ITAT issues guidelines for stay of demand.
Started by JB, August 31, 2012, 07:26:41 PM
QuoteThe profits or gains arising from the transfer of a capital asset by a person to a firm or other association of persons or body of individuals (not being a company or a co-operative society) in which he is or becomes a partner or member, by way of capital contribution or otherwise, shall be chargeable to tax as his income of the previous year in which such transfer takes place and, for the purposes of section 48, the amount recorded in the books of account of the firm, association or body as the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset.
Quote50C. (1) Where 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 11[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 11[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.
QuoteSection 45(3) is a general provision and section 50C is a special provision which would override section 45(3) if the sale deed is sought to be registered by paying stamp duty. But where such registration does not takes place by paying stamp duty that case would only be covered under section 45(3) and therefore, value recorded by the firm in its books would only be the full value of consideration for the purposes of computing capital gains
QuoteSection 45(3) is a deeming fiction and it treats a particular type of transaction as transfer and the capital gains is directed to be charged by treating book entry in the books of the firm as sale consideration, being the value of the asset transferred from individual partner to the firm without getting it registered under Registration Act.....20. It clearly creates a fiction by deeming the value of a capital asset recorded in the books of the firm being a transfer by the individual partner/member to the firm/AOP by way of capital contribution or otherwise as full value of consideration received or accruing as a result of the transfer."