LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Sec 50 C Defeated or Not

Amir (Learner) (4016 Points)

01 February 2010

Hi friends,

Sec 50 C says that For computing capital gain in respect of Land or Building or Both, sales consideration will NOT BE LESS THAN the Value adopted by Stamp valuation Authority "IN RESPECT OF SUCH TRANSFER"

Now

1) If upon transfer, the property is not registered or is registered at alater date then whether Sec 50 C can be escaped ?

2) Since we have a specific section for reference of valuation officer in case of land, building or both then can Sec 55 A be invoked in this case?

Reply
Follow
Share

11 Replies

Max Payne (employed) (2569 Points)
Replied 01 February 2010

Amir bhai,

Unless the sale is registered, the property itself cannot be transferred unless section 53A of the transfer of property act is followed.....

Even though the transfer is not registered at the proper authority (village office) and the land remains in the register in the name of transferor itself, there is TRANSFER within the meaning of 2(47) of income tax act.

50C says that the Gross consideration shall not be less than:

the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”

Explanation 2 says

For the purposes of this section, the expression “assessable” means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.

Hence it will not be possible to avoid guideline value (adopted for stamp valuation purpose) by merely postponing registration or not registering the transfer.

Also regarding 55A, the AO has the authority to ascertain FMV for the purpose of this Chapter in the cases referred in conditions (a) and (b). Thus i think the AO can make the reference to the valuation officer, even if the transfer is not registered.

2 Like

Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear G.K.,

THANKS BROTHER FOR CLAIRIFYING ACTUALLY I WAS LOOKING AT THE OLD PROVISION, THE EXPLAINATION WHICH U HAVE RIGHTLY POINTED OUT IS INSERTED BY THE LATEST BUDGET.

ONE MORE AMENDMENT MADE BY ADDING WORD "ASSESSABLE" IN SEC 50C , I THINK THIS ALSO COVERS THE PRESENT CASE..

THANKS BROTHER.

BUT I M STILL CONFUSED THAT 55A CAN BE INVOKED IN THIS CASE OR NOT..U R RIGHT WHAT IS MENTIONED IS "CHAPTER" BUT THEN "SPECIFIC LAW PREVAILS OVER THE GENERAL"..??

Max Payne (employed) (2569 Points)
Replied 01 February 2010

Dear Amir,

If we see condition (a), to make reference to valuation officer, the valuation must be MADE by a registered valuer, which AO feels is less than FMV.

But condition (b) says that IN ANY OTHER CASE, if the AO is of the opinion that

(i) the asset is undervalued by either Rs.25,000 or 15%of disclosed consideration, or

(ii)having consideration to the nature and other relevant circumstances,

he can make the reference to valuation officer.

So it would rest on AO's opinion of the case whether the reference is to be made or not.......

Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear G.K.

Thanks 4 shwing interest in my query..

I may b wrong, but if AO could have applied Sec 55A in case of properties, etc then there would not be any need of the amendment which have discuused...

Anyways, since now in Sec 50 C itself AO has the power to refer(even in the absence of registration) then no need to go further.

Thanks bro.

Max Payne (employed) (2569 Points)
Replied 01 February 2010

Hmmm.. u r rite.... Amendment's intention is to tackle non registration issue only....

Max Payne (employed) (2569 Points)
Replied 01 February 2010

Hmmm.. u r rite.... Amendment's intention is to tackle non registration issue only....

preeti (student) (143 Points)
Replied 01 February 2010

The A.O can invoke Sec 55A only where there is reference to the fair market value in Sec 45.

Please refer to the case law of CIT Vs. Smt. Nilofer I. Singh (2009)176 Taxmann 252 (Delhi)

1 Like

Max Payne (employed) (2569 Points)
Replied 01 February 2010

Dear Preeti, Thanks for giving citation of Nilofer singh's case. Amir Bhai, Pls see the below link.Even though AO cant make reference to Valuation officer, guideline value will have to be adopted in the light of amendment. https://www.thehindubusinessline.com/2009/03/21/stories/2009032150550900.htm

1 Like

sumit (CHARTERED ACCOUNTANT) (479 Points)
Replied 01 February 2010

even if u dont register then it will be taken as transfer without consideration and section 20 c will apply accordingly

Amir (Learner) (4016 Points)
Replied 01 February 2010

Dear G.K., Ya I think u have adopted rite interpreatation... The main purpose is soved by adding "assesable" & explanation.. That means AO cannot refer 4 determining Stamp Valuation but assessment can be done on the basis of stamp valuation Value which AO can identify without referring to Valuation officer.

CA. Harsh Kumar (Chatered Accountant) (56 Points)
Replied 02 May 2011

Sir my query is,

In special circumstances the land and building is being sold at a value lower than the value as per land valuation authority.The special circumstance is that the land and building is occupied by the the owners Tenants .The assessee enters into an agreement to sell the property as is condition.That is the seller does not have any liability of getting the place vacanted. The purchaser will take all the measures to get the place vacated and it involve high litigation costs and compensation settlements ect.

Therefore the property is being sold at a price less thatn the value as per land valuation authourity.In this case how will we defy section 50C.

Is the Agreement to sell mentioning all the above circumstances good enough proof to satisfy the tax authorities.