1. 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
CA. Tarun Ghia

2. I. Section 50C : Validity upheld History and Background
Chapter XXA: to
XXA proceedings started after transfer
CA. Tarun Ghia

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

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

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

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

7. 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

8. 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

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

10. 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

11. 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

12. 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

13. 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
CA. Tarun Ghia

14. 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

15. 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

16. 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

17. 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

18. 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 /-
or stamp value exceeding stated
consideration by Rs.50000/-
CA. Tarun Ghia

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

20. 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 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

21. Thank you : CA. TARUN GHIA
Method of fair valuation prescribed
Thank you : CA. TARUN GHIA
CA. Tarun Ghia