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Background of Section 50C Income Tax Act, 1961

Stakes in transactions in immovable properties are quite high and so are the tax implications. It is not only perceived but an open secret in India that sale transactions of immovable properties are undervalued leading to leakage of tax revenue causing losses to the Government and unaccounted money is not good for the health of the society in general. Therefore,  the restlessness on the part of Government to plug such leakage and attempts by assessees and tax professionals to avoid hardships to genuine assessees. The provisions of section 50C of the Income Tax Act, 1961 specifically dealing with transactions in immovable properties are  in this context.

PART I: SECTION 50C OF INCOME TAX ACT, 1961

SPECIFIC PROVISIONS IN RESPECT OF TRANSACTIONS IN LAND AND BUILDING:

Basic Provision in Section 50C  :

With effect from A.Y. 2003-2004 section 50C has been inserted in the Income Tax Act, 1961 dealing specifically about gross consideration in computation of capital gains in respect of transactions in land or building or both.

Section 50C provides that if the value stated in the instrument of transfer is less than the valuation adopted, assessed or assessable  by the stamp duty authorities, the valuation as adopted, assessed or assessable  by the stamp duty authorities will be considered for the purpose of computation of capital gains arising on transfer of land or building or both. For example if in the agreement for sale, the value of the flat is stated at Rs. 24 lacs but according to the stamp duty authorities the valuation of the flat is Rs. 34 lacs, then it will be considered that the flat has been sold for Rs. 34 lacs and capital gains will be computed on the basis of Rs. 34 lacs.

In certain cases, this causes a very difficult situation for the seller of the property as he is required to pay tax on extra money which he never received. Alternately, if he wants to claim exemption by investing in a residential house or capital gains bonds, etc. depending upon the facts of his case, he has to invest an extra amount, which he never received on sale. It is not necessary that one should invest the very sale proceeds in exemption schemes as funds from any sources can be invested to avail exemption.  To come out of the difficulty one may consider recourse to relief provisions, but by the time decision in respect of relief provisions come, the time limit for planning investment gets expired.

History and background of section 50C:

The history and background of section 50C can be traced to Government’s restlessness to tax the black money in transactions in land and buildings. The prices of land and buildings like other items are a function of market forces of demand and supply. The demand far exceeds the supply; more so in big cities. This wide gap between demand and supply generates an inflationary and speculative market for immovable properties and provides a major avenue for investment of black money.  The consideration for their transfer is understated in the instrument of transfer by the vendor and the purchaser and a substantial part is paid unrecorded in black money. The vendor saves on capital gains on undeclared portion of the sale proceeds while the purchaser saves on wealth tax and accommodates his unaccounted funds.

Position between 1972 and 1986:

Considering the wide-spread use of black money and under-statement of consideration in the instruments of transfer, which adversely affected the interest of revenue, the Government introduced Chapter XXA in the Income Tax Act, 1961 with the purpose of curbing such arrangements. Chapter XXA was there in statute book from November 15, 1972 to September 30, 1986 and was applicable to transfers of immovable properties during that period. It provided for acquisition of immovable property by the Government when it was found that fair market value was higher than the consideration stated in instrument of transfer. The proceedings under Chapter XXA started after transfer was completed. In Chapter XXA, the Government was required to determine the fair market value of the property but the Supreme Court in the case of K.P. Verghese at 131 ITR 597 took a view that apart from determining the fair market value of the property transferred, the Government was also required to prove that extra consideration not stated in the transfer document had passed from the buyer to the seller. This requirement of proving passing of under-hand consideration from the buyer to the seller rendered Chapter XXA unworkable.

Position between 1986 and 2002:

In view of the above SC decision and because Chapter XXA applied after the immovable property was transferred, with effect from October 1, 1986, Chapter XXA was replaced by Chapter XXC which granted the Government pre-emptive right to purchase immovable property at a price agreed to by the transferor.

