Capital Gain
Ramsharan
(Querist) 19 November 2010
This query is : Resolved
We have one query regarding Section 50C of Income Tax Act, 1961:
Company A Ltd. entered into an agreement on 31.12.2002 to sell land to Mr. B at Rs. 50 Lacs, which was also stamp valuation of the land. Complete payment was to be made by 31.12.2003 and possession and transfer of land was to be done on that date. But Mr. B died on 30.6.2003 and land could not be transferred on due date. Later on his son made the complete payment and land was transferred to his name on 31.12.2007 for Rs. 50 Lacs. But the stamp valuation on that date was Rs. 1 Crore.
Now Assessing Officer wants to attract Section 50C on the transaction and treat deemed consideration as Rs. 1 Crores. We are of view that there is no fault on part of assessee company and there was no intention to do the transaction below stamp valuation, but company was bound by the agreed amount of Rs. 50 Lacs.
Want to know your opinion on the issue and any case law supporting will be highly appreciated
R.Ramachandran
(Expert) 19 November 2010
Dear Mr. Ramsharan,
The Section 50C was introduced only with effect from 1.4.2003. There are no case laws touching upon this provision so far. But from the plain wording of the Section it seems that the Assessing Officer is right. At best, you can avail the provisions of Sec. 50C(2)(a) and get the fair market value of the property as on thedate of transfer which is 31.12.2007. [Needless to say that value will certainly not be Rs. 50 lakhs, but definitely above that.]
s.subramanian
(Expert) 20 November 2010
I agree with Mr.Ramachandran.
