Capital gains benefit of higher tolerance band of 10% u/s 50 C would be applicable retrospectively.


👉 A recent ruling of the Income-Tax Appellate Tribunal (ITAT)’s Mumbai bench has come as a relief to taxpayers embroiled in litigation on capital gains arising out of sale of their flats due to the sale price being lower than the stamp duty valuation.

👉  ITAT has held that the benefit of a higher tolerance band of 10% for the difference between the sale price of a flat and the stamp duty valuation will apply with retrospective effect.

👉 The ITAT bench of vice-president Pramod Kumar and judicial member Saktijit Dey held this benefit would apply retrospectively from financial year 2002-03 (assessment year beginning April 1, 2003) when anti-abuse provisions were introduced in the income-tax Act.

👉 The ruling will help pending cases from these years when the acceptable variation rate was much lower or no such leeway was available. 

👉 Tax experts said several such cases are pending at various levels, especially in larger cities such as Mumbai.

👉 To prevent tax abuse and deter the use of black money in property deals, Section 50C was introduced by the Finance Act, 2002. 

👉 It provided that if the sale consideration claimed to be received by the seller is less than the stamp duty rate, the latter would be considered for determining capital gains.

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This article is being furnished for informational purposes only. We make every effort to use reliable & comprehensive information, but we do not represent that the contents of the article are accurate or complete.

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