Chapter XXC of the Act inter alia provided for the purchase of immovable property by the Central Government in certain cases of transfer. A transaction relating to a transfer of any immovable property, if it was situated in any of the notified cities and towns of India and if the apparent consideration of such transaction exceeded the prescribed limit, required compliance with provisions of Chapter XXC. Accordingly, whenever a person wanted to transfer an immovable property for a price exceeding specified amount, he could not do so before undergoing the procedure as laid down in Chapter XXC.

Chapter XXC had limited application and was failing:

Thus, Chapter XXC was applicable only to certain notified towns and cities and only if the price of the immovable property exceeded a specified amount. Therefore, only a few people were affected by the provisions of Chapter XXC.

Of late, there were many litigations between the assessees and the Income Tax Department. It was also observed that even when Tax Department acquired such high priced properties, the same could not be disposed off at a profit in many cases. This had resulted in a situation whereby the Department was criticised for unnecessarily acquiring the high priced immovable properties. The funds of the Government were unnecessarily blocked. Thus, neither the Income Tax Department nor the tax payers were happy about Chapter XXC. The Finance Act, 2002 deleted Chapter XXC w.e.f. 1st July 2002.

2002 onwards Section 50C inserted:

While deleting Chapter XXC, the Government simultaneously decided to introduce section 50C with effect from A.Y. 2003-04.

Coverage of section 50C is  very wide :

Section 50C affects all the transactions of land and buildings in the country except Jammu and Kashmir. Although the section speaks of transfer of land or building or both, on the reasoning that the term “whole” includes “part.”  It also covers part of building. Thus, transactions of flats, shops, galas factories etc. are covered by the provisions of section 50C.  It is observed that in some cases, the stamp duty authorities have been adopting valuation of properties at higher level than the real values.

Stamp duty generally paid by buyer:

Stamp duty is generally paid by the purchaser of the property. Therefore, the purchaser is entitled to dispute higher valuation by stamp duty authorities. However, generally the purchasers do not prefer an appeal before the stamp duty authorities as compared to the purchase price involved, the amount of additional stamp duty becoming payable due to higher valuation by stamp duty authority is meager amount which does not afford spending money and time involved in an appeal.

The seller may not have much representation before the stamp duty authorities even when an appeal is preferred by the purchaser.

It may happen that the purchaser after completing the transaction of purchase may prefer an appeal before the stamp duty authority and the seller has no information about it. Further, under the provisions of most of the State Acts,   stamp duty authorities have the power to revise valuation of immovable property for a certain period of years from the date of stamping. In such circumstances, the assessment order may be subjected to rectification requiring the seller to pay additional tax, interest u/s 234B, as investment u/s. 54/ 54F/ 54EC may fall short than required.

In view of the provisions of section 50C, the vendor is more concerned with the stamp duty valuation.  Practically, it is suggested that for the purpose of allowing appeal to the vendor under stamp duty laws, it may be provided in the document of transfer that a small part of stamp duty would be borne and paid by the vendor so that the locus of the vendor is not challenged. Corresponding adjustment may be made in the consideration money.

Transactions not covered:

Section 50C is applicable only to transfer of land or building or both provided it is a capital asset. Thus, in cases when such assets are held as stock-in-trade, the section does not apply. By implication, it does not affect sale of land or building by a builder or a developer because land, building, shops, flats, etc sold by the builders and developers are generally stock-in-trade in their hands and not the capital assets. This section will also not be applicable to transfer of tenancy. In such a case, there is no transfer of land or building or both to which provisions of section 50C are applicable.

Relief  provisions for separate income tax valuation:

It is however provided in section 50C that even though the higher valuation by stamp duty authorities has not been disputed, the seller of the property may represent before the Income Tax Officer that the valuation adopted by stamp duty authorities is higher than the fair market value of property on the date of transfer and that the Income Tax Officer may refer the matter of valuation to the Valuation Officer of the Income Tax Department itself. Although the word used is “may”, the ITO has to refer the case for valuation once requested by the assessee. If the valuation by the Valuation Officer of the IT department is lower, then such lower valuation is to be adopted by the Income Tax department for the purpose of capital gains taxation under section 50C.

