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As Albert Einstein said "The hardest thing in this world is to understand income tax". And Vanya Cohen said "When there's a single thief it's robbery and when there are thousand thieves its taxation".

Entry 82 of Indian Constitution gives power to central government to levy tax on income and hence income tax act 1961 was introduced. As we all know that taxes were levied from very beginning of human civilization as 'taxes are the dues that we pay for the privileges of membership in an organized society'. But as taxes grow without ran and income tax is a capital punishment, and out of all debts, men are least willing to pay their taxes and hence they try to evade tax but it's not an easy task but as John Maynard Keynes said "The avoidance of tax is only intellectual pursuit that carries any reward". So I just want to ask that if you are having 50 crore black money and you want to convert it into white within one year in India, what will you do? Earlier there was only one avenue and that was used by many property brokers and underworld they purchase land in big cities at higher price and get it registered at lower value, hence they invest their money into black gold at  higher value and shows it at lower price, as in the case of Shivcami Co.P.Ltd. v/s ITR 71 though the sale consideration declared by the assessee is lower assessing officer has to accept it. It was with a view to overcome this legal position that the legislature inserted section 50C with effect from April.1.2003. Though prior to the introduction of Section 50C, Section 52 of the act permitted the tax authorities to treat the fair market value as deemed sale price, but they didn't have latest stamp duty value. So there came a need of introducing Section 50C. The condition that should be fulfilled for the applicability of Section 50C are:

1. If there is a transfer of Land or building or both.

2. The asset may be long-term capital asset or short -term capital asset.

3. It may be depreciable or non-depreciable asset.

The sale consideration is less than value adopted by stamp duty authority then the value adopted by stamp duty authority shall be taken as full value of consideration, for the purpose of computation of capital gains. When assessee accepts the value adopted by stamp duty authority then there is no problem, but when assessee has disputed value adopted by stamp duty authority then the stamp duty valuation as finally accepted for stamp duty purpose is taken as full value of consideration. But where the assessee claims that value adopted by stamp duty authority is more than the fair market value but he has not disputed such valuation in stamp duty proceeding as there is a difference between dispute and claim then there are two options when fair market value determined by valuation officer is taken as full value of consideration. But if the value determined by valuation officer is more than stamp duty value then stamp duty value is taken as full value of consideration. Though we say 'Equity and income tax are stranger to each other' then also we must accept that income tax is not so rude. If property is transferred under Section 53 A of the transfer of property act which is popularly known as power of attorney transaction then stamp duty is not applicable hence Section 50C does not have any role to play.

So this is all about section 50C but still there are lots of ways to evade tax, but as Will Rogers said "the difference between death and tax is death doesn't get worse every time".

As a fine is a tax for doing something wrong but a tax is a fine for doing something right. Well I just want to ask that don't you people think that it is appropriate that the month of tax begins with April fool's day and ends with cries of may day.

I will end with few lines of Ogden Nash that :

"The more you earn ,the less you keep

And  now I lay me down to sleep

I pray the lord my soul to take

If the tax collector hasn't got it

Before I wake"




Category Income Tax, Other Articles by - Manali Agrawal 



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