Section 50C

[Pawan Sharma]

Is section 50C applicable to depreciable assets? More specifically, will sale of building being a depreciable asset be covered under section 50 or section 50C?

[Pritesh Jain]

Section 50C can be made applicable to Depreciable assets, as Sec.50C doesnot make any specific exception that its provisions cannot be made applicable to Depreciable assets. Section provides for deeeming fiction according to which if
"the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed 54[or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed 54[or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
deeming fictions created by law have to be interpreted strictly - Is a Rule of Interpretation followed and the same has been upheld and observed in many decisions.

Heading of section50 is as follows:

"45[Special provision for computation of capital gains in case of depreciable assets.
Section provides for a specific mode of computation in case of depreciable assets, it provides for modification of various items that are considered for Computation of Capital Gains. There is no exception in sec.50 that sec.50C will not be applicable to cases where sec.50 would be applicable.

In my view section 50C can be made applicable only when sec.50 is applicable, If no computation of capital Gains (either u/s 50 or under other sections) is made sec.50C can never be made applicable.

[Pritesh Jain]

Under sec. 50 actual sale consideration will be used to find if any capital gain is arising.
Once this test it met, section 50C value for full value of consideration will be substituted and the Capital Gains will increase accordingly.
However, if if there is no requirement of computing Capital Gains u/s 50, the provisions of sec.50C can never be made applicable to such cases.