National Conference At Shegaon, Maharashtra

Organised by CPE Committee of the ICAI

Hosted by :

Subject :Special Provisions for Taxation of Real Estate Transactions in Income

Paper written by CA. Tarun Jamnadas Ghia

tarunghiaca@yahoo.co.in 9821345687

Taxation of real estate transactions is a very vast subject and therefore

comprehensive coverage may be possible only in a book. In the limited space

that may be available for paper presentation in a souvenir in the National

Conference, I have attempted to present this write up on some specific

provisions as contained in section 50C, 43CA, 56(2)(x) and 269SS, 269T.

CAPITAL GAINS IN TRANSACTIONS OF LAND AND BUILDINGS : Section 50C :

Basic Provisions :The Finance Act, 2002 had introduced section 50C in the Income Tax Act, 1961

dealing specifically with the full value of the gross consideration in computation of

capital gains in respect of transactions in land or building or both. Since then the

section has been amended from time to time. Unless otherwise specified in this

write up, the provisions on the date of writing this paper have been considered.

Section 50C provides that if the value stated in the instrument of transfer is less

than the valuation adopted, assessed or assessable by the stamp duty

authorities, the valuation as adopted, assessed or assessable by the stamp duty

authorities will be considered as the full value of the gross consideration for the

purpose of computation of capital gains arising on transfer of land or building or

both. For example, if in the agreement for sale, the value of the flat is stated at

Rs 56 lacs but according to the stamp duty authorities the valuation of the flat is

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Rs 66 lacs, then the full value of the consideration will be deemed at Rs. 66 lacs

and capital gains will be computed accordingly. Section 50C applies to

computation of capital gains, whether short term or long term.

In certain cases, this causes a very difficult situation for the seller of the property

as he is required to pay tax on extra money which he never received. Alternately,

if he wants to claim exemption by investing in a residential house or in capital

gains bonds depending upon the facts of his case, he has to invest an extra

amount, which he never received on sale or earned as capital gains. It is not

necessary that one should invest the very sale proceeds in exemption schemes

as funds from any sources can be invested to avail exemption. To come out of

the difficulty one may consider recourse to relief provisions but by the time

decision in respect of relief provisions come, the time limit for planning

investment gets expired. At the same time taking a chance of further valuation

by tax department does not place an assessee in an adverse position although

he may gain from the same.

History and background of section 50C: The history and background of section 50C can be traced to Government’s

restlessness to tax the black money in transactions in land and buildings. The

prices of land and buildings like other items are a function of market forces of

demand and supply. The demand far exceeds the supply; more so in big cities.

This wide gap between demand and supply generates an inflationary and

speculative market for immovable properties and provides a major avenue for

investment of black money. The consideration for their transfer is understated in

the instrument of transfer by the vendor and the purchaser and a substantial part

is paid unrecorded in black money. The vendor saves on capital gains on

undeclared portion of the sale proceeds while the purchaser saves on wealth tax

and accommodates his unaccounted funds.

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Position between 1972 and 1986: Considering the wide-spread use of black money and under-statement of

consideration in the instruments of transfer, which adversely affected the

interests of the revenue, the Government introduced Chapter XXA in the Income

Tax Act, 1961 with the purpose of curbing such arrangements. Chapter XXA was

there in the statute book from November 15, 1972 to September 30, 1986 and

was applicable to transfers of immovable properties during that period. It

provided for acquisition of immovable property by the Government when it was

found that fair market value was higher than the consideration stated in

instrument of transfer. The proceedings under Chapter XXA started after transfer

was completed. In Chapter XXA, the Government was required to determine the

fair market value of the property but the Supreme Court in the case of K.P.

Verghese at 131 ITR 597 took a view that apart from determining the fair market

value of the property transferred, the Government was also required to prove that

extra consideration not stated in the transfer document had passed from the

buyer to the seller. This requirement of proving passing of under-hand

consideration from the buyer to the seller rendered Chapter XXA unworkable.

Position between 1986 and 2002:In view of the above SC decision and because Chapter XXA applied after the

immovable property was transferred , with effect from October 1, 1986, Chapter

XXA was replaced by Chapter XXC which granted the Government pre-emptive

right to purchase immovable property at a price agreed to by the transferor.

