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August 2024

Applicability of Section 50c to Rights in Land

By Pradip Kapasi | Gautam Nayak | Bhadresh Doshi, Chartered Accountants
Reading Time 21 mins

ISSUE FOR CONSIDERATION

Section 50C of the Income Tax Act, 1961 provides for substitution of the actual consideration by the stamp duty valuation on the transfer of a capital asset, being land or building, if the consideration is less than the stamp duty valuation, for purposes of computing capital gain under section 48. In other words, the full value of consideration, in such cases, shall be deemed to be the value adopted for the purpose of levy of stamp duty. Section 50C reads as follows:

“Where the consideration accruing as a result of transfer of the capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereinafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of consideration received or accruing as a result of such transfer.”

The issue has arisen before the Courts as to whether this deeming fiction of s. 50C applies to a case of transfer of leasehold or other rights in

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