Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
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FEROZ PALITANAWALA (PROPRIETOR)     19 September 2016

Section 56(2)(vii)

I am a resident Individual and have booked a residential flat in Mumbai on 15-09-2009, which  now it seems to attracts applicability of section 56(2)(vii) for which I have following queries stated hereunder :-
(1) Section 56(2)(vii) is applicable from 01-09-2009  or  01-04-14 ?
(2) According  to  Letter  of  Allotment dt. 15-09-2009, the difference of booked value to Ready Reckoner Value of 2009 is Rs. 5.50 Lacs.
(3) Shall I file revised return of AY 2010-11 or 2014-15 ?
(4) Accordingly, shall I add above difference amount of Rs 5.50 lacs in Income from Other Sources and pay tax at normal rates or at highest rate emulated at 30% ?
(5) Shall I have to add interests till-date @ 1.25% per month from booking date of 15-09-2009  or  date of S-56(2)(vii) from 31-03-2014 ?   



Learning

 2 Replies

Ms.Usha Kapoor (CEO)     20 September 2016

Dear Client,                   

              Before answering your query I 'd liketo know some informationfrom you. How didyou acquire the flat? was i by way ofgift deed registered. Was the value of the considertiuon was less than its stmp duty value? If you clear THESE DOUBT I'd  BETTER ABLE TO APPRECIATE YOUR .CASE AND GIVE YOU CORRECT REPLY..1)Your liability startsfrom 1/04/22014 , th epreviou s year..

LET Us BRIEFLY GO THROUGH THE  PROVISIONS OF SECTION 56(2)(VII) OF it aCT 1961:

Finance Act, 2013 has substituted clause (b) of section 56(2)(vii) w.e.f. 1.4.2014 providing, inter alia, that where an individual or Hindu Undivided Family receives, in any previous year, from any person or persons any immovable property-

(i) Without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) For a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration

2)2) According  to  Letter  of  Allotment dt. 15-09-2009, the difference of booked value to Ready Reckoner Value of 2009 is Rs. 5.50 Lacs.

3)You pay revised rates of IT  from 2014-15

4)You add above difference of Rs.5.5 lacs and pay tax at ordinary RATES.

5)YOU ADD INTEEST TILL DATE AT NORMAL RATE OF 1.25% IFROM BOOKING DATE INSTEAD OF EENHANCED RATE.because already you pid tax on actual stamp duty value hich is more than slae consideration, Please read this discusion in thisconnecion.

.

It means that in case the buyer of the property has acquired the property as capital asset, the legislature has prescribed the provision for cost step-up available to the buyer/ transferee for the purpose of calculating capital gain at a later date when such property is sold / transferred by such person. Provision such as sub-section (4) to section 49 would mean that cost step-up shall be available to the person only for the purpose of calculating capital gain when such property is transferred at a later date as capital asset. Since provision of section 49(4) cannot be extended to section 32, assessee cannot account for such asset at higher value in the books of accounts and cannot claim depreciation on the enhanced value of the asset.

balas (Chartered)     27 October 2016

Hello Mr. Feroz,

W.r.t to your query, I would first advice to have further expert opinion.  My views/ opinion given the details are :

a. The word 'receives' is not defined in the I. Tax Act. (to my limited knowledge). The act states 'where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,'

b. In your case you have booked the flat on '15-09-2009'. Although you have stated it is booked which does not equate to mean 'receives', but I would contest to state that there is a contractual commitment coming into force on 15/09/2009 with penalty applicable were you to rescind the contract. Hence receving the flat or registration and receipt of flat after oct 2009 is only an extension activity of the contractual agreement to complete the process.

c. In furtherance to 'b' above, I would opine that  you may not be attracted by Sec 56(2)(vii)(b) and can challenge the AO claims. Caveat, you need to  prepared for legal battle as the revenue will defnitely contest your claim.

d. Apart from above, to answer your query point wise, below :

1.  Applicable from 1st Oct 2009.

3. Revised return to be filed for AY 10-11, if you wish to revise.

4. Pay Inc. Tax at normal slab rates

5. I am bit confused by second part of your query, hence I am not answering the query.

 

I would request you to kindly take a second opinion as my view can defnitely be challenged.

Thnx

Balaji Srini

 

 


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