Chapter XXC of the Act inter alia provided for the purchase of immovable

property by the Central Government in certain cases of transfer. A transaction

relating to a transfer of any immovable property, if it was situated in any of the

notified cities and towns of India and if the apparent consideration of such

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transaction exceeded the prescribed limit, required compliance with provisions of

Chapter XXC. Accordingly, whenever a person wanted to transfer an immovable

property for the stated price exceeding specified amount, he could not do so

before undergoing the procedure as laid down in Chapter XXC.

Chapter XXC had limited application and was failing:Thus, Chapter XXC was applicable only to certain notified towns and cities and

only if the stated price of the immovable property exceeded a specified amount.

Therefore, only a few people were affected by the provisions of Chapter XXC.

Of late, there were many litigations between the assessees and the Income Tax

Department. It was also observed that even when Tax Department acquired such

high priced properties, the same could not be disposed off at a profit in many

cases. This had resulted in a situation whereby the Department was criticised for

unnecessarily acquiring the high priced immovable properties. The funds of the

Government were unnecessarily blocked. Thus, neither the Income Tax

Department nor the tax payers were happy about the provisions of Chapter XXC.

The Finance Act, 2002 deleted Chapter XXC w.e.f. 1st July 2002.

2002 onwards Section 50C inserted:While deleting Chapter XXC, the Government simultaneously decided to

introduce section 50C with effect from A.Y. 2003-04.

Coverage of section 50C is very wide :Section 50C affects all the transactions of transfers for consideration of land and

buildings in the country except Jammu and Kashmir. Although the section speaks

of transfer of land or building or both, on the reasoning that the term “whole”

includes “part”, it also covers part of building. Thus, transactions of flats, shops,

galas factories etc. are covered by the provisions of section 50C. It is observed

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that in some cases, the stamp duty authorities are not reflecting real values o the

properties.

Stamp duty generally paid by buyer:Stamp duty is generally paid by the purchaser of the property. Therefore, the

purchaser is entitled to dispute higher valuation by stamp duty authorities.

However, generally the purchasers do not prefer an appeal before the stamp

duty authorities as compared to the purchase price involved, the amount of

additional stamp duty becoming payable due to higher valuation by stamp duty

authority is meager amount which does not afford spending money and time

involved in an appeal.

The seller may not have much representation before the stamp duty authorities

even when an appeal is preferred by the purchaser.

It may happen that the purchaser after completing the transaction of purchase

may prefer an appeal before the stamp duty authority and the seller has no

information about it. Further, under the provisions of most of the State Acts,

stamp duty authorities have the power to revise valuation of immovable property

for a certain period of years from the date of stamping. In such circumstances,

the assessment order may be subjected to rectification requiring the seller to pay

additional tax, interest u/s 234B, as investment u/s. 54/ 54F/ 54EC may fall short

than required.

In view of the provisions of section 50C, the vendor is more concerned with the

stamp duty valuation. Practically, it is suggested that for the purpose of allowing

appeal to the vendor under stamp duty laws, it may be provided in the document

of transfer that a small part of stamp duty would be borne and paid by the vendor

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so that the locus of the vendor is not challenged. Corresponding adjustment may

be made in the consideration money.

Transactions not covered:Section 50C is applicable only to transfer of land or building or both provided it is

a capital asset. Thus, in cases when such assets are held as stock-in-trade, the

section does not apply. By implication, it does not affect sale of land or building

by a builder or a developer because land, building, shops, flats, etc sold by the

builders and developers are generally stock-in-trade in their hands and not the

capital assets. Section 50C does not apply to transfer of tenancy and leasehold

rights. In such cases, there is no transfer of land or building or both to which

provisions of section 50C are applicable. As far as development and

redevelopment transactions are concerned, much will depend upon substance of

the transactions. Interpretation of the documents is a mixed question of facts and

law. Rule of purposive construction will also have to be considered.

However, provisions of TDS u/s. 194-IA do not make any distinction between the

builders and developers and other sellers and therefore, subject to prescribed

threshold consideration for the immovable property of Rs. 50 lacs, all the

resident sellers are subjected to TDS @ 1% by the buyers.

