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This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2007-08 in the matter of order passed u/s. 143(3) of the I.T.Act.
The presumption against the value being understated (not undervalued) is greater where parties are connected or related. However, if the AO does not allege that the assessee received more consideration than is stated in the sale deed, he cannot made an addition to the stated consideration.
For determination of capital gains according to section 50C market value of property as on date of sale deed or stamp duty value as on date of agreement to sale: which has to be taken?
Provisos to Section 50C(1) of Income Tax Act, 1961 inserted by the Finance Act, 2016 w.e.f. 01/04/2017 are to be treated as curable in nature and would apply with retrospective effect from 01/04/2003 i.e. the date from which Section 50C was introduced.
Section 50C of the Income Tax act, 1961(herein referred to as the Act) has been inserted in the Act by the Finance Act, 2002, w.e.f. 1-4-2003. This section is causing hardships, in many cases, to the assessees since its inception. Many appeals are arising in respect of this section.
The ITAT Mumbai held that the provisions of Sec 50C is applicable only to transfer of land of which the assessee is absolute and legal owner and cannot be applicable to the transfer of leasehold rights in land.Thus, the transfer value cannot be benchmarked to stamp duty value.
In this case assessee sold a property at Rs.20 lakhs against circle rate of 89 lakhs and spent more than a crore in construction of new residential property, exemption u/s 54F was claimed but the AO allowed exemption only with reference to 20 lakhs and balance amount was assessed as capital gain.
It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration.
Rationalisation Of Section 50c To Provide Relief Where Sale Consideration Fixed Under Agreement To Sell- Section 50C makes a special provision for determining the full value of consideration in cases of transfer of immovable property. It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government
Section 50C will get attracted only when there exists difference on the sale consideration and assessed value for the purpose of stamp duty by the authority of a state government. Where there is no material evidence that the assessee had received more than the fixed component from the developer,
