Treatment of immovable property U/S 56(2)(vii)

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Tarun Kumar (Querist)
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04 December 2010 If X makes (transfer)registry of his immovable property to Y without any consideration.What is the treatment in the hands of Y under the Income Tax Act?
Does it make any difference if he gives only power of attorney to Y.X is not the relative of Y.

CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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04 December 2010 U mean to say, the property is transferred without any consideration??.., so X is a relative of Y or the property is transferred under willl or as a gift?? I think in absence of any information, i would consider the same property transferred as gift in the hands of X.., and accordingly to b charged in the hands of X.... Amount here considered would b fair value of property on transfer date..... But let other experts reply tooo...

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CA. BHAVIK DILIPBHAI MEHTA

CA. BHAVIK DILIPBHAI MEHTA (Expert)
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04 December 2010 Transfer of an immovable property worth Rs. 100 or more is not complete without execution and registration of conveyance deed. However section 53 A of the Transfer of property Act envisages situation where the transferor is debarred from agitating his title to the property against the purchaser. The situations are mentioned below:

1) Possession of property has been handed over to the buyer.
2) Sale consideration has been paid to the seller
then although the sale deed has not been executed in favour of buyer but if certain documents like power of attorney/agreement to sell/will etc have been executed then the buyer will be deemed to be the owner of the property.

From the above paragraph, I can opine that the property has been sold by X to Y without adequate consideration. Hence the tax will have to be paid by X. For Y, the fair market value on the date the documents are executed shall be deemed to be the cost price. When Y will sell the property, tax shall will have to be paid by Y.

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