A Chennai taxpayer has secured relief from a ₹99.06 lakh tax addition after the Income Tax Appellate Tribunal (ITAT), Chennai, ruled that tax benefits under Section 50C could not be denied merely because the earlier agreement to sell was unregistered. According to reports from Mint and The Economic Times, the case involves Aroumougam Pragalanadane, who sold property for ₹94 lakh despite a stamp-duty value of ₹1.93 crore. The tribunal's 8 July 2026 order established that once the agreement, agreed consideration and banking-channel payments were established, the benefit could not be denied merely because the agreement itself was unregistered.
As reported by Mint and The Economic Times, Pragalanadane 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, the property's guideline value for stamp-duty purposes had risen to ₹1.93 crore, triggering Section 50C proceedings.
According to Mint and The Economic Times, 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.
As reported by Mint and The Economic Times, the Chennai ITAT took a different approach from the Assessing Officer and Commissioner of Income Tax (Appeals). 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. The tribunal found that the sale price had been fixed on 11 July 2013 and substantial portions of the consideration were received through RTGS on that date, with the remaining amount paid before registration.
According to Mint and The Economic Times, the ruling is significant for property sellers because substantial increases in guideline values between the agreement date and registration date can otherwise create 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. The tribunal's decision provides clarity that unregistered agreements to sell do not automatically disqualify taxpayers from claiming Section 50C relief when proper documentation and payment records are maintained.
