter merged into Living Media, raising suspicion of foul play.
As such, the Department sought to make an addition of ₹20 crores to Living Media's taxable income by invoking Section 50C. It contended that the sale deed was executed between the parties on 11.10.2013 whereas the circle rate of the area was enhanced prior to that, with effect from 01.08.2013.
The ITAT had rejected Revenue's contention and had noted that part of the sale consideration was paid even before the date of the transfer agreement, and the stamp duty was also paid on the date of the agreement to sell, that is, on 30.05.2013. Thus, it had held that the sale consideration as agreed was at the circle rates, which were applicable at the material time.
Agreeing, the High Court held that Revenue cannot be heard to contend that Section 50C of the Act is applicable retrospectively.
“In view of the express finding that the transaction was at the value which is commensurate with the Circle rate at the material time, the fact that the circle rate had been increased subsequently would have little effect for the purposes of Section 50C of the Act,” it held.
Reliance was placed on Principal Commissioner of Income Tax-6 v. Modipon Limited, where the High Court had rejected Revenue's contention that the circle rate, as on the date of the sale deed, is required to be considered for the purposes of Section 50C.
As such, the Department's appeal was dismissed.
Appearance: Mr Puneet Rai, SSC, Mr Ashvini Kumar, Mr Rishabh Nangia, Mr Gibran, JSCs and Mr Nikhil Jain, Ms Srishti Sharma and Mr Pratham Aggarwal, Advocates for Appellant; Mr Salil Aggarwal, Sr Advocate with Mr Uma Shankar, Mr Madhur Aggarwal, Advocates for Respondent.
Case title: Pr. Commissioner Of Income Tax, Delhi-7 v. M/S Thomson Press (India) Ltd.
Case no.: ITA 192/2025