Section 50C vs 56(2)(x)

This query is : Resolved

P.Madhivadhanan (Querist)
Follow

01 January 2025 An assessessee who purchased a property for Rs.1crore whereas as per stamp value is Rs.1.50 crores. The assessee deducted TDS u/s 194IA on 150000 stamp value and paid the 9850000 to the seller by way of cheque. As per income tax act 50C Will attract to the seller. Suppose, if seller paid the capital gain tax on the basis of sale consideration as stamp value even then 56(2)(x) attracts to purchaser.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

01 January 2025 Yes. Section 56(2)(x) of the Income-tax Act, 1961, deals with the taxation of income from other sources. It states that if a property is purchased for a consideration less than its stamp duty value, the difference between the two will be taxed as income from other sources in the hands of the purchaser. So, Section 56(2)(x) attracts to the purchaser, and the difference of Rs. 50 lakhs will be taxed as income from other sources.

Message likes : 1 times

P.Madhivadhanan

P.Madhivadhanan (Querist)
Follow

02 January 2025 Suppose if it is taxed in the hands of seller u/s 50C, then Buyer also have to declare income u/s 56(2)(x)?. If it so , same income doubly taxed in the hands of both buyer as well as seller. clarify?

Upgrade to CAclubindia Pro. Subscribe Now!

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

02 January 2025 That is partly true, because if the transaction had been at circle rate seller would have paid capital gain as per same rate as amount u/s. 50C. But buyer is penalized as he gets property at lower rate then circle rate, so to restrict the transactions through unaccounted money, the penalty is levied through sec, 56(2)(x) over the purchaser. Had buyer paid full amount as per circle rate he would have paid tax over the unaccounted money earlier (to bring it in the books) so over all there is no loss to buyer, and Government recovers the loss through such levy.

P.Madhivadhanan

P.Madhivadhanan (Querist)
Follow

02 January 2025 The property is near Burial ground. It will fetch rate as per amount transacted in between buyer and seller. Then, what evidence in support of value to be produced, if there is demand raised by the department and if we appealed against?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

02 January 2025 Get Valuation certificate from registered valuer in support of your claim.