Higher Income Tax valuation to be disregarded:

However, it may happen that the valuation by the Income Tax Valuation Officer is higher than the valuation adopted by the stamp duty authorities. In such an event, the stamp duty valuation is to be adopted and higher valuation by the Income Tax Valuation Officer is to be disregarded. Thus by approaching the Income Tax Valuation Officer, the seller of the property will not be a loser in any case. The DVO has to follow the procedure under relevant sub-sections of section 16A of the Wealth Tax Act whereby the DVO has to call for the records, give an opportunity of being heard to the assessee and lead evidences and then pass a speaking order of valuation. Further, the order of the DVO can be appealed against.

Amendments in Section 50C :

Certain Amendments were made to this section by Finance Act, 2016. Two provisos were added to subsection (1) which are as follows:

Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer:

Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer.

Further this section was amended by Finance Act Finance Act, 2018. Third proviso was added to subsection (1) which is :

Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.

Some of the  Ruling in Section 50C

1. S.50C not applies to transfer of booking rights

Income Tax Officer Vs. Shri Yasin Moosa Godil (ITAT Ahemdabad)

From the reading of Sec. 50C,it is evident that Sec. 50C is a deeming provision and it extends to only to land or building or both. Section 50C can come into play only in a situation where the consideration received or accruing as a result of the transfer by an appellant of a capital asset, being land or building or both is less than the value adopted or assessed or assessable by any authority of State Government therefore for the purpose of payment of stamp duty in respect of such transfer. It is settled legal proposition that deeming provision can be applied only in respect of the situation specifically given and hence cannot go beyond the explicit mandate of the section. Clearly therefore, it is essential that for application of Sec.50C that the transfer must be of a capital asset, being land or building or both. If the capital asset under transfer cannot be described as “land or building or both” then section 50C will cease to apply. From the facts of the case narrated above, it is seen that the assessee has transferred booking rights and received back the booking advance. Booking advance cannot be equated with the capital asset and therefore section 50C cannot be invoked.

2. Section 50C not applies to transfer of tenancy/ leasehold rights

DCIT vs. Tejinder Singh (ITAT Kolkota)

ITAT held that Section 50C of the Income-tax Act, 1961  will apply on receipt of consideration on ’transfer of a capital asset, being land or building or both’ but will not apply in case of transfer of tenancy / leasehold rights.

3. Section 50C – Fair market value determined by DVO cannot be replaced for full value of consideration

ITO Vs. Chandrakant R. Patel (ITAT Ahmedabad )

– The language in section 55A does not refer the ‘value of consideration’ but only uses the term ‘Fair Market value’. So the scope of the section gets con-fined to determine the fair market value of a capital asset only. Thus, considering the language of section 48 the value so deter¬mined cannot be substituted for ‘Full value of consideration’.

– Section 50C states that the AO can refer to DVO u/s. 55A only if the assessee claims that the value adopted by the stamp valuation authority exceeds their fair market value or the value so adopted by stamp valuation authority has not been disputed by any authority, Court or High Court.

– Thus, the valuation made by the DVO and the consequential addition as made by the AO was reversed and the view taken by the CIT(A) was upheld.

4. Section 50C not applicable to tenancy rights and unregistered document

ACIT Vs. M/s. Munsons Textiles (ITAT Mumbai)

On applicability of Section 50C of the Act in absence of registered document –Capital gain has to be computed on the basis of sale consideration received or accruing to the taxpayer. Even if the document was not registered, the capital gain has to be computed on the basis of the sale consideration shown and received by the taxpayer unless there was material to show that the sale consideration was understated. In this case, the document was not registered and no stamp duty had been paid. Therefore, stamp duty value cannot be adopted for the purpose of computation of capital gain and the value shown in the agreement has to be adopted as there is no material to show that the taxpayer had understated the sale consideration.

