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Comparison between Section 50C and 43CA

27-Apr-2014

Comparison between Section 50C and 43CA:

Sr No. Section 50C Section 43CA
1 This section had been inserted by finance Act 2002 w.e.f.1/4/2003. This section had been inserted by finance Act 2013 w.e.f.1/4/2014.
2 The Assessment year 2003/04 is the first operational year of this section. The Assessment year 2014-15 is the first operational year of this section.
3 This section had been introduced to check the gray area in the transactions of properties and assets. This section had been introduced to check the gray area in the transactions of properties and assets.
4 However this section is restricted to the transfer of capital assets (sec.2 (14)) in the form of land or building or both only. However this section is restricted to the transfer of an asset (other than capital asset) being land or building or both only.
5 The income generated from the treatment of this section is to be assessed under section 45 of the Income Tax Act 1961 under the head capital Gains long term or short term in nature. The income generated from the treatment of this section is to be assessed under section 28 of the Income Tax Act 1961 as income from business.
6 The income derived by the application of this section is to be taxed as –
a) The LTCG will be taxed at 20.60% at special rate as per section 112 of the Income Tax Act.
b) The STCG will be taxed at normal rate as per part I of first schedule appended to the Income Tax Act 1961.
The income derived by the application of this section is to be taxed at the rate of 10%, 20% or 30% and surcharge as the case may be as per part I of the first schedule appended to the Income Tax Act 1961.
7 Constitutional validity of this section had been upheld. Constitutional validity of this section had been upheld.
8 It is a deeming provision. It is a deeming provision.
9 Under the provision of the Act, on the transfer of capital asset, if the consideration is less than the value as per the stamp valuation authority then such stamp value will be treated as full value of consideration. Under the provision of the Act, on the transfer of an asset (other than capital asset), if the consideration is less than the stamp valuation authority, then such stamp value will be treated as full value of consideration.
10 Under the provision of this section, further, if such stamp valuation is challenged before the assessing authority, in such situation, the assessing officer should refer the matter to department valuation officer. Under the provision of this section, further, if such stamp valuation is challenged before the assessing authority, in such situation, the assessing officer should refer the matter to department valuation officer.
11 Under the provision again further, if the value determined by the DVO exceeds the value of either the stamp valuation or value adopted by the assessee, in this situation the value determined by the DVO will be the full value of consideration. Under the provision again further, if the value determined by the DVO exceeds the value of either the stamp valuation or value adopted by the assessee, in this situation the value determined by the DVO will be the full value of consideration.
12 There is no other provision specified under the said section. In case, the date of agreement and the date of registration are different, the value as on the date of registration should be adopted. However, where the amount of consideration of a part there of has been received by any mode other than cash on or before the date of agreement.
13 This section specifically applies for the capital asset land or building or both held as capital asset either in Investment account or in Fixed Asset by the Assessee. This section specifically applies for the asset other than capital asset and being land or building or on both held as stock in trade by the assessee.
14 The effect of taxation on the basis of valuation as per this section is lying with the seller or transferor and not the purchaser or transferee. The effect of taxation on the basis of valuation as per this section is lying with the seller or transferor and on the specified purchase or the transferee as per section56(2) (vii) (b) w.e.f. 1/4/2014
15 The provision of this section will not apply to the asset standing as trading assets or stock in trader of the assessee. The provision of this section will not apply to the asset standing as investment or fixed assets with the assessee.
16 The section had not been challenged at the supreme court till date because there is no judgment so far. The section had not been challenged at any court till date because there is no judgment so far.
17 Under this section the word ‘transfer’ can be projected as defined in section 2(47) of the Income Tax Act 1961. Under this section the word ‘transfer’ cannot be enumerated as defined under section 2(47) of the Income Tax Act 1961. Not only because it follows that for the purpose of applicability of this section, the date of transfer of property had to be construed in accordance with the provision of transfer of property Act 1882 when transfer of property is recognized.
18 The deduction under chapter VI A are not allowed so as the gains or income are of LTCG nature as per this section. The deduction under chapter VI A are allowed against the income as per the provision of this section.
