Deduction u/s 54

Dear Sir,

1) In this case Sec 50C should be kept in mind -

.For CG purposes sale price shall be Higher of  -

a) Sale Consideration declared by the assesee (29 Lacs or 36 Lacs)

b) Value as determinded by Stamp Valueation authority.

 Now as far as spliting the consideration between two agreements is concerned -one pertaning to bulding & other pertaining to Furniture, etc -

Well you may very well escape with this since it will depend upon the inteliigence of AO - But I would say if ur AO is as smart as you he can put either of the following  questions before you -

>>>>>>>> If u show Profit on sale of Furniture - He will tax it, since u urself are claiming the same. (remember Sec 54 is not available) - this case might involve double taxation where Sec 50C comes into play....

>>>>>>>>If u show Loss on sale of Furniture - He might reject it on the ground of "Personal effects"

You can prove that u have sold these items at Profit & it is a personal effect but then u might have to go a long way...So be careful...

2) Advance paid to builder is allowed - atleast I dont see any reason why it should not be allowed but again transaction should be genuine......

Thanks Amir,

The Value determined by the Stamp Duty authority is Rs.24 Lacs.

So in any case our sale consideration is higher. The Flat was residential (self occupied) and the furniture was of personal effect, though not valued Rs. 7 lacs.

The purchaser in order to escape the AIR query might have asked the seller to take value on paper below Rs. 30 lacs. The Seller had purchased another flat and he had to pay this money there. So in order to not loose this deal he agreed to the above proposition of purchaser.

But now still the big question is what to declare as Sale Consideration Rs. 36 lacs or Rs. 29 lacs. The reason why I am inclined to take the said value as Rs. 36 lacs is that always a Flat is sold along with Furniture and fixtures. In this case also the Flat is sold along with furniture or we can say that the sale of furniture is incidental to sale of flat. The seller and purchaser are also same. The 2 agreements denotes also that the purchaser in order to escape some liability has compelled the seller to enter into two agreements. If we declare Rs. 29 lacs as sale consideration, the ITO at later stage may say that you have tried to conceal the real sale value.

Still i am not able to reach at any conclusion

What shall be the best option in this case either to declare the sale value as Rs. 36 lacs

Or to declare the sale value as Rs. 29 lacs & show remaining amount of Rs. 7 lacs as sale of furniture which was of personal effect (thus not liable to tax)

Dear Sir,

As I said earlier, If ur case is not picked up for scrutiny then u might very well be escaped by declaring sale price at 29 Lacs.

But once it is selected -

U cannot take the cost of electric works, sanitary works,etc from the price of building - For me the ground of "Personal effect" will not be listend at any level especially in this circumstances where one can blindly say that this is being done to evade tax.

Dont forget Penalty for concealment.

Final Answer from my side -

Case is clear, u r trying to manipulate the exact affairs by spliting agreements - Sale Price should be "actual" i:e 36 Lacs