Income tax notice
Anurag Kumar
(Querist) 20 February 2014
This query is : Resolved
I have sold some property in 2010 to tenants who had been there for nearly 40 years. the property was sold at much less than circle rate because it was a distress sale. I was very ill and I needed money. now four years later i have received query from income tax department. they will now ask for enhanced tax according to circle rate though property was sold for much less. what to do?
R.V.RAO
(Expert) 21 February 2014
the Assessing Officer was justified in treating the value adopted by registration authorities as the deemed sale consideration received by the assessee as a result of the transfer.(SEC50(C)
CASE LAW RELEVANT: the judgement of the Madras High Court in the case of Ambattur Clothing Company Ltd VS. ACIT(326 ITR 245).
assessee CAN avail of the opportunity provided under sub sec 2 and 3 of section 50C to object to the value adopted by the stamp valuation authorities,
Anirudh
(Expert) 21 February 2014
Dear Mr. Anurag Kumar,
You have lost your chance.
In fact, if you have sold the property at a value less than the market value (stamp duty value), you could have disputed the stamp duty value. In such a circumstance, the Stamp duty authority would have referred the matter to Valuation officer and then decided the stamp duty value.
Now, having accepted the stamp duty value, you have no other go than to pay capital gains tax on that basis.
Guest
(Expert) 21 February 2014
Consult your Auditor and Mere income or money raised from sale of property alone would not attract tax if you have sufficient Expenses Or Debts equivalent or more than money received.Consult your Auditor and Plan Accordingly
Anirudh
(Expert) 21 February 2014
Dear Mr. Anurag Kumar,
The Capital Gains is a separate head of income and is computable only with reference to the Sale Proceeds less Indexed Cost of Acquisition. Therefore, any other expense, debt etc., have no relevance whatsoever.
Guest
(Expert) 21 February 2014
Consult Your Auditor First
Vineet
(Expert) 21 February 2014
You have option to dispute the stamp duty valuation before Assessing Officer by putting full facts of the case and valuation done by an independant valuer. The AO may refer such case to departmental valuer and determine the actual value. You still have chance to dispute the same in appeal.
T. Kalaiselvan, Advocate
(Expert) 22 February 2014
I go by the opinion given by expert Mr.Vineet on the subject issue, the author may follow this suggestion to dispute the stamp duty valuation before the Assessing officer.
Anirudh
(Expert) 22 February 2014
One has to object to the very stamp duty valuation at the time of Registration and wait for its outcome.
Instead, if anybody has paid the stamp duty, based on the stamp duty valuation, then no appeal/agitation/objection lies thereafter.
Vineet
(Expert) 22 February 2014
Dear Mr Anirudh, Please refer to provisions of Income Tax rather than insisting on a wrong notion. There are inbuilt provisions in section 50C to safeguard taxpayers interest in the case of high pitch guidance values.
Anirudh
(Expert) 22 February 2014
Dear Mr. Vineet,
I know Section 50C has only three sub-sections.
Please indicate which exact provision you rely upon to say that one can agitate the stamp duty valuation after registration?
Anirudh
(Expert) 23 February 2014
Dear Mr. Vineet,
Can you clarify as to which exact provision you rely upon to say that one can agitate the stamp duty valuation even after registration?
Anirudh
(Expert) 24 February 2014
Dear Mr. Vineet,
Can you please clarify.
Anirudh
(Expert) 02 March 2014
It is more than 8 days and Mr. Vineet is not clarifying. I think Mr. Vineet is not able to substantiate his view on this issue. I am of the strong view, the views expressed by Mr. Vineet cannot be backed by legal provisions.
Now it will be clear as to who was suggesting things/giving views on a wrong notion.
Guest
(Expert) 02 March 2014
@Author Does the Query Still Exists
Guest
(Expert) 02 March 2014
@ Authors Even In Courts Ex Parte Orders Would be Set Aside
Guest
(Expert) 02 March 2014
@Authors Court would Condone the Delay even after long time with justifiable reasons
Anirudh
(Expert) 03 March 2014
Dear Querist,
I pity you, for persons with no domain knowledge at all masquerade!
Neither you nor I can help it, so long as the LCI Admin is a passive onlooker!
Guest
(Expert) 03 March 2014
Dear Author,In your Issue the Chartered Accountants would be the Right people to guide you perfectly if necessary you could take second opinion from a CA or CA Club apart from your Auditors.