19 The applicability of the provision is extended to all types of assesses however it is restricted to transaction of capital gains. The frequency of those transactions may could be lesser relatively. The applicability of the provision is extended to all types of assesses and further the transactions could be voluminous for the applicability of this section because it applies to trading transactions.
20 There is no direct nexus between the provision of this section and the provision of section 56(2) (vii) (b) for the purchaser or the transferee and it is fortunate part. There is a direct nexus between the provision of this section and the provision of section 56(2) (vii) (b) for the purchaser or the transferee and it had raised a lot of eyebrows.
21 The provision of this section is a deeming fiction and a lot of judicial controversies have been filed in the various court of law. It has been proved as a genuine hardship to the assessee whose property had been under litigation by one way the other and he ought to face the music of this provision. Similarly, the provision of this section is a deeming fiction and it might pose as a hardship for persons who have a genuine case of transfer of property at low rate than ready reckoner rate due to some reasons (Distress sale due to many possible reasons.) So is litigation, the only way for the assessee to prove his genuineness. And then what is the probabilities of the courts deciding in favor of the assesses going against interpretation of the Act? Both the seller or transferor and the purchaser or transferee could be sufferer?
22 This provision is a weapon which can very well hit to the black money holder transacting in to immovable assets but can simultaneously painful for the innocent purchaser who can be trapped by the department for the controversies with such black money holders. Whereas the black money holders can invest 20% to 70% value through banking Chanel and rest all in cash after insertion of this section and amendment in section 56(2)(vii) such balance consideration though paid in cash will be treated as normal income in their hands and taxed accordingly. This to avoid a situation in which tax payable will work out almost equivalent income or the accounting ratios show unreasonable picture, there will surely be curb over cash spending and in turn over generation of black money in the long run at least via this route.
23 This section is not applicable to the TDR Rights purchased. This section may could be applicable for the purchase of TDR Rights.
24 This provision can not be applied in case of transfer of tenancy rights in respect of land or building or both. The application of this section in the case of transfer of tenancy rights is a matter of debate and dispute.
25 Legal fiction u/s 50C can not mean that deemed sale amount of property is actually received. Legal fiction u/s 43CA could not be worded that the consideration valued as per section is the actual receipt of seller or transferor and purchaser or transferee.
26 Section 50C can be invoked for depreciable assets if other conditions are fulfilled. Section 43CA can not be invoked for depreciable asset at all.
27 Section 50C con not be applied to other assets or for other purposes. Section 43CA can not be applied to other assets or for other purposes.
28 Section 50C can be invoked only in the case of transferor and not the transferee. Section 43CA can be invoked both for transferor as well as transferee.
29 The primary on us is on the transfer to prove the validity of the consideration. The departments onus comes next. The primary on us is on the transfer to prove the validity of the consideration. The departments onus come.
30 The provision of this section is not applicable to the newly introduced TDS section 194 IA because under that section 1% TDS is to be deducted from the actual consideration only. The provision of this section is not applicable to the newly introduced TDS section 194 IA because under that section 1% TDS is to be deducted from the actual consideration only.
31 a) This being deeming provisions, these provisions cannot be extended beyond its objective for which the same is promulgated.
b) In the case of co-owners, a proceeding in all the co-owners be examined and consistent stand has to be taken.
c) While making reference to DVO, the objective of reference be very clear. The appellant has to be provided an opportunity to rebut the valuation of DVO though as per this section the same is mandatorily be adopted.
d) The reference to DVO is invariably in the case of dispute of full value of consideration and stamp valuation authorities whether on the instance of A.O. or assessee.
e) ‘Cost of acquisition’ is different than ‘full value of sale consideration’ hence reference for determination of coast of acquisition is separate than reference to DVO under section 50C.
a) This being deeming provisions, these provisions cannot be extended beyond its objective for which the same is promulgated.
b) In the case of co-owners, a proceeding in all the co-owners be examined and consistent stand has to be taken.
c) While making reference to DVO, the objective of reference be very clear. The appellant has to be provided an opportunity to rebut the valuation of DVO though as per this section the same is mandatorily be adopted.
d) The reference to DVO is invariably in the case of dispute of full value of consideration and stamp valuation authorities whether on the instance of A.O. or assessee.
e) ‘Cost of acquisition’ is different than ‘full value of sale consideration’ hence reference for determination of coast of acquisition is separate than reference to DVO under section 43CA.

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