Durgapur Projects Ltd. v. PCIT – [2023]
The National Highways Authority of India (NHAI) received land that was the subject of a compulsory purchase from of the assesses, a company. The Assessing Officer (AO), who oversaw the assessment processes, calculated the capital gains on such land by taking the requirements of Section 50C, or the stamp duty value of such land, into account.
The modifications made by AO, which were later confirmed by the Tribunal, were removed on appeal by CIT(A). The Calcutta High Court was then consulted on the issue.
The Court concluded that Section 50 of the Act was intended to regulate transactions in which the right market value is not disclosed and the parties to the transaction conceal the true value.
In the present instance, the government acquired the land through a process known as compulsory acquisition. The land was transferred due to forced acquisition rather than a mutual agreement between the parties. So, there is no reason to cast doubt on the accurate assessment and the apparent consideration as shown in the sale documentation.
It is an accepted fact that the compensation for forced acquisition is significantly less than the property’s fair market value since the value is established by considering a number of different criteria. For this reason, if the owner is offered insufficient compensation, the Act allows for appeal and other remedies.
As a result, it is unnecessary to consider whether to use Section 50C of the Act to conceal the value.