It is pertinent to note that an amendment has been made in Section 50C of the Act with effect from 1 October 2009 to bring unregistered document   also under the purview of Section 50C of the Act. In view of this amendment, this Ruling would not hold good for the sale transactions entered into post 1 October 2009. However, it would still hold good for the sale transactions that are entered into prior to 1 October 2009

On applicability of Section 50C of the Act to tenancy rights –Only for the limited purpose of computation of capital gain in respect of sale of land and building, stamp duty value has to be substituted for sale consideration in view of specific provisions of Section 50C of the Act.Therefore, provisions of section 50C of the Act cannot be applied in case of transfer of tenancy rights in respect of land or building or both.

5. Legal fiction u/s 50C cannot mean that deemed sale amount of property is actually received

Subash Chand vs. ACIT (ITAT Chandigarh)

Deemed consideration” u/s 50C for computation of capital gain u/s 48 is quite different from actual consideration or actual availability of money for the purpose of making investments or for meeting the expenses. Deemed consideration within the meaning of section 50C cannot and does not mean that the amount of deemed consideration has actually been paid by the transferee or actually received by the assessee.

6.  IF Valuation referred by AO, then DVO valuation shall be final sale consideration for computing capital gain

Sudha Garg Vs ITO (ITAT Delhi)

The assessing officer made the assessment order u/s 147/143(3). The only issue involved in this appeal is regarding computation of long term capital gain on sale of property located at Ghaziabad. The assessee has declared the long term capital gain on the sale of the said property claiming real sale receipt value of the property.

7.  Section 50C not applicable to cold storage building

Laxmi Ice & Cold Storage Vs Income Tax Officer (ITAT Lucknow).

provisions of section 50C of the Act is not applicable to the cold storage building so to substitute actual sale consideration by deemed sale consideration and the order of the Assessing Officer passed under section 147/143(3) of the Act cannot be a subject matter of section 263.

8. Reference to DVO is mandatory for invoking Section 50C (2 )

Amarshiv Construction Pvt. Ltd. Vs. D.C.I.T. (ITAT Ahmedabad)

Impugned addition u/s.50C(2) of the Act mandates reference to DVO in case an assessee contests the jantri price in question to be higher than fair market value of the relevant capital asset.

9. Section 50C not applicable on Right to Purchase a Building

Sh. Anil Jain Vs DCIT (ITAT Delhi)

Provisions of section 50C of the Act are not applicable in the case of the assessee as the capital asset involved here was not land or building but it is a right to purchase a building (shop).

10. Section 50C not applicable on sale of rights in property through POA without stamp valuation

CIT Vs. Satya Dev Sharma (Rajasthan High Court)

Assessee entered into a purchase agreement for purchase of a land and later transferred all the rights acquired under the power of attorney for certain consideration, AO applied section 50C and enhanced short-term capital gains of assessee which was not justified since section 50C was not applicable in this scenario as there was no stamp valuation.

11. Conversion of Agricultural land: Section 50C not apply to business income

The Income-tax Officer Vs. Smt. Sejal D Shah (ITAT Ahmedabad)

The ITAT bench comprising Pramod Kumar (AM) and S. S. Godara (JM) recently confirmed that the sale consideration on agricultural land after its conversion to non-agricultural Land constitutes business income and therefore, section 50C of the Income Tax Act, 1961 cannot be applicable to such cases.

12. Section 50C could not be applied to lease hold rights in land

ACIT Vs. Everest Industries Ltd. (ITAT Mumbai)

The only grievance of the revenue in this appeal is that the provisions of section 50C of the Act mandates that where a transfer of capital asset being land or building or both is for consideration less then its value as adopted/assessed by the State Government for the purpose of stamp duty then the stamp duty value would be adopted as being the full value of consideration for computing capital gains arising out of transfer of the asset. It is the case of the revenue that section 50C of the Act would apply also to transfer of leasehold interest in land and is not limited to only to transfer of land and building or both.

