DEEMING FICTION UNDER SECTION 50C OF THE INCOME TAX ACT

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On July 17, 2017, Posted by , In KnowledgeBase, With Comments Off on DEEMING FICTION UNDER SECTION 50C OF THE INCOME TAX ACT

Deeming fiction under Section 50C

Section 50C of the Income Tax Act, 1961 (hereafter referred to as the “Act”) was introduced vide Finance Act 2002 w.e.f. 01.04.2003 as a measure to curb the incidence of use of unaccounted money in immovable property transactions leading to tax revenue leakage through undervaluation of the property in the transfer instrument. The section was introduced as a special provision for determining the full value of consideration while computing capital gains in cases of transfer of immovable property, being land or building or both, held as capital assets. The Section provides that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed  or assessable by any authority of a State Government (hereafter referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed  or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

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