Purchased Property: Market Value or Agreement Value Concept

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Ayushraj

Professional

125 Points Posted on 17 March 2010

Mr A Purchased a Property: Agreement Value is Rs. 15,00,000/- but the Market Value is Rs. 20,00,000/-

1.) Is the amendment made w.e.f 1-10-2009 to consider Market Value and add the diff. of Rs 5,00,000/- as Gift reversed in the current Financial budget 2010 (one practioner is of opinion that it has been reversed while passing of budget of 2009 in Feb.: 2010. Please investigate this throughly & answer)

2.) If No, where to show the Diff. of Rs 5,00,000/- in Income from other Sources.

3.) Does this concept applicable to both residential houses and commercial Premises as well.

Thanks.

Replies (2)

Ayushraj

Professional

125 Points Posted on 19 March 2010

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Amir

Learner

4016 Points Posted on 19 March 2010

Dear Ayushraj,

The term which is used in this section is "Stamp Duty Value" & not "Market Price"

After the retrospective amendment proposed to be made in Sec 56 by the Finance Bill 2010 effective from 01.10.2009

"Receipt of Immovable property for inadequate consideration" has been been taken out of the purview of Sec 56 so now if we consider this proposed amendment then No treatment would be done in respect of Rs. 5 Lacs

The logic behind this proposed amendment is Sec 50C since the seller of this property have to pay tax at Rs. 15 Lacs even when it is sold for Rs. 10 Lacs..

So if we add this Rs. 5 Lacs in the income of BUYER AS WELL THEN THERE WOULD BE DOUBLE TAXATION ON SAME AMOUNT.

So after this proposed amendment "Receipt of Immovable Property without Consideration" is ONLY covered by Sec 56

Yes, Sec 56 covers both residential as well as commercial properties..........