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Real estate

Gopal Gupta (CHARTERED ACCOUNTANT) (44 Points)

07 May 2014

Dear Member,

Please let me know the impact of SECTION 50C , 56(2) and SECTION 43CA.

I want to know

"CAN a Partnership firm buy a land or building, for a consideration less than the value in which stamp duty was assessed?

Thanks

Gopal Gupta

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4 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 08 May 2014

It is better to set the sale deed value equal to or more than the stamp value to avoid section 50C. There are stamp valuers who may provide you the exact stamp value of the property as per the ready reckoner and built-up area of the property.

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Gopal Gupta (CHARTERED ACCOUNTANT) (44 Points)
Replied 08 May 2014

Dear Mihir,

I would like to know, how sec 50C prevents the purchaser to purchase the property for price less than the value adopted for stamp duty?

2. Sec 56(2) is applicable only to Individual and HUF, there is no scope to cover the partner ship firm or Body Corporate.

3.Sec 43 CA is applicable to set the full value of consideration that is the amount received by transferor in consideration of non-capital assets.

In my view, a body corporate is not covered under above section.

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 08 May 2014

Sec50C generally will not prevent buyer to purchase an asset being Land or Building u/s 50C as impact in case of transfer of property u/s 50c will be in hands of seller.Seller needs to pay extra capital gain tax on excess of stampvalue over real consideration.so this will not demoralise the buyer to purchase the asset at lower value.Indeed purchaser can claim stamp value as cost of acquisition in case or resale whether it was in ambit of sec50C or sec43CA.sir as in your case asseesse is in real estate business,he will be in terms of 43CA.further comments required

Thank you

Gopal Gupta (CHARTERED ACCOUNTANT) (44 Points)
Replied 08 May 2014

Ofcourse Yes. It is under the scope of Section 43CA, which is also design for fixing the Sale Price i.e. Full Value of consideration.

There is nothing written in the section that a purchaser is under scope of this section.

Hence, I think, If a body corporate is purchasing the property for price less than the value adopted for stamp duty, then that is not inder the scope of Section 43CA.

Thanks