Anurag Kumar
(Querist) 03 March 2014
Thanks all! I have filed reply with help of my CA. Keeping fingers crossed now!
Guest
(Expert) 03 March 2014
You are Welcome
Vineet
(Expert) 03 March 2014
Anirudh Ji, I thought it was a simple matter which is obvious and did not revisit this query. However, considering lot of sudden activity as visible due to series of emails.
Well reproducing section 50C(2)of Act below:
(2) Without prejudice to the provisions of sub-section (1), where—
(a) the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;
(b) the value so adopted or assessed by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court,
the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.
So now I hope it is clear, that assessee can very well dispute the value adopted by stamp duty authorities for the purposes of capital gains. In fact, this saving provision does not apply if the person has challenged the stamp duty valuation before any appellate authority or court (under Stamp Act. So if somebody challenges the stamp duty valuation before registrar, his higher authorities and court, probably he will continue to fight and section 50C(2) will not come to his rescue.
So wish Anirudhji, you could have just referred to plain language of Act than keeping on writing and doubting domain knowledge of contributors who come here to help people.
Guest
(Expert) 03 March 2014
@ Author Now the Delay is condoned and Ex Parte Orders would be Set Aside
Vineet
(Expert) 03 March 2014
Ha Ha, Narsimha Ji...like your sense of humour. you have saved me from falling into deep professional distress after being declared as useless masquerade!!
Dear author, please advise your CA to contest the matter u/s 50C(2) and 50C(3) of Act. You will certainly get justice.
Guest
(Expert) 04 March 2014
@The actual people with no domain knowledge at all Masquerade ! who blamed others now vanished
Anirudh
(Expert) 04 March 2014
Dear Mr. Vineet,
First and foremost let me clarify as regards "Masquarade". It was certainly not meant to for you. This was meant for persons who repeatedly directed the querist to consult the Auditor/CAs and then suggesting that delay would be condoned by Courts - little realising that the assessee has to travel not less than 2 stages before approaching any Court.
Now coming back to your views: What is provided for under Sec.50C(2) was when the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;.
You will appreciate that fair market value and actual consideration received are two different things altogether. The VO would only value the property based on the year of construction, locality, various sale instances etc. Ofcourse he will take into consideration any impairment like defective title etc., but certainly not any
The querist is not contesting the fair market price. Rather he was telling that he made a distress sale for a less consideration.
Now, please tell me whether Sec. 50C(2) will come to his help before the AO.
You will also appreciate the above does not flow from the plain language of the Section. I have no hesitation in updating myself. That's why I said that I know the provisions of Sec. 50C, and wanted to know from you which specific provision that you are relying upon.
Now to the also Rans: Vanishing is not in my DNA. Nor is it my forte to piggy ride on other's knowledge. If I had domain knowledge, I would not have asked anybody to consult somebody else like consult your Auditor etc.
Guest
(Expert) 04 March 2014
The people with out knowing the exact Answers and misleading and misguiding the querist and wasting his time is the real masquerade IN THIS QUERY ONLY A CA COULD GIVE PERFECT ANSWER THAN ADVOCATE WHICH WAS EVEN ACKNOWLEDGED BY QUERIST> I know Hippocrates would never understand
Vineet
(Expert) 04 March 2014
Anirudhji,
You have been insisting that once stamp duty valuation has been accepted, there is no relief available to querist. Now atleast you accept that there is scope to restrict the sale consideration to fair market value for purposes of capital gains and stamp duty valuation is not the final word.
If you kindly see query, he has sold property below Circle Rate AND NOT fair market value under distress because the property is tenanted. Tenanted property being one of the biggest defect in title bring down fair valuation substantially. I have never stated anything about actual consideration received which may or may not be lower than fair market value. So that is left to the facts of the case. Here limited point of reply was whether querist has any chance to reduce his tax liability in view of high pitched stamp valuation due to circle rate without considering defective title. Here section 50C(2) only and I say ONLY comes to his rescue which you were simply overlooking.
So I leave it there. Will not post anything else. As I do not find regular time, I do not frequent this site which you may have privilege of. Hence, my kind request is please do not keep on challenging people and then pass verdict on their domain knowledge.
You are doing a good job helping people. I appreciate your knowledge but one should be humble to accept mistake. Acceptance of mistake enhances the stature and does not demean it.
Guest
(Expert) 04 March 2014
@ Mr.Anirudh Why should you and Who are you to Judge Other Experts
