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Sec 50c capital gains

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Saurabh

51 Points Posted on 23 August 2013

My client has purchased a property for Rs. 2900000 whose market value is Rs. 4500000 in Mar 13. Now he sold this property in Aug 13 for Rs. 3000000 & the market value is still Rs. 4500000. Now under Sec 50C he is required to pay tax on difference between market value & cost of acquisition i.e. on Rs 1600000 while his actual profit is just Rs. 100000 & if market values are considered his profit is Nil.

Is there any way out of this? Can anyone pls give me any case reference or any provision which can help me to pay tax on actual profit earned & not on notional profits

Replies (1)

Pankaj

Chartered Accountant

118 Points Posted on 23 August 2013

Under Section 50C case is reffered to Valuation Officer (in disputed cases) who is a independent officer and Value the property on some basis. Now in your case if the Valuation officer finds the Market Value as Rs. 4500000/- only then you have only 1 remedy other than to pay tax is to go for appeal. And prove that the actual value of property is Rs. 3000000 (that's why you are getting Consideration as 300000) and not Rs. 4500000

and by the way, have you considered indexation on Rs. 2900000?