13. Transfer of property by way of GPA is not a valid transfer, So no capital gain arises

Smt. Maniza Jumabhoy Vs. Asst. Commissioner of Income Tax (ITAT Hyderabad)

Assessee has entered into is not a ‘sale deed’ as considered by the AO and CIT(A) but only an ‘agreement of sale cum Irrevocable General Power of Attorney’ for a property, which the Hon’ble Court has held that these three parties have no ownership rights or title and now property was/is in the possession of Hyderabad Water Works Department for a long period. Without establishing that the assessee has title to the property and also without any sale deed of the transaction, the agreement of sale registered may not give rise to transfer of rights in a particular property, particularly in view of the fact that the Hon’ble Supreme Court did not approve the transfer of property by way of GPA. In these circumstances, the very basis for levy of capital gains is in doubt. However, the order of the court has been pronounced subsequently and there may be further contentions on the issue between the parties. Therefore, it is better if AO examines the issue afresh, in the light of the orders of the Hon’ble Court on the issue and also the fact is that it is only an agreement of sale not a sale deed.

14. Sec 50C not applies to distress Sale of Land to Govt Company

Income-tax Officer Vs. Southern Steel Ltd. (ITAT Hyderabad)

The moot point in this case is whether Sec. 5OC can be invoked when the purchaser is a government undertaking i.e, Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC). In the real estate business it is prevalent that the substantial part of the consideration is unaccounted. In order to tax this unaccounted portion of consideration deeming provision was introduced as Section 5OC wherein when the consideration is less than stamp duty value, such stamp duty value is to be treated as full value consideration for the purpose of capital gain.

15. Penalty U/s. 271(1)(c) not justified based on mere high stamp duty valuation of property

ITO Vs. Shri Ajay Sharma (ITAT Delhi)

Where assessee had offered actual amount received on sale of property for taxation, revenue authorities were not justified in passing penalty order under section 271(1)(c) by adopting higher sale consideration under section 50C on basis of stamp duty valuation of said property

CA. TARUN GHIA

ghiatarun@rediffmail.com

(The Article was Originally written by CA Tarun Ghia in which we added few more Paras to update it with recent case laws)

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49 Comments

  1. CA Ashok Malhotra says:

    I am really thankful to CA Tarun Ghia for the analysis of section 50C of the Income Tax Act 1961 and also for providing historical background of the challenges faced by buyers, sellers, and the tax department while chapters XXA and XXC were in force. The confusion arose in the minds of stakeholders who refer to these chapters in the income tax act uploaded on the Income Tax website. Nowhere it is mentioned that these chapters are deleted, except the word ‘Now Redundant’ is used in Form 37-I under rule 48L.

  2. Jaya says:

    My friend enter into an agreement of purchasing a flat and he paid more than 50% of the said flat in the month of march. But due to lockdown the complete agreement doesn’t happened. And on the said flat tenants are already there. So from March to till date. Transferor is enjoying tenant money i.e rent.

    So just need clarification does the rent money should belongs to transforer or transferee

  3. Jaya says:

    Hi.. My friend has purchased a flat and paid more than 50% of said value. And the said flat rent is going on. He paid it till march but due to lockdown it been extended till July. And now august.

    So just need clarification. From March to July. Does this rent money belongs to transferor or transferee??

  4. Guruprasad says:

    Sir I purchased a agriculture land on 17/3/2014. By agreement for sale for rs 35laks.in the court notary agreement. Because the documents were in complete, I gave him advance rs 1lak in cash. Because the saler of the land was not having his bank account. complete his paper for registration purposes it took 5yrs.the agriculture land was converted into non agricultural purposes. By that time the government value came to 1crore. As per our agreement I got the sale deed regestred for 35lak. Iam not so much educated and the saler of the land is un educated.while getting the land regesterd even sub register had not inform us that u will be in trouble in future by income tax. I came to know this in July 2019 while filing my return by ca.that. u have come under section 50c of income tax. U have to pay tax on difference amount which is 65lak is ur deemed capital gain from other source@ tax nearly. 25lak Sir please suggest me what to do

  5. Guruprasad says:

    Sir I gone through a agreement for sale of agriculture land in 2014.by court notary its value at that time was 20lak. Due to some difficulties in paper and conversation of agriculture land. Now in 2019 all paper got clear and got regested at the time of registration the market value was 45lak .I had made payments of 1lak at the time of agreement in cash. Does 50c apply please suggest me what to do now vendor is also in trouble.

