Section 50C - Applicability to Confirming Party

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Ravindra Manek (Querist)
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18 July 2011 Dear all,

Kindly give your valuable opinion under following situation-

Mr. S is owner of a plot.

He has entered into a sale agreement (without possession) with Mr. C, assessee for sale of his plot. However no registered sale deed is executed for it.

Before executing any sale deed, property is sold to Mr. P (under the direction of assessee, Mr. C) in which Mr. C, assessee has agreed as confirming party for giving up his rights.

Now, under this situation, can provisions of section 50C be made applicable to Mr. C who has only acted as confirming party?

As per my understanding same cannot be invoked as assessee has never assumed ownership of said property and hence he can never transfer it.

It is the actual owner Mr. S, against whom only Section 50C can be applied.

Any case law / circular will be of great help.

Please note that matter is of Financial Year 2008-09 and hence amendment made u/s. 50C has no applicability to it (However, I think, same can be taken as plea for its non application).

Waiting for an early reply.

Thanks in advance.

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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19 July 2011 WHAT C HAS GIVEN UP IS HIS RIGHT TO SPECIFIC PERFORMANCE OF THE CONTRACT
HE HAS NOT TRANSFERREED ANY LAND/BUILDING
RIGHT TO SPECIFIC PERFORMANCE IS A CPITAL ASSET BUT SECTION 50C IS NOT APPLICABLE TO IT
IN CIT v. Tata Services Ltd. (1980) 122 ITR 594 (Bom) IT WAS HELD that since a contract for sale of immovable property is capable of specific performance, a right thereunder to obtain conveyance of an immovable property is clearly a property and, therefore, ‘capital asset’ within the meaning of section 2(14).

CA MANOJ GUPTA
JODHPUR
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