SURAT BRANCH OF WIRC OF ICAI ISSUES IN PROVISIONS OF SECTIONS 50C AND 56(2) OF THE INCOME TAX ACT, 1961 ON MAY 01, 2010 Presentation by : CA. TARUN GHIA tarunghiaca@yahoo.co.in tarunghiadirtaxes-subscribe@yahoogroups.co.in 9821345687 CA. Tarun Ghia

I. Section 50C : Validity upheld History and Background   Chapter XXA: 15 11 1972 to 30 09 1986 XXA proceedings started after transfer CA. Tarun Ghia

Acquisition of immovable property based on Fair Market Value K. P. Varghese 131 ITR 597 (SC)   XXC : 01 10 1986 to 30 06 2002 Pre-emptive right to purchase by Govt. in notified cities and towns CA. Tarun Ghia

Based on monetary limits of apparent consideration   Limited application and was failing Finance Act, 2002 introduced 50C w.e.f. 01 04 2003 Simultaneously Chapter XXC made inoperative w.e.f. 01 07 2002 CA. Tarun Ghia

Overlapping transactions Extends to entire country except J & K   Transactions in land and building or both Held as capital assets CA. Tarun Ghia

Consideration stated in instrument of transfer vis a vis value adopted and assessed by stamp duty authorities “Assessable” inserted w.e.f. 01 10 2009 CA. Tarun Ghia

Appeal, Revision or Reference before other authority or court Relief Provisions : Appeal, Revision or Reference before other authority or court Claim of lesser Fair Valuation before AO “May” refer to Departmental Valuation Officer   Valuation Proceedings Valuation Report CA. Tarun Ghia

Value determined: Higher/ Lower   Valuation Report received after completion of assessment Coverage of term “land or building or both” : Flats, shops, galas and other such units CA. Tarun Ghia

Units in co-operative hsg. society or other such organisations Development rights   Tenancy rights Booking right in a unit CA. Tarun Ghia

For Builders and developers   Stamp duty paid by Purchaser : Locus of Vendor Can sec. 50C be applied to purchaser ? Effect on exemption provisions Section 50C vis a vis sections : 45(2), 45(3), 45(4), 50, 50B CA. Tarun Ghia

II. Section 56(2) : Abolition of Gift Tax Act, 1958 in 1998   Due to very poor collection under that Act Proposal to include gifts in the Income Tax Act Gifts in the hands of donee CA. Tarun Ghia

Continuing exemption to gifts from Non residents Proposal was not enacted   Gifts became tax free Introduced by Finance (No.2) Act, 2004 By insertion of clause (v) in section 56 (2) and (xiii) in 2(24) CA. Tarun Ghia

Limit per donor Rs.25000 per previous year   No provision about aggregation of such gifts Taxation Amendment Act, 2006 inserted clause (vi) for aggregation Gifts received on or after 01 04 2006 CA. Tarun Ghia

if aggregate in a previous year exceeds Rs.50000/- then such gifts are income Position prior to Finance (No.2) Act, 2009:   Receipts without consideration by Individual or HUF CA. Tarun Ghia

Can a company receive gift ? Sum of money : connotation   Sum of money : connotation from non –relatives taxable Gifts from relatives not taxable ? CA. Tarun Ghia

On occasion of marriage Under a will or by inheritance Exceptions: From relatives On occasion of marriage Under a will or by inheritance In contemplation of death of payer From local authority ref sec 10(20) Institution etc. registered u/s. 10(23C) CA. Tarun Ghia

Trust or institution registered u/s. 12AA Relatives of an individual : Spouse, brother, sister, brother or sister of the spouse, brother or sister of either of the parents, lineal ascendants or descendants, lineal ascendants or descendants of the spouse, spouse of any such specified relative. CA. Tarun Ghia

Substantial amendments w.e.f. 01 10 2009: Immovable properties without consideration or for inadequate consideration (Proposed to be deleted by Finance Bill, 2010) Stamp Valuation exceeding Rs. 50000/- or stamp value exceeding stated consideration by Rs.50000/- CA. Tarun Ghia

Per immovable property Assessee can dispute stamp valuation   Assessee can dispute stamp valuation Sec 49(4): Enhanced cost of acquisition CA. Tarun Ghia

Property other than immovable property : Shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, any work of art   (Proposed addition of “bullion” w.e.f. 01 06 2010 by Finance Bill, 2010 ) Taxable in the like manner but w.r.t. fair market value whole of aggregate value of such property CA. Tarun Ghia

Thank you : CA. TARUN GHIA Method of fair valuation prescribed Thank you : CA. TARUN GHIA tarunghiaca@yahoo.co.in tarunghiadirtaxes-subscribe@yahoogroups.co.in CA. Tarun Ghia