  6. satish goel says:

    During FY 2014-15 state govt. Reduced collectorate rate of property from rs.15000/- per Sq. yd. to Rs.12000/- per sq. yd.
    The assessee wrongly paid stamp duty on old higher rate of rs.15000/- instead if Rs.12000/-. But the actual consideration was rs.13500/- per sq. yd.
    Ld’ AO / ITO U/s 50C adopted higher value based on Rs.15000/- per sq. Yd. On which stamp duty paid, assessee paid capital gain tax on the basis of actual consideration of Rs.13500/-per sq. yd.
    Evidence (notification of circle rate schedule) produced that stamp duty value payable actually was Rs.12000/- instead of Rs.15000/- which is already lower than actual consideration of Rs.13500/- sq. Yd. but AO denies to accept the same. Please guide.

  7. LAKHMI CHAND TEWANI says:

    Can minor other factual changes be mad on 31.8.18 in respect of return filed on 28.8.18. There is no change in total income or tax.

  8. S. Patra says:

    Now the trend is, in urban areas and areas surrounding urban areas, to receive more money from the buyers than valuation made for stamp duty purpose. Buyers are to be contended with registration for the values, determined for stamp duty purposes. Extra amounts paid by buyers remain unrecorded. Such modus operendi provide escape route for payment of proper Income Tax by sellers.
    How will Government deal with such situation?

  9. SUNIL Gayakwad says:

    One of my clients matter is as under
    1. Sold property on 15-6-2016 for 60,00,000 Market Value Under Section 50C 1,52,00,000
    2. Purchased above property on 15-6-2014 for 45,00,000 Market Value Under Section 50C 1,25,00,000
    The officer says he will take Market Value for Sales only but refuses to take Market value for purchase
    Please Advise

  10. Radhana says:

    My client purchase a land of 60 lakhs and make registry of such land at 50 lakhs.
    And he sell such land at 1crore bt made registory of 15 lakhs nd during sale procedure he did not present his PAN card
    Now he have to file his income tax return
    What to do ???

  11. Arpita says:

    What will be the amount to be taken as sales consideration for computation of capital gains if the consideration received is rs 5500000 but the valuation officer determines the fair market value to be rs 5000000?

  12. Trilochan Rath says:

    in a register sale deed if both vendor and purchaser writes down the price which is less than the Bench mark valuation fixed by the registering authority, then what will be the tax liability.

  13. Parinder says:

    Sir,my client is a company. All shareholder sell his all shares to other persons. that means new shareholder owner of the company. is that cover in 50c

  14. Nirmal says:

    Is Sec. 50C applicable on conversion of a company to LLP where all the assets and liabilities(including land and building) are transferred because here transfer only means sale or exchange and no such case arises here.

  15. GUNJAN PATEL says:

    father transfer property to his son by sales deed ,and received lower amount form his son as per market price.in this case section 50/c applicable or not.they also mention reason in deed about this lower price

    2. father transfer property to his son by sales deed ,and received lower amount form his son as per market price.in this case section 50/c applicable or not.

    please give me answer above my question

  16. GUNJAN PATEL says:

    respected sir,

    1. father transfer property to his by sales deed ,and received lower amount form his as per market price.in this case section 50/c applicable or not.they also mention reason in deed about this lower price

    2. father transfer property to his by sales deed ,and received lower amount form his as per market price.in this case section 50/c applicable or not.

    please give me answer above my question

  17. ashish says:

    I wanna knw date of amendment applicable for purchaser when he purchase property less than the value adopted by valuation authority and value adopted by valuation authority is apply

  18. Rohit says:

    Dear Sir,

    I would much appreciate it if you can advice me on the income tax implications for unsold property retained by a partnership firm, engaged in real estate market.

    Please advice on up to date amendments with specific circular numbers.

