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Need Help on s. 50C

Started by bhaskar rao, January 06, 2008, 05:16:30 PM

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bhaskar rao


I need help on section 50C of Income Tax Act, 1961.

My client is having plot of land which he agreed to sell to builder as part of development agreement in year 2002. The agreement is propoerly stamped in law and there is no undervalue of any sort.

Now the full amount of consideration was received by client in year 2006 and client has returned same as cap gain after claiming indexation.

Now AO claim that there is undervaluation because as per him stamp duty market rates of year 2006 are much higher than agreed consideration value of 2002-2003. He say that section 50C of Income Tax Act, 1961 is applicable and as per him client is taxable on the basis of market value of 2006 and not as per agreement value of 2002.

I read 50C of Income Tax Act, 1961 and AO seems to be correct on a plain reading. But it does not make sense to say that because there is a delay in the execution of the agreement/receipt of consideration etc, assessee can be charged on amount much higher than what he has received.

Sir, can you pl give your valuable opinion on the topic and oblige.

Please respond urgently.

Yours faithfully,

Bhaskar Rao, ITP. 


The terms of the agreement are to be read to understand the nature of transaction entered into.

When was the possession given? How and when was the consideration received? when was the sale deeds executed?

In your case transfer as per section 2(47)(v) may apply depending the facts of your case. More details are required.