Income Tax Section 50C: Sold property for ₹94 lakh despite ₹1.93 crore stamp value; ITAT Chennai grants tax relief

A Chennai taxpayer who sold property for ₹94 lakh despite a stamp-duty value of ₹1.93 crore has won relief from a ₹99.06 lakh tax addition after the Income Tax Appellate Tribunal (ITAT), Chennai, held that the tax department could not deny Section 50C relief merely because the agreement to sell was unregistered.

The case concerns Aroumougam Pragalanadane, who had entered into an agreement to sell the property on 11 July 2013 for ₹94 lakh. He received ₹48.50 lakh through RTGS on the date of the agreement and the remaining ₹45 lakh through banking channels on 23 March 2015. The registered sale deed was eventually executed on 7 March 2017.

By the time the sale deed was registered, however, the property's guideline value for stamp-duty purposes had risen to ₹1.93 crore. The difference between the actual consideration and the stamp value triggered Section 50C proceedings.

Why the Income Tax Department invoked Section 50C

Section 50C of the Income Tax Act provides that where immovable property is sold for a consideration lower than its stamp-duty value, the stamp value can be treated as the deemed sale consideration for computing capital gains, subject to specified safeguards.

In Pragalanadane's case, the Assessing Officer treated ₹1.93 crore as the deemed sale consideration and made an addition of ₹99.06 lakh, representing the difference between the stamp-duty value and the ₹94 lakh stated in the registered sale deed.

The taxpayer argued that the sale consideration had actually been fixed much earlier, under the agreement to sell dated 11 July 2013. A substantial portion of the consideration had also been received through RTGS on that date, with the balance paid through banking channels before the sale deed was registered.

The Assessing Officer rejected the argument, primarily because the agreement to sell was not registered. The Commissioner of Income Tax (Appeals) also upheld the addition.

ITAT says unregistered agreement cannot be the only reason to deny relief

The Chennai ITAT took a different view. In its 8 July 2026 order, the tribunal held that the provisos to Section 50C allow the stamp-duty value as on the date of the agreement to sell to be considered when the date of agreement fixing the consideration differs from the date of registration, provided the statutory payment condition is met.

In this case, the tribunal found that the sale price had been fixed on 11 July 2013 and ₹48.50 lakh had already been received through RTGS on that date. The remaining ₹45 lakh was also received through RTGS before registration of the sale deed.

The tribunal rejected the argument that an unregistered agreement to sell could not qualify for the Section 50C proviso. Once the agreement, agreed consideration and banking-channel payments were established, the benefit could not be denied merely because the agreement itself was unregistered.

The ruling is significant for property sellers because a substantial increase in guideline values between the agreement date and registration date can otherwise create a tax liability on a value that the seller never actually received. The case underscores the importance of preserving the agreement to sell, payment records and other documentary evidence when a property transaction spans several years.