CA. Tarun Ghia AHMEDABAD TAX PRACTITIONERS’ ASSOCIATION ISSUES IN PROVISIONS OF SECTIONS 50C AND 56(2) OF THE INCOME TAX ACT, 1961 ON JANUARY 31, 2010  Presentation by :  CA. TARUN GHIA   

CA. Tarun Ghia I. Section 50C : VValidity upheld HHistory and Background CChapter XXA: to X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 : to  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  Simultaneously Chapter XXC made inoperative w.e.f

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 or assessable by stamp duty authorities  “Assessable” inserted w.e.f

CA. Tarun Ghia  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) : AAbolition of Gift Tax Act, 1958 in 1998 DDue to very poor collection under that Act PProposal to include gifts in the Income Tax Act G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 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  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  from non –relatives taxable  Gifts from relatives not taxable ?

CA. Tarun Ghia  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 :  Immovable properties without consideration  or for inadequate consideration  Stamp Valuation exceeding Rs /- or stamp value exceeding stated consideration by Rs.50000/-

CA. Tarun Ghia  Per immovable property  Assessee can dispute stamp valuation  Sec 49(4): When assessee charged to tax u/s. 56(2)(vii) : ref. Property Diff. will be added to cost of acquisition u/s. 48

CA. Tarun Ghia  Property other than immovable property : Shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, any work of art  Taxable in the like manner but w.r.t. fair market value  whole of aggregate value of such property

CA. Tarun Ghia  Method of fair valuation to be prescribed  W.e.f. A.Y interest received on compensation or enhanced compensation ref. Sec. 145A(b)  taxable in year of receipt  Sec 57 : Deduction of 50% of such interest income Thank you :