Market price of property 1.5 crores
Circle price of property 4 crores
Now, need to understand if there is any way out/ law/ provision by which we can claim exemption or contest before the AO that difference between Circle price and Market price should not be treated as Income in the ITR. Else difference of 2.5 crores will be charged as notional income and taxed heavily without any real income. This factor is really denting the transaction and due to this we are stuck while buying the property. Kindly suggest and provide relevant act references so that we may go through the property transaction without any hiccups of paying income tax on notional income.
As per sec 50 C on income tax act, if property sold below circle rate. then it would be deemed that property is sold at circle rate abs tax would be calculated accordin.
however, if taxpayer claim before AO that FMV property price are actually lower than circle rate then AO may refer it to valuation officer for calculating the actual price.
in this case Valuation officer can't increase but only decrease the price.
CAclubindia
