Applicability of section 50c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 October 2014 "A" has purchased the residential property from Builder for Rs 100 lacs. Letter of allotment is dt 24 Feb 11 and had made 80% payment. Subsequently Sale agreement is executed in 13 April 11.
Registration is done after paying the stamp duty on Rs 110 lacs (Ready Recknor Value).
Whether provision of Section 50C will be applicable to purchaser "A" and has to pay I T on Rs 10 lacs?
Kindly guide.

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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04 October 2014 Provisions of section 50C will be applicable to purchaser A if he further sells this property. In that case it will be capital gain for him and sale consideration will be equal to registrar's value at the time of sale deed registration. However for purchaser A provisions of section 56(2)(vii) will apply according to which if property is purchased for less than stamp duty value and the difference between the purchase consideration and stamp duty value is more than Rs. 50000/- then the entire amount will be treated as income in the hands of purchaser. But in your case since the difference between the purchase consideration and stamp duty value is not more than Rs. 50000/- no tax implications will be there.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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04 October 2014 1. Section 50C is not applicable to the purchaser viz., "A".

2. Goyal Ji.

Section 56(2)(vii), pre amended, will not apply to "A" because immovable property is transfered to "A" for a consideration whereas section talks about transfer without consideration.

Querist : Anonymous

Querist : Anonymous (Querist)

06 October 2014 Difference is of 10 lacs and not 10000

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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06 October 2014 What I have meant in my previous reply that section 50C is not applicable for purchaser A at the moment but will apply if he further sells his property since it is a capital asset for him.

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