Relief provisions for separate income tax valuation:It is however provided in section 50C that even though the higher valuation by

stamp duty authorities has not been disputed, the seller of the property may

represent before the Income Tax Officer that the valuation adopted by stamp

duty authorities is higher than the fair market value of property on the date of

transfer and that the Income Tax Officer may refer the matter of valuation to the

Valuation Officer of the Income Tax Department itself. Although the word used is

“may”, the ITO has to refer the case for valuation once requested by the

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assessee. If the valuation by the Valuation Officer of the IT department is lower,

then such lower valuation is to be adopted by the Income Tax department for the

purpose of capital gains taxation under section 50C.

Higher Income Tax valuation to be disregarded:However, it may happen that the valuation by the Income Tax Valuation Officer is

higher than the valuation adopted by the stamp duty authorities. In such an

event, the stamp duty valuation is to be adopted and higher valuation by the

Income Tax Valuation Officer is to be disregarded. Thus, by approaching the

Income Tax Valuation Officer, the seller of the property will not be a loser in any

case. The DVO has to follow the procedure under relevant sub-sections of

section 16A of the Wealth Tax Act whereby the DVO has to call for the records,

give an opportunity of being heard to the assessee and lead evidences and then

pass a speaking order of valuation. Further, the order of the DVO can be

appealed against.

In this background material, mainly the provisions of the section 50C and plain

construction thereof have been discussed. Some of the issues arising in respect

of such provisions have been stated in the power point presentation for the

purpose of deliberations.

When date of agreement differs from date of registration :It was possible that an agreement is executed on an earlier date and while

agreeing consideration the parties have taken into consideration the stamp

valuation on the date of agreement. Thereafter, the same may be lodged for

registration after a gap of time and at the time of registration the stamp valuaiton

might have increased or reduced. To take care of such situations and to alleviate

resultant hardships, the section 50C provides that the stamp valuation on the

date of agreement will be the basis of section 50C in such cases. However, this

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is subject to the condition that on or before execution of such agreement, the

consideration or part consideration has been received by the transeror assessee

either by account payee cheque or account payee bank draft or use of electronic

clearing system through a bank account.

5% margin provided :

To ensure that minor variation between the agreement value and stamp valuation does not result into application of stamp valuation, the law has been amended by the Finance Act, 2018 providing that if stamp valuation does not exceed 105% of the stated consideration in the agreement, then also the agreement value will be treated as full value of consideration and the higher stamp valuation shall be ignored.

Section 43CA : As stated earlier, the provisions of section 50C were introduced by the Finance Act, 2002 and were confined to only capital gains transactions. While comparatively far more transactions of sales happen by the builders and developers. However, as section 50C does not apply to sales of stock in trade and in most cases the builders and developers hold land and building as stock in trade, therefore, the same were not subjected to stamp valuations. It is an open secret that many builders and developers charge on paper only a portion of sales consideration and balance is collected as unaccounted cash. Despite this position, it was strange that the Government kept their sales out of the purview of stamp valuation. It was after more than a decade that the Government amended the law and introduced section 43CA by the Finance Act, 2013 and provided that the transfer of land or building or both held otherwise than as capital asset will be chargeable on the basis of stated

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consideration or stamp valuation whichever is higher. The another main difference between 50C and 43CA is that while for the purpose of section 50C the transfer will be governed by section 2(47)(v) or 2(47)(vi), the transfer for the purpose of section 43CA will be decided under the chapter of business income read with section 5 and section 145.

PROVISIONS OF SECTION 56(2) PERTAINING TO gifts, deemed gifts and deemed under-valuations :

Provisions of section 56(2) : Section 56(2) of the Income Tax Act, 1961 inter alia deals with receipts without

consideration. Section 56(2) contains many provisions but since this write up is

confined to real estate transactions, therefore, the provisions concerning

immovable properties have been discussed and only passing reference has been

made to provisions concerning movable properties. The Provisions regarding

transfers of unquoted shares have not been discussed for the same reason.

