Full Value Consideration when Stamp Value Exceeds Sale Price
Where the consideration for transfer of land or building or both, is less than the value adopted or assessed or assessable by Stamp Valuation Authority for payment of stamp duty, the value so adopted or assessed or assessable by stamp valuation authority shall be deemed to be the full value of consideration for the purpose of Section 48.
Section 50C applies to:
- consideration received or accruing as a result of transfer of land or building or both: and
- every transfer of land or building or both, whether registered with Stamp Valuation Authority or executed through agreement to sell or by way of power of attorney.
The Value to be adopted for Section 50C is as follows:
|S.No||Situation||Value to be adopted for Section 50C|
|1||In a case where the property is registered for stamp duty value upon transfer||The assessed value adopted for stamp duty valuation shall be the full value of consideration u/s 50C.|
|2||In a case where transfer is made through agreement of Sale of power of attorney without registration.||The assessable value adopted for Stamp Duty Valuation shall be the full value of consideration u/s 50c.|
Reference to Valuation Officer
The Assessing Officer may refer valuation thereof to Valuation Officer if :-
- the assessee claims that the stamp duty value exceeds the fair market value of the property as on the date of transfer, and
- such reference shall be made only if the stamp duty value has not been disputed in any appeal or revision before any authority pr Court of the High Court.
Valuation by Valuation Officer
In case reference is made to Valuation Officer, the full value of consideration shall be lower of:-
- Value as determined by the Valuation Officer; or
- Value assessed or adopted or assessable by the Stamp Valuation Authority.
Meaning of Word “Assessable”: Assessable means the price which the stamp valuation authority would have adopted or assessed, if it were referred to such authority for the purpose of payment of stamp duty.
Effect of “Assessable”: Even if the sale deed of the property does not get registered with the stamp valuation authority and no actual value has been assessed for the purpose of payment of stamp duty, the stamp value under this section shall be the value that would have been assessed by the stamp valuation authority.
Subsequent to the making of assessment in a case bu adopting the stamp duty value as the full value of consideration, if such value is revised in any appeal or revision etc., the Assessing Officer shall amend the order of assessment to recompute the capital gain on the basis of the revised value- Section 155(15).
Impact of Section 50C:
If sale consideration is Rs. 50 lakhs and guideline value for stamp duty purpose if Rs. 45 lakhs, then Rs. 50 lakhs shall be the basis for computation of capital gains and section 50C shall not apply. If guideline value is Rs. 75 lakhs, then Rs. 75 Lakhs shll be adopted as the consideration for computation of capital gain. In this case, if no appeal is made for reviewing guideline value, assessee can request officer to refer the matter to valuation officer. If valuation officer determines the value at Rs 85 lakhs, still Rs. 75 lakhs shall be adopted as the consideration and the value adopted by valuation officer shall be ignored. If valuation officer determines the value at Rs. 55 lakhs, then Rs. 55 lakhs shall be adopted instead of the guideline value of Rs. 75 lakhs. If valuation officer determines the value at Rs. 45 lakhs, the same shall be ignored and the actual consideration of Rs. 50 lakhs shall be adopted as the basis of computation.
In case, the guideline value is appealed against, the assessee cannot request for reference to valuation officer, Therefore, the assessing officer shall adopt Rs. 75 lakhs as the consideration. However, if the guideline value is later revised to Rs. 60 lakhs, the capital gains shall be recomputed on the basis of Rs. 60 lakhs instead of Rs. 75 lakhs.
Related Case Law:
Section 50C does not applies in computation of Business Income: CIT v. Thiruvengadam Investments Pvt. Ltd. (2010) 320 ITR 345 (Mad.)
Where any immovable property is held as stock-in-trade, the same would not be a “capital asset”. Any gain arising therefrom shall be “business income” and n computation of such business income, only the actual sale price shall be considered; section 50C cannot be applied in computing business income. Section 50C applies in respect of transfer of immovable property being a “capital asset”.