Capital Gain
This query is : Resolved
19 November 2010
I have one query regarding Section 50C of Income Tax Act, 1961:
Company A Ltd. entered into an agreement on 31.12.2002 to sell land to Mr. B at Rs. 50 Lacs, which was also stamp valuation of the land. Complete payment was to be made by 31.12.2003 and possession and transfer of land was to be done on that date. But Mr. B died on 30.6.2003 and land could not be transferred on due date. Later on his son made the complete payment and land was transferred to his name on 31.12.2007 for Rs. 50 Lacs. But the stamp valuation on that date was Rs. 1 Crore.
Now Assessing Officer wants to attract Section 50C on the transaction and treat deemed consideration as Rs. 1 Crores. We are of view that there is no fault on part of assessee company and there was no intention to do the transaction below stamp valuation, but company was bound by the agreed amount of Rs. 50 Lacs.
Want to know your opinion on the issue and any case law supporting will be highly appreciated
Company A Ltd. entered into an agreement on 31.12.2002 to sell land to Mr. B at Rs. 50 Lacs, which was also stamp valuation of the land. Complete payment was to be made by 31.12.2003 and possession and transfer of land was to be done on that date. But Mr. B died on 30.6.2003 and land could not be transferred on due date. Later on his son made the complete payment and land was transferred to his name on 31.12.2007 for Rs. 50 Lacs. But the stamp valuation on that date was Rs. 1 Crore.
Now Assessing Officer wants to attract Section 50C on the transaction and treat deemed consideration as Rs. 1 Crores. We are of view that there is no fault on part of assessee company and there was no intention to do the transaction below stamp valuation, but company was bound by the agreed amount of Rs. 50 Lacs.
Want to know your opinion on the issue and any case law supporting will be highly appreciated
CA.ViVeK M ACA
(Expert)
19 November 2010
Relevant date for the purpsose of stamp duty value is the date when the transaction is complete. If the transaction was completed on 2007 then the stamp duty value as on the same date shall be deemed to be the full value of consideration even if there may be geniue reason.
taxindiaconnect
(Expert)
19 November 2010
Interesting query, however from the reading of section 50C it seems that there is no escape from this michief of section as the stamp valuation on the date of transfer has to be seen, unfortnatly in this case the tranfer took place when the sale stamp valuation has gone up. One can take the shelter of the plea that he was bound by the agreement to transfer the land at a predetermined price, but the chances of success depend on how robust the agreeeent is?!!
CA.ViVeK M ACA
(Expert)
19 November 2010
What is the conclusion?? Whether 1 crore or 50 lakh??
20 November 2010
Conclusion is for Rs 1 Cr and assessing officer is right, But we need to find the way from this......
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