    Regards
    Rohit

  19. A.P. says:

    Dear Sir,
    Just got a Notice from Income Tax Department subjecting “NON reflection of Transaction in your return of income for Assessment Year 2012-2013”
    Stating following;
    “1. This has come to the notice of Income Tax Department that you have not filed return of income despite carrying out substantial sale of immovable property as under;
    Rs.9,75,000/- in the office of Sub-Registrar on 14-Feb-12
    2. It appears that the stamp valuation of this property is made at Rs.11,97,000/- and you have paid a stamp duty of Rs.61,300/-
    3. The difference between Stamp Valuation and Sale Consideration is required to be added to the Capital Gain as per the provisions of section 50C of the I.T.Act.
    4. You are required to explain to ITO WD1 (2), within 15 days of receipt of this letter the reason for not reflecting the above transaction in your return of income.“
    Above notice was on my younger brother’s name (who was assigned a Power of Attorney by My Mother & myself for doing all formalise during sale of home in year of 2012)
    Above home was purchased by my mother in year of 2000 and sold in Feb-2012
    My Mother being a housewife, not filling any income tax return.
    I have following query:
    IT Dept. in notice saying in 1st point that “you have not filed return of income despite of carrying out substantial sale of immovable property Rs.9,75,000/- in the office of Sub-Registrar on 14-Feb-12”
    Now my Questyion-1 is : Subject sale of home done by my younger brother who is assigned a power of attorney by my mother and myself for doing all formalities.
    Now if at all this income to be shown in income tax then only my younger brother to saw this income in his income tax (b’coz subject notice is on name of my younger brother only). Or my mother being owner as per purchase deed or we all three have to divide equally and to show in our individual income tax return??
    IT Dept. in notice saying in 2nd point that; “It appears that the stamp valuation of this property is made at Rs.11,97,600/- and you have paid a stamp duty of Rs.61,300/-“
    Now my Question-2 is : If at all there is a difference between stamp valuation based on 9,75,000/- Vs 11,97,600/- as per my understanding it has to be borne by buyer?? (Buyer to ensure correct stamp duty while making deed, isn’t it??)
    IT Dept. in notice saying in 3rd point that; “The difference between Stamp Valuation and Sale Consideration is required to be added to the Capital Gain as per the provisions of section 50C of the I.T.Act.”
    Now my Question-3 is : I understand that IT dept. saying to include capital income of 11,97,600/- in income tax computation where question-1 applied who to consider or to show this income???
    Now my Question-4 is : If at all this capital income to be shown in income of any of us (to be cleared/decided in question-1) is there any way to save income tax ??
    We have following things done after sale of home:
    Capitan aroused from sale of home was invested in 2012-13 for construction of new home above plot purchased by my late father around 1997/98 which we held in hereditary jointly on name of my mother, self and my younger brother. (Applied for home plot plan approval in 2013 and got approval in 2014 by authority in this year)
    Can my brother show above new home (which we held in hereditary jointly on name of my mother, self and my younger brother) as an investment of capital gain aroused from sale of subject old home?? In order to save income tax on capital gain???
    Request you to please help us in the crises aroused. Please help us we are in big tension and not in good financial situation to pay mammoth amount of tax on income which we have never earned/gained.
    Regards,
    A.P., Gujarat

  20. R.P.shah says:

    Sir,
    I Have constructed a house in the FY 1999-2000 and sold in the year 2013-14 the sale price is 61 lacs and as per as per registrar office the value was 76 Lacs as per capital Gain Purpose what amount taken kindly confirmed.
    Thanks
    R.P.Shah

  21. RJ says:

    In case of a Public Trust where the District Judge fixes the FMV of a tenant occupied property which is far less than the value adopted by the Stamp Valuation Authority whether section 50C would still be applicable? Please advise

  22. M.POONAM KOCHER says:

    i sold my some plots which i purchased as a agricultural land.i purchased that land in 1997.here in ahmednagar,maharashtra state i sold my plots just 20 days ago at Rs.10 lakhs.i note this amount in document which is registered by registrar office,also my plots government value was noted in my document i.e.Rs.18 lakhs.
    SO MY C.A. said to me to pay advance tax for that transaction,when he calculated my advance tax against this transaction,he considered sale consideration value Rs.18 lakhs, but i actually received Rs.10 lakhs.here front party deposited stamp duty + registration fees on amount of Rs.18 lakhs.
    BUT MY PROBLEM IS HOW MY C.A.CALCULATE THE ADVANCE TAX FOR LONG TERM CAPITAL GAIN ON SALE CONSIDERATION ON AMOUNT Rs.18 LAKHS when i received 10 lakhs

