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income tax on dif in cost of flat and circle rate

15 September 2009

my sone is NRI living abroad he has taken a flat of which final instalment has been paid in Aygust but registry has yet not been made.Builder says if registry is not done immediately an ammendment is coming in income tax by which difference between the sale cost of flat and circle rate at which registry is be done will be added to his income.He is unable to come immediately.He filing I.T return but his income in India is not in taxable limit.

Please advise the facts and he can save him self from this notional income.

It is urgent Thanks

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3 Replies

Sudip Adhikary (Accountant) (19 Points)
Replied 15 September 2009

Sir,

What the builder said is to you is correct. I advised you to please go through the following para. I copy this para from Income Tax website.

Section 56 : [(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property,

(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consi-deration;

(i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

(ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration :

Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections :

Provided further that this clause shall not apply to any sum of money or any property received

(a) from any relative; or

(b) on the occasion of the marriage of the individual; or

(d) in contemplation of death of the payer or donor, as the case may be; or

(e) from any local authority as defined in the Explanation to clause (20) of section 10; or

(f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

(g) from any trust or institution registered under section 12AA.

Explanation.For the purposes of this clause,

(a) assessable shall have the meaning assigned to it in the Explanation 2 to sub-section (2) of section 50C;

(b) fair market value of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed;

(d) property means

(i) immovable property being land or building or both;

(ii) shares and securities;

(iii) jewellery;

(iv) archaeological collections;

(v) drawings;

(vi) paintings;

(vii) sculptures; or

(viii) any work of art;

(e) relative shall have the meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of this section;

(f) stamp duty value means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.]

I think your purpose will be sloved. You can feel free to reply for any other query at " sudip.adhikary @ icteas.com "

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Prateek (M.Com. CWA- Final) (237 Points)
Replied 12 November 2009

Sunil (Trader) (2611 Points)
Replied 12 November 2009

Do not worry about the registry. You have 120 days time for presentation for registration of the executed documents from the date of execution. This is if you have indeed signed agreement with builder before 1/10/2009 on stamp paper at least of agreement value. Even if you have done the sgreement to sell on Rs.100 stamp paper, you can present it now for registration and pay the difference in stamp duty + interest and penalty that cannot exceed twice the stamp duty. The valuation of the property will be as of January 2009 Stamp Duty Reckoner less deductions as applicable for all agreements for transfer (conveyanceof property or assignment of lease). Therefore if you have purchased the flat and paid fullconsideration before 1/10/2009 it does not matter registration being done late.

What many people did was get the value adjudicated before 1/10 and purchase appropriate stamp before 1/10. Sign the deed dated before 1/10 and present it for registration within 120 days or the law of the state. They would want sellers to come as sellers PAN, Thumb impression and image on web cam is required on the document. Builder would send a person with his power of attorney registered before with the same registrar. You go to a property lawyer who is active at the registrars office and conversant with procedures there (you may find one around that office itself) and get the agreement signed before 1/10/2009 by both parties registered.and indexed.

If your NRI son signed the agreement in India and went back abroad, you can ask him to go to the consulate and sign a power of attorney in your favour before the consulate giving you the power of attorney to present the document for registration and sign at the registrar's office on his behalf. The documents signed before the Indian Consulate have equal validity before a registrar as consular stamping is equivalent to Magistrate for affidavits and registrars for power of attorney.