Since most of such receipts tantamount gifts, the provisions are commonly

known for gifts and deemed gifts. Till 30 09 2009 only sum of money exceeding

prescribed limit received without consideration was gift if the recipient was

either an individual or a HUF. W.e.f. 01 10 2009 the provisions include cases of

immovable properties received without consideration to be taxed on the basis of

stamp valuation. Thereafter, the cases of immovable properties purchased at

less than fair market value are also considered in the net of 56(2). The expanded

provisions also include receipt of specified movable properties either without

consideration or at inadequate consideration as compared to fair market value. If

an individual or HUF receives immovable property without consideration, the

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stamp valuation thereof would be taxed as income. But if consideration is there

but inadequate, and difference exceeds rupees fifty thousands then the

difference between the stamp valuation and the stated consideration is a deemed

income in the hands of the purchaser of the property. Further, by virtue of

section 50C, the seller would continue to be taxed on capital gains on the basis

of stamp valuation or sale price whichever is higher.

Pertinent to mention that gifts from relatives and under specified exceptions from

non relatives continue to be beyond tax net.

Enhanced cost of acquisition when sold as capital asset : In transactions of immovable property received without consideration or specified

movable properties received without consideration or at inadequate

consideration, the provision continues that when the recipient of immovable

property was subjected to income tax on the basis of stamp valuation or receipt

of movable property was subjected to FMV, as the case may be, then in future

when such recipient sells the same property, his cost of acquisition of such

capital asset would be such valuation which was subjected to income tax earlier

and indexation would also be available on such valuation being his deemed

enhanced cost of acquisition.

Relief provision with regard to stamp valuation : If the recipient of the property claims before the income tax assessing officer that

the stamp valuation is higher than the fair market value thereof, then he has

remedy either to contest the stamp valuation before the concerned authorities or

to request the assessing officer for valuation by valuation officer to be appointed

by the income tax department. In such a case, if income tax valuation comes

equal to stamp valuation, then no case arises. But if the income tax valuation is

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lower than the stamp valuation then income tax valuation would be adopted.

However, if the income tax valuation is determined higher than the stamp

valuation, then stamp valuation is adopted and higher income tax valuation is

disregarded. Therefore, by seeking valuation by income tax department, the

assessee cannot be worse off than what he is due to stamp valuation. Similar

relief provisions are contained in section 50C for the vendor of the immovable

property.

Immovable Properties mean and include : The immovable property in the context of section 50C, 43CA and 56(2) means

land or building or both. However, building should include part of the building and

therefore flats, shops, galas etc. should get included. Further, one may like to

take a view that in a housing organization, what one is transferring is a share

certificate and not an immovable property but one is not likely to succeed in such

a view because the decisions under the stamp duty and registration laws as well

as under the income tax laws are in one direction having taken a view that in

such a case share certificate is only in representative capacity and in substance

what one is transferring is an immovable property represented by such share

certificate.

When date of agreement differs from date of registration :In respect of transactions of inadequate consideration, it was possible that an

agreement is executed on an earlier date and while agreeing consideration the

parties have taken into consideration the stamp valuation on the date of

agreement. Thereafter, the same may be lodged for registration after a gap of

time and at the time of registration the stamp valuaiton might have increased or

reduced. To take care of such situations and to alleviate resultant hardships, the

section 50C provides that the stamp valuation on the date of agreement will be

the basis of section 50C in such cases. However, this is subject to the condition

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that on or before execution of such agreement, the consideration or part

consideration has been received by the transeror assessee either by account

payee cheque or account payee bank draft or use of electronic clearing system

through a bank account.

Specified Movable Properties : Provisions as inserted by the Finance (No. 2) Act, 2009 also cover receipts,

either by way of purchase or otherwise, of specified movable properties namely

shares and securities, jewellery, archaeological collections, drawings, paintings,

sculptures, any work of art. By the Finance Act, 2010 a new item namely

“bullion” was added w.e.f. 01 06 2010. In normal commercial parlance, the term

“bullion” would include gold, silver, platinum, or palladium, in the form of bars or

ingots. Some central banks use bullion for settlement of international debt, and

some investors purchase bullion as a hedge against inflation.

In respect of such movable properties, it is provided that if the aggregate fair

market value of such movable properties received during the year without

consideration exceeds Rs.50000/-, then such value is income in the hands of

recipient. In a case one receives such properties by payment of their respective

prices, but if the difference between the aggregate of prices so paid and the

aggregate of fair market values thereof exceeds Rs.50000/-, then such difference

would be income in the hands of the recipient. For purposes of determination of

fair market value, rules have been framed.

