Sectin 50 C.pptVIP

SECTION - 50 C Rajiv K. Doshi B. Com, LL. B., F. C.A., D.I.S.A. Section 50 C Introduction Section 50C has been inserted by the Finance Act, 2002 with effect from 1st April, 2003. Provision when construed literally and applied to cases in which value of transfer is honestly or truly stated/declared as per contractual but which is lower than the value assessed or adopted by the stamp valuation authority, would produce absurd and irrational picture because the assessee would be required to pay capital gain tax on the amount which he had not contracted and which has not accrued or received by him as profit or gain. In Circular No.8 of 2002 dated 27th August, 2002 [(2002) 178 CTR (St) 9] the provision of section 50C as enacted has been explained. Prior to Amendment. Section 50C is applicable wef :01.04.03, ie A.Y.03-04. The law applicable on the date of transfer of capital asset should be taken into consideration. Nevillede Noranha 115TTJ (Kol) 390. Up to AY 02-03, in the sale of land or building or both, the value declared in the transfer (sale) deed was taken as the full value of consideration for computing capital gains. [CIT v. Smt. Nilofer I. Singh, 221 CTR 277 (Del.)] Applicability Section 50C is applicable if the following conditions are satisfied – Condition 1There is a transfer of land or building or both. The assets may be long-term capital asset or short term capital asset. It may be depreciable or non-depreciable asset. Condition 2The sale consideration is less then value adopted (or assessed) by any authority of a State Government for the purpose of payment of stamp duty (hereinafter referred to as “Stamp duty Authority”) in respect of such transfer. Inderlok Hotels Pvt. Ltd. v. ITO, Circle 5(2)(1) Navneet Kumar Thakkar v. ITO [2007] 112 TTJ (Jodh.) 76. CONSEQUENCES IF THE ABOVE CONDITION ARE SATISFIED Example X owns a piece of land situated in Shapar (date of acquisition: March 1, 1983, cost of acquisition: Rs.19291, value adopted by Stamp du