Tax traetment in case of bus. of plots by less than dlc rate
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 January 2015
Dear sir
pl give me latest provision regarding if person is having business income of sale of plots by conversation of ag land after purchases and sale by less than DLC rate in the year 2012-2013 and on wards.. what will be the difference of the sale price and circle rate in which section if will applicable. as 50C is applicable on capital gain not on stock in trde..
pl clear with few examples...
thanx in advance
pl give me latest provision regarding if person is having business income of sale of plots by conversation of ag land after purchases and sale by less than DLC rate in the year 2012-2013 and on wards.. what will be the difference of the sale price and circle rate in which section if will applicable. as 50C is applicable on capital gain not on stock in trde..
pl clear with few examples...
thanx in advance
31 January 2015
Alike section 50C which is applicable in case of capital assets, there is a section 43CA which is applicable in case of stock in trade. According to which if sale of a land or building or both other than a capital asset is sold less than the stamp duty value determined by stamp authority than stamp duty value so adopted shall be taken as the full value of consideration for the purpose of business profits. This section is applicable from AY 2014-15 onwards.
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 February 2015
I agree from this sir. now the situation in the above case is related to 12-13 in that we can show the business income by taking a tournover of Rs. 500000 i.e. actual registry amount instead of DLC value i.e.1050000/-
what will be the reply to ITO that he has given a notice regarding the difference in DLC and actual sale value as deeming provision of capital gain u/s 50C.
what will be the reply to ITO that he has given a notice regarding the difference in DLC and actual sale value as deeming provision of capital gain u/s 50C.
26 July 2025
Great question! Here’s a clear explanation to help you respond to the ITO:
---
### Background:
* **Section 50C** applies when **capital assets** (like land/building held as investment) are sold below the stamp duty value (DLC rate). The stamp duty value is considered the sale price for capital gains computation.
* **Section 43CA** applies when **immovable property held as stock-in-trade** (i.e., business inventory) is sold below the stamp duty value. In this case, the stamp duty value is considered the sale price for computing **business income** (not capital gains).
* Section 43CA came into effect from **AY 2014-15 onwards**.
---
### Your Case:
* The sale of plots took place in **FY 2012-13** (AY 2013-14).
* Business income from sale of plots (stock-in-trade).
* Sale price is less than DLC value.
* ITO is citing Section 50C (capital gains) for adjustment.
* You want to show turnover at actual sale price (Rs. 5,00,000) instead of DLC (Rs. 10,50,000).
---
### What to reply:
1. **Section 43CA is NOT applicable for AY 2013-14 / FY 2012-13** because it came into effect from AY 2014-15 only. So, Section 43CA cannot be used to adjust business income for that year.
2. **Section 50C applies only to capital assets, not to stock-in-trade/business assets.** Since plots are held as stock-in-trade (business inventory), Section 50C is not applicable.
3. **Therefore, for AY 2013-14 (FY 2012-13), the actual sale consideration (i.e., Rs. 5,00,000) can be taken as full value of consideration for computing business income.**
---
### Additional suggestion:
* Explain that since **Section 43CA was introduced only from AY 2014-15**, for earlier years, the law does not provide for deeming sale price as stamp duty value in case of business assets.
* Hence, the actual sale price must be accepted as turnover.
---
### Example:
| Particulars | Sale Price | DLC Value (Stamp Duty Value) |
| ------------------------- | ------------ | ---------------------------- |
| Actual sale consideration | Rs. 5,00,000 | Rs. 10,50,000 |
For AY 2013-14:
* Since 43CA not applicable, business income should be computed on Rs. 5,00,000 and not Rs. 10,50,000.
---
**Summary for ITO:**
"For AY 2013-14, since the sale was of stock-in-trade and Section 43CA is not applicable retrospectively, the actual sale consideration of Rs. 5,00,000 should be taken as full value of consideration for business income computation. Section 50C is not applicable as the asset is not a capital asset."
---
If you want, I can help draft a formal reply to the ITO notice. Would you like that?
---
### Background:
* **Section 50C** applies when **capital assets** (like land/building held as investment) are sold below the stamp duty value (DLC rate). The stamp duty value is considered the sale price for capital gains computation.
* **Section 43CA** applies when **immovable property held as stock-in-trade** (i.e., business inventory) is sold below the stamp duty value. In this case, the stamp duty value is considered the sale price for computing **business income** (not capital gains).
* Section 43CA came into effect from **AY 2014-15 onwards**.
---
### Your Case:
* The sale of plots took place in **FY 2012-13** (AY 2013-14).
* Business income from sale of plots (stock-in-trade).
* Sale price is less than DLC value.
* ITO is citing Section 50C (capital gains) for adjustment.
* You want to show turnover at actual sale price (Rs. 5,00,000) instead of DLC (Rs. 10,50,000).
---
### What to reply:
1. **Section 43CA is NOT applicable for AY 2013-14 / FY 2012-13** because it came into effect from AY 2014-15 only. So, Section 43CA cannot be used to adjust business income for that year.
2. **Section 50C applies only to capital assets, not to stock-in-trade/business assets.** Since plots are held as stock-in-trade (business inventory), Section 50C is not applicable.
3. **Therefore, for AY 2013-14 (FY 2012-13), the actual sale consideration (i.e., Rs. 5,00,000) can be taken as full value of consideration for computing business income.**
---
### Additional suggestion:
* Explain that since **Section 43CA was introduced only from AY 2014-15**, for earlier years, the law does not provide for deeming sale price as stamp duty value in case of business assets.
* Hence, the actual sale price must be accepted as turnover.
---
### Example:
| Particulars | Sale Price | DLC Value (Stamp Duty Value) |
| ------------------------- | ------------ | ---------------------------- |
| Actual sale consideration | Rs. 5,00,000 | Rs. 10,50,000 |
For AY 2013-14:
* Since 43CA not applicable, business income should be computed on Rs. 5,00,000 and not Rs. 10,50,000.
---
**Summary for ITO:**
"For AY 2013-14, since the sale was of stock-in-trade and Section 43CA is not applicable retrospectively, the actual sale consideration of Rs. 5,00,000 should be taken as full value of consideration for business income computation. Section 50C is not applicable as the asset is not a capital asset."
---
If you want, I can help draft a formal reply to the ITO notice. Would you like that?
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