Rs. 50000/- has been provided as tolerable difference for transactions in

immovable as well as specified movable properties meaning that higher stamp

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value in case of immovable property and higher FMV in case of specified

movable properties will be ignored to the extent of Rs.50000/-. The Finance Act,

2018 has added an additional tolerable difference of 5% in transactions of

immovable properties with inadequate considerations by providing that if stamp valuation does not exceed 105% of the stated consideration in the agreement, then also the agreement value will be treated as full value of consideration and the higher stamp valuation shall be ignored.

The gifting provisions with regard to movable properties would apply only when in

the hands of the recipient individual or HUF such movable property is a capital

asset and not as stock in trade.

Gifts received from relatives : Section 56(2) inter alia provides that sums received without consideration from

following relatives are not income:

(i) spouse of the individual;

(ii) brother or sister of the individual;

(iii) brother or sister of the spouse of the individual;

(iv) brother or sister of either of the parents of the individual;

(v) any lineal ascendant or descendant of the individual;

(vi) any lineal ascendant or descendant of the spouse of the individual;

(vii) spouse of the person referred to in clauses (ii) to (vi).

By Finance Act, 2012 the provisions were amended so as to provide that any

sum or property received without consideration or inadequate consideration by

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an HUF from its members are w excluded from taxation. This amendment was

made retrospectively with effect from 1st day of October, 2009.

Whether gifts received from relatives are not taxable ? :One cannot conclude like that section 56(2) provides that gifts received from non-

relatives are income but nowhere in the Income Tax Act,1961 it is provided that

gifts received from relatives are not income and therefore tax free. Therefore, it is

not a case that section 56(2) places the gift from relatives beyond taxing

provisions. If gifts are received from specified relatives, the recipient will have to

prove genuineness of such gifts with reference to identity of the donor, capacity

of the donor, source of funds of the donor, etc.

Taxability of firm and closely held company :Till 30 09 2010 section 56(2) treated receipts without consideration as income if

the recipient was an individual or HUF. Finance Act, 2010 made a starting point

to tax a firm and a company in a specified situation. The Finance Act, 2010

provided to tax a firm or a closely held company when it receives shares of a

closely held company either without consideration or at a consideration less than

the fair market value. The provisions do not apply if such shares are received in

the course of amalgamations, mergers, demergers and re-organisations. When

afterwards such company or firm transfers such shares the valuation whereof

either fully or partly subject to income tax, then at the time of subsequent transfer

of such shares, the cost of acquisition would be the fair market value which was

earlier taken into consideration for taxation u/s. 56(2). It is pertinent to mention

here that as far as this category is concerned, the Act does not distinguish

between receipt as capital asset and receipt as stock in trade.

Taxability of all persons : law amended by the Finance Act, 2018 :

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The above provisions have been further expanded by introducing sub clause (x)

which uses the term “any person”. Therefore, now in the present position any

person in receipt without consideration of sum of money in aggregate Rs.50000/-

during the previous year, or specified movable property without consideration or

with inadequate consideration or immovable property without consideration or

with inadequate consideration will be chargeable to tax under section 56(2)(x).

Gifts received from non relatives in specified circumstances :Gifts received from non relatives are generally taxable. However, there are

certain exceptions under which gifts received from non relatives are also not

taxable.

Gifts received on the occasion of marriage of an individual even from non

relatives are not an income.

Further following receipts without consideration are also not income :

i. under a Will or by way of inheritance;

ii. in contemplation of death of payer;

iii. from local authority as defined in Explanation to section 10(20);

iv. educational or medical institution or fund etc. referred to u/s. 10(23C);

v. trust or institution registered u/s. 12AA.

Gift in contemplation of death : A gift is said to be made in contemplation of death when the donor is ill and he

expects to die shortly out of such illness and delivers to another possession of

the movable property to be kept by another person as gift in case a donor dies of

that illness. A gift in contemplation of death can be made of any movable

property which the donor could dispose off under a Will. It is possible for the

donor to resume such a gift before he dies. Further in a case where donor

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recovers from the illness during which he made the gift then such a gift will not

take effect. Further if the donor survives the person to whom such gift was made

then also such gift does not take place.

