Mazars Tax Update | Edition 14.20

Section 50C of the Income-tax Act was inserted by the Finance Act 2002 w.e.f. 01/04/2003 to make special provision for determining the full value of consideration in cases of transfer of immovable property.

Section 50C creates a deeming fiction and in cases where the sale consideration on immovable property is below the stamp duty value assessable or assessed by any authority of a State Government, then stamp duty value would be deemed as the full value of sales consideration.

However, we have come across several cases where taxpayers have to sell an immovable property at a value below the stamp duty, due to various factors like distress sales, market slump, and location disadvantage etc.

Further, over the past several years, there have been a number of judicial pronouncements clarifying the various issues in Section 50C, like the interpretation of deeming provisions, the applicability of Sec 50C on unregistered properties, stock in trade, rights, depreciable assets etc.

In the enclosed article, we have critically analyzed such possible scenarios and studied the legal remedies available to the taxpayer in light of Judgments of the Supreme Court, High Courts, and Tribunals.