Simplifying Tax for C.A's and Taxpayers
Provisions of Section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property

Provisions of Section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property

Rationalization with section 43CA of the Income tax act, 1961

 Under the existing provisions contained in Section 50C, in case of transfer of a capital asset being land or building on both, the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty shall be taken as the full value of consideration for the purposes of computation of capital gains. The Income Tax Simplification Committee (Easwar Committee) has in its first report, pointed out that this provision does not provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property and the sale consideration is fixed in such agreement, whereas similar provision exists in section 43CA of the Act i.e. when an immovable property is sold as a stock-in-trade.

As such the provisions of section 50C have been amended so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration.

Further this provision shall apply only in a case where the amount of consideration referred to

therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property.

These amendments are effective from the 1st day of April, 2017 and shall accordingly apply in relation

to assessment year 2017-18 and subsequent years.

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