Section 50C of Income-Tax Act, 1961

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Section 50C of Income-Tax Act, 1961 deals with Special provision for full value of consideration in certain cases of depreciable assets.

Contents

From the Act

(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 [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 [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.

(2) Without prejudice to the provisions of sub-section (1), where—

(a) the assessee claims before any Assessing Officer that the value adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;

(b) the value so adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court,

the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.

Explanation 1.—For the purposes of this section, “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).

Explanation 2.—For the purposes of this section, the expression “assessable” means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.

(3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed 93 [or assessable] by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed 93 [or assessable] by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.]

Recent Cases / Related Cases / Case Laws

  • December 2011: [2011] 16 LNIN 357 (Jaipur - Trib.): Where entire amount of sale consideration has been invested in specified bonds, capital gain would be exempt under section 54F and provisions of section 50C would not be applicable
  • Provision of section 50C is applicable to transfer of depreciable capital assets covered by section 50
    • There is no exclusion of applicability of one fiction in a case where other fiction is applicable; as a matter of fact, there is no conflict between these two legal fictions which operate in different fields and their application in a given case simultaneously does not result in imposition of supposition on other supposition of law [Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases]
      • There are two deeming fictions created in section 50 and section 50C; the first deeming fiction modifies the term ‘cost of acquisition’ used in section 48 for the purpose of computing the capital gains arising from transfer of depreciable assets whereas the deeming fiction created in section 50C modifies the term "full value of the consideration received or accruing as a result of transfer of the capital asset" used in section 48 for the purpose of computing the capital gains arising from the transfer of capital asset being land or building or both; the deeming fiction created in section 50C thus operates in a specific field which is different from the field in which section 50 is applicable - [2011] 10-320 (Mum. - ITAT)(SB)
  • K.R. Palanisamy v. Union of India [2008] 306 ITR 61 (Mad.): Section 50C is constitutionally valid - Section 50C is validly enacted and not hit by legislative incompetence of Central legislature. The provision of section 50C cannot be said to be arbitrary because of adoption of guidelines value and violative of article 14 and principles of natural justice on the ground that no opportunity is given. Complete fullproof safeguard has been given to the assessee to establish before the authorities concerned the real value. Thus, what is stated in section 50C as a real value cannot be regarded as a notional or artificial value and such real value is determinable only after hearing the assessee as per the statutory provisions. There is no indication either in the provisions of section 50C of the Income-tax Act or section 47A of the Stamp Act or Rules made thereunder about the adoption of the guideline value. Hence, the contention that section 50C is arbitrary and violative of article 14 cannot be accepted. Incidentally, there is also no merit in the contention that the capital assets, and trading assets/stock-in-trade are one and the same and section 50C applies only to capital assets and is not applicable to trading assets or stock-in-trade and thereby the provision is discrimina­tory in nature. The capital assets and trading assets/stock-in-trade are treated differently under the scheme of the Act. They cannot be compared on par with each other by considering them as a class of assets. The discrimination on the ground of valid classification which answers the test of intelligible differentia does not attract wrath of article 14

Related Sections from the Act

Sections of the Indian Income Tax Act, 1961


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