Capital gain
This query is : Resolved
14 February 2013
If the buyer buy the immovable property from unrelated party at a value which is less than its market value (diff of market value & agreement value is approx 10lks). Is there any tax liability in the hands of buyer under the head Capital gain.
14 February 2013
Dear Roshini,
No. The transaction from buyer's side is covered under "income from other sources".
As long as some consideration has been paid by the buyer, the difference between the consideration paid and stamp duty value doesn't impact the taxability in the hands of the buyer even under "Income from Other Sources" - Section 56(2)(vii)(b) covers only the transactions without consideration and 56(2)(vii)(c) covers only the movable property.
However, 56(2)(vii)(c) does impact immovable property being land or building (a strange thing, given that the clause C starts with "any property, other than immovable property" and then goes onto explain that property includes immovable property being land or building".
Thus your case do attracts taxability under 50(2)(vii)(c). the income addition shall be equal to difference between the consideration and fair market value of the property.
No. The transaction from buyer's side is covered under "income from other sources".
As long as some consideration has been paid by the buyer, the difference between the consideration paid and stamp duty value doesn't impact the taxability in the hands of the buyer even under "Income from Other Sources" - Section 56(2)(vii)(b) covers only the transactions without consideration and 56(2)(vii)(c) covers only the movable property.
However, 56(2)(vii)(c) does impact immovable property being land or building (a strange thing, given that the clause C starts with "any property, other than immovable property" and then goes onto explain that property includes immovable property being land or building".
Thus your case do attracts taxability under 50(2)(vii)(c). the income addition shall be equal to difference between the consideration and fair market value of the property.
14 February 2013
Thanks nikhil for your quick response
It means the person is liable to pay tax not under the head "capital gain" but under the head "other sources" u/s 50(2)(vii)(c)
It means the person is liable to pay tax not under the head "capital gain" but under the head "other sources" u/s 50(2)(vii)(c)
14 February 2013
Yes Roshni. so due care needs to be taken before entering into such transactions.
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