Whether Sec 50C is applibale if Land or Building transferred is Stock in Trade of Assesse?
12 Replies
laxman suthar
(Asst. Manager Taxtation )
(329 Points)
Replied 11 December 2009
if land & building held as stock in trade than on the transfer of such stoce should be business income so there is no capital gain hence 50c not applicable
Jatin Gupta
(Article)
(38 Points)
Replied 11 December 2009
So that means for Property Dealers Sec 50C is not applicable because they held Land & Building as Stock in Trade
FATEMA
(CHARTERED ACCOUNTANT)
(719 Points)
Replied 11 December 2009
No jatin,It is not that section 50C is not applicable to property dealers.
Property dealers may hold land and building for their own purposes as an investment.For the land and building held as investment sec 50C may apply even to property dealers
Jatin Gupta
(Article)
(38 Points)
Replied 11 December 2009
but suppsose for a Real Estate Company, for them the Land Building is Stock in Trade so for them is sec 50C applicable
FATEMA
(CHARTERED ACCOUNTANT)
(719 Points)
Replied 11 December 2009
No,it will not be applicable if land and building is held as stock in trade.
FATEMA
(CHARTERED ACCOUNTANT)
(719 Points)
Replied 11 December 2009
Jatin
The simple rule is that section 50C is applicable only to that assets which is not held in view of earning business or revenue profits.
Stock in trade is held to earn revenue profits whereas land & building as an investment will ear you capital profits and the time of sale.
Jatin Gupta
(Article)
(38 Points)
Replied 11 December 2009
could you please refer me any case in this regard
FATEMA
(CHARTERED ACCOUNTANT)
(719 Points)
Replied 11 December 2009
Jatin,
I could not find a case law but i found a link to the lawyer's clubindia-experts.See if it helps you.
https://www.lawyersclubindia.com/experts/experts_message_display.asp?group_id=50451
NARENDER PAWAR
(CA final Student)
(337 Points)
Replied 11 December 2009
Section 50C is applicable when we transfered land & building, but if land & building ia as a stock than in that case there is no transfer & no capital gain computed, but if land & buildin as a stock & there should any income in that case income is taxable under tha head "income from bussinss & profession"
Reetika Goel
(Qualified Chartered Accountant)
(565 Points)
Replied 21 December 2009
Dear Jatin,
Sec. 50C is applicable only if two conditions are satisfied:
- Transfer of Land or Building or land appurtenant to a building.
- Land or Building or Land appurtenant to Building is held as Capital Asset.
If above two conditions are satisfied only then Section 50C shall apply.
Further, this section says that for valuation purpose, if the assessee has disclosed a value below than the value adopted by Stamp Valuation Authority, then value of Stamp Valuation Authority shall be considered.
All possible combinations are given below:
Declared Value < Stamp Valuation Authority Value (SVA) ; then Value of SVA
Declared Value > Stamp Valuation Authority Value (SVA) ; then Declared Value
Stamp Valuation Authority Value > Valuation Officer Value ; Valuation Officer Value
Stamp Valuation Authority Value < Valuation Officer Value ; Stamp Valuation Authority Value
Hope you got the insight of section and now there won't be any problem...
Bharat Khurana
(Student)
(153 Points)
Replied 05 January 2010
50c is applicable if land & building is held as capital assets. if it is held as stock in trade then on sale of land or building the income shall be taxable under the head of p/g/b/p
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