In a significant decision, the Delhi High Court has rejected the Income Tax Department’s appeal against Thomson Press (India) Ltd., upholding the Income Tax Appellate Tribunal’s (ITAT) finding that a 2013 property transaction was not undervalued, as alleged.
The case involved the sale of a 20,000 square meter plot in Sector 132, Noida, originally owned by M/s. Living Media India Ltd. (now merged with Thomson Press), to M/s. Maccons Infra Pvt. Ltd. at ₹18,000 per square meter. The department claimed that the applicable circle rate at the time of the sale deed (executed on October 11, 2013) was ₹28,000 per square meter, implying an undervaluation of ₹20 crore.
However, the Division Bench of Justice Vibhu Bakhru and Justice Tejas Karia clarified that the registered agreement to sell, and the payment of stamp duty amounting to ₹72 lakh, had already occurred on May 30, 2013—prior to the circle rate hike which came into effect on August 1, 2013.
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“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,” the Court observed.
Section 50C of the Income Tax Act, 1961, states that if a capital asset is sold below the state-adopted stamp duty value, the latter shall be deemed the full value for computing capital gains. The Revenue had used this provision to add ₹20 crore to the assessee’s income.
Yet, both the CIT (Appeals) and ITAT held that the transaction value was compliant with the applicable circle rate when the deal was originally executed. The ITAT further emphasized that partial consideration had been received even before the agreement to sell, reinforcing that the agreed sale price matched the prevailing rate at that point.
“There is no dispute that the transaction in question was prior to the increase in the stamp duty and was at the value, as computed in accordance with the prevalent circle rate,” the Court stated.
The Revenue argued that Section 50C should apply based on the circle rate effective at the date of the sale deed. However, the Court rejected this interpretation, citing its earlier ruling in Principal Commissioner of Income Tax-6 v. Modipon Limited. In that case, the Court had held that once an agreement to sell is registered and payments are made as per the agreed schedule, Section 50C cannot be applied based on later circle rate hikes.
“Application of Section 50(C) in such cases would result in extreme hardship. Parliament has recognized this mischief and has added proviso to Section 50(C) w.e.f. 01.04.2017,” the judgment quoted.
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The Court concluded that no substantial question of law arose and dismissed the Revenue’s appeal accordingly.
Quote Highlight
“The issue sought to be raised...would have little effect for the purposes of Section 50C... no substantial question of law arises.” — Delhi High Court
Case Title: Pr. Commissioner of Income Tax, Delhi-7 v. M/S Thomson Press (India) Ltd.
Case No.: ITA 192/2025
For Appellant: Mr Puneet Rai, SSC with Mr Ashvini Kumar, Mr Rishabh Nangia, Mr Gibran, Mr Nikhil Jain, Ms Srishti Sharma, Mr Pratham Aggarwal
For Respondent: Mr Salil Aggarwal, Sr Advocate with Mr Uma Shankar, Mr Madhur Aggarwal