Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Sale to relative

20 May 2018

if an assessee sells goods to relative below cost what are the income tax implication..who so ever answers please give reference of relevant section

Reply
Follow
Share

16 Replies

JAI BHOLA (504 Points)
Replied 20 May 2018

there is no such provision which says you can not sell stock below cost .

rama krishnan (12234 Points)
Replied 20 May 2018

jai sir... you are wrong, if capital asset is sold, section 50c will be attracted and if it is stock then section 43CA will be attracted

Jatin (Accountant) (3479 Points)
Replied 20 May 2018

Agree with Rama Krishnan

CA S Praveen Kumar Reddy (Chartered Accountant) (2195 Points)
Replied 20 May 2018

Agreed with rama krishnan

JAI BHOLA (504 Points)
Replied 20 May 2018

he is asking for goods not capital asset

CA S Praveen Kumar Reddy (Chartered Accountant) (2195 Points)
Replied 20 May 2018

43CA deals with stock

irfan gul (20 Points)
Replied 20 May 2018

dnt give wrong replies...section 43ca gets attracted when immovable property is sold which is not capital asset but stock in trade....dnt confuse your self and others also my question is simple if u are selling goods to ur family below cost what are the tax implications

rama krishnan (12234 Points)
Replied 20 May 2018

sorry Irfan sir... agreed to your views.....
when the sale of goods below the fmv, then it can be assessed as sales suppression or under stated sales...
this is my view let's wait for experts view

Vinod Babu (24191 Points)
Replied 20 May 2018

In my point of view, you can't sale a goods below the purchase price because sales tax department assess for evading of tax except for certain goods like electonic items, mobile.
My 1st question is that whether you are giving to your relative for free of cost.
2. What items are you selling.

irfan gul (20 Points)
Replied 20 May 2018

in law no point of view exist if we have been regulated by any provision related to same either in income tax or under gst please refer

rama krishnan (12234 Points)
Replied 20 May 2018

in income tax it will be assessed to tax as understated or suppressed sales... but in respect of query raised, in income tax, provisions of arms length price is there, to assess, the sales which are made much lesser than fmv and exorbitant expenses incurred in respect of associated enterprises

irfan gul (20 Points)
Replied 20 May 2018

you are trying to cover it by section 40 which is regarding excess payment made to relative ....kindly refer section no.which regulates it

rama krishnan (12234 Points)
Replied 20 May 2018

sir please go through arms length price in income tax and if possible enlighten us

Garima jain (24 Points)
Replied 21 May 2018

No provision ruling here in income tax as such... Further clarify the whole transaction what is the nature of asset , nature of relation, amount involved and all...

1 Like