Special Provisions for full value of consideration in Case of Immovable Property : Sec. 50C

Special Provisions for full value of consideration in Case of Immovable Property : Sec. 50C

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Special Provisions for full value of consideration in Case of
Immovable Property : Sec. 50C

1. Where the sale consideration received or accruing as a result of transfer by an assesse of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a state government (Stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall for the purpose of sec. 48, bedeemed to be the full value of sale consideration received or accruing as a result of such transfer.

First proviso to sec. 50C :

Where the date of agreement fixing the amount of sale consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer.

Second proviso to sec. 50C :

The first proviso shall apply only in case where the amount of sale consideration or part there of, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of agreement for transfer.

Third proviso to sec. 50C (Added by Finance Act 2018 w.e.f. 1-4-2019) :

 Where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the sale consideration received or accruing as a result of the transfer, the sale consideration so received or accruing as a result of the transfer shall, for the purpose of section 48, be deemed to be the full value of consideration.

2. Without prejudice to the provisions of sub-section (1), where

a. the assesse claims before any Assessing Officer that the value adopted or assessed or assessable by Stamp Valuation Authority under sub-section(1) exceeds the fair market value of the property as on the date of transfer, and

b. the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing officer may refer the valuation of the capital asset to a Valuation Officer.

3. Subject to the provisions contained in sub-section (2),where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of consideration received or accruing as a result of the transfer.

Few case Laws governing the provisions of sec. 50C :

 Section 50C – Fair market value determined by DVO cannot bere placed for full value of consideration

ITO Vs. ChandraKant R. Patel (ITAT Ahmedabad )

– The language in section 55A does not refer the ‘value of consideration’ but only uses the term ‘Fair Market value’. So the scope of the section gets confined to determine the fair market value of a capital asset only. Thus, considering the language of section 48 the value so determined cannot be substituted for ‘Full value of consideration’.

– Section 50C states that the AO can refer to DVO u/s. 55 A only if the assesse claims that the value adopted by the stamp valuation authority exceeds their fair market value or the value so adopted by stamp valuation authority has not been disputed by any authority, Court or High Court.

– Thus, the valuation made by the DVO and the consequential addition as made by the AO was reversed and the view taken by the CIT(A) was upheld.Section 50C not applicable on Right to Purchase a Building

Sh. Anil Jain Vs DCIT (ITAT Delhi)

Provisions of section 50C of the Act are not applicable in the case of the assesse as the capital asset involved here was not land or building but it is aright to purchase a building (shop).Conversion of Agricultural land: Section 50C not apply to business income The Income-tax Officer Vs. Smt. Sejal D Shah (ITAT Ahmedabad)The ITAT bench comprising Pramod Kumar (AM) and S. S. Godara(JM) recently confirmed that the sale consideration on agricultural land after its conversion to non-agricultural Land constitutes business income and therefore, section 50C of the Income Tax Act, 1961 cannot be applicable to such cases.

–Falguni Ghediya

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