  23. M.POONAM KOCHER says:

    i sold my some plots which i purchased as a agricultural land.i purchased that land in 2000 march.here in cuddalore,tamilnadu state i sold my plots just 28 days ago at Rs.10 lakhs.i note this amount in document which is registered by registrar office,also my plots government value was noted in my document i.e.Rs.18 lakhs.
    SO MY C.A. said to me to pay advance tax for that transaction,when he calculated my advance tax against this transaction,he considered sale consideration value Rs.18 lakhs, but i actually received Rs.10 lakhs.here front party deposited stamp duty + registration fees on amount of Rs.18 lakhs.
    BUT MY PROBLEM IS HOW MY C.A.CALCULATE THE ADVANCE TAX FOR LONG TERM CAPITAL GAIN ON SALE CONSIDERATION ON AMOUNT Rs.18 LAKHS when i received 10 lakhs

  24. R.S.Sharma says:

    Please let me know whether section 50 c is applicable in case of transfer/sale of lease hold right rights to third party . I have lease agreement with first party for setting up industry by me.

  25. Kanhaiya Sevlani says:

    my queries as below:-
    One of my client is partnership firm and main object of business is property dealing, development and builders. They have purchased the non-agriculture land and the same is taken as stock-in trade as per object of business. Now the firm sold the plots to their customers and the government rate is higher than actual sale price. My question is whether sec. 50C of Income Tax Act, 1961 is applicable if the transaction occurred in F.Y. 2013-14

  26. Amit Bansal says:

    Sir plz help me…………
    i am partner in firm. my firm bushiness construction market and than after sale of shop. profit chargeable u/h PGBP.
    my question is i am sale shop less than fair market value, tax implication in the hand of firm.. what is treatment difference of FMV & sale price.

  27. S.S.RAVICHANDRAN says:

    Sir/Madam

    One of my client pledged the property to the bank. He was unable to repay the loan. Now the assessee has no option to wait for price increment. Then, there was a forced sale of that property. The sale consideration received was Rs.10.00 Lakhs but the stamp duty value is Rs.35.00 lakhs. Whole of the sale proceed was paid to repay the loan with some additional borrowings. What is the sale consideration for Long Term Capital Gain.Since he got only Rs.10.00 lakh only under the forced sale condition & the same was utilised to settled for loan. There is no hide in price. Can we take the value of the consideration is only Rs.10.00 Lakhs or stamp duty value of Rs.35.00 Lakhs?. Let me advise.

  28. Sumit says:

    I am goindg to sell a residential plot, which is not a agricultural land. Stamp value of the property is say 1 Cr but valuation done by a private registered valuer is lower than the value of stamp valuation authority. I want to calculate my tax by taking such lower value as sales consideration which i will actually receive. How should i deal in this matter to minimise the tax payable as per section 50c and other applicable sections of Income Tax

  29. SHINDE HEMANT says:

    i sold my some plots which i purchased as a agricultural land.i purchased that land in 1997.here in ahmednagar,maharashtra state i sold my plots just 20 days ago at Rs.10 lakhs.i note this amount in document which is registered by registrar office,also my plots government value was noted in my document i.e.Rs.18 lakhs.
    SO MY C.A. said to me to pay advance tax for that transaction,when he calculated my advance tax against this transaction,he considered sale consideration value Rs.18 lakhs, but i actually received Rs.10 lakhs.here front party deposited stamp duty + registration fees on amount of Rs.18 lakhs.
    BUT MY PROBLEM IS HOW MY C.A.CALCULATE THE ADVANCE TAX FOR LONG TERM CAPITAL GAIN ON SALE CONSIDERATION ON AMOUNT Rs.18 LAKHS when i received 10 lakhs

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