If such property instead of being given away in contemplation of death is made

subject matter of the Will then the bequest under a Will would require executor’s

assent to perfect the title of the legatee and will be subject to probate, when

applicable. Gifts in contemplation of death can be made only of a movable

property.

Cash Transactions in immovable properties subjected to penal provisions :

Earlier Section 269SS provided that, subject to specified exceptions, a person shall not take or accept any loan or deposit from any other person otherwise than by the prescribed banking channels that is by an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account so that the aggregate of loan or deposit from one person together with aggregate of existing loans and deposits from such person is Rs.20000/- or more. In simplified terms, cash loan or deposit from same person of Rs.20000/- or more is not allowable for the purpose of section 269SS.

Contravention of the above provision attracts penalty under the provisions contained in section 271D which provides that the person shall be liable to pay by way of penalty a sum equal to amount taken or accepted in contravention of section 269SS.

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The above provisions are not applicable inter alia in a case when the acceptor of the loan or depositor as well as the person giving the loan or deposit have agricultural income and neither has any income chargeable to income tax.

By the Finance Act, 2015 these provisions were expanded by adding the sums received in relation to transfer of immovable property whether as advance or otherwise and whether or not ultimately the contemplated transfer takes place or not. The term used in the amendment is “immovable property”, which has not been defined for the purpose of the Income Tax Act. The meaning assigned to the term “immovable property” in section 269UA(d) is restricted for the purpose of Chapert XX-C only while the provisions of section 269SS and 269T are contained in Chapter XX-B. Whether recourse is taken to the said section 269UA(d) or the to the General Clauses Act, 1897, Transfer of Property Act, 1882 or to the Registration Act, 1908, in any case, the term immovable property would certainly include land, building and may include rights in land or building.

It is pertinent to recollect and co ordinate here that the Finance Act, 2013 introduced a provision in section 43CA whereby for the limited purpose of date of stamp valuation, the agreement for transfer of land or building or both not held as capital asset involving only cash consideration is disregarded till the agreement is registered that is to say that when the consideration is paid only in cash instead of date of agreement, the date of registration thereof is taken for stamp valuation.

The implication of the amendment is that a transaction in immovable property otherwise than by prescribed banking channel attracts harsh penalty under section 271D to the transferor of immovable property being the recipient of money.

Section 269SS was substituted by a newly drafted section 269SS. The new section became operative w.e.f. 01 06 2015.

On the same lines, section 269T was amended to provide that no

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repayment of any advance received in relation to a transfer of immovable property would be made except by the said prescribed banking channels, if such advance together with other specified sums in the section in aggregate on the date of payment is Rs.20000/- or more. Whether the transfer takes place or not is irrelevant. The specified sum being repaid might have been received by cheque or cash or any other mode is not relevant here as for the purpose of section 269T the mode of repayment is only the relevant subject. Contravention of this provision would invite penal provisions of section 271E making the person making such repayment liable to pay, a sum equal to advance so repaid. This amendment took effect from 01 06 2015.

Although amendments in both the sections were made with the same intent and with reference to same subject manner, but it is observed that the new words inserted in section 269SS and 269T are not the same. While 269SS introduced the key words “advance or otherwise” in relation to transfer whereas section 269T introduced the words “advance by whatever name called”. Therefore, for the purpose of section 269T, the specified sum is restricted to repayment of advance only as distinguished from the proposed amendment to section 269SS whereby receipts whether as advance or otherwise are prohibited. If the sum repaid is not in the nature of advance then the provisions of section 269T is not be attracted. For example, a transaction in immovable property is executed and for some reasons the transaction is cancelled and money becomes repayable then whether the repayment is of the sum received earlier is of advance or not is a a question of fact and circumstances of the case.

The Explanatory Memorandum stated that the amendments were proposed in order to curb generation of black money by way of dealings in cash in immovable property transactions. However, the writer submits that in reality the cash portion of the transaction is not accounted at all and therefore to that extent the amendment does not have the desired effect. Further, under the existing provisions contained in sections 50C and 43CA read with section 56(2), the transactions in land or buildings or part thereof are taxed at stamp valuation or stated consideration, whichever is higher. Therefore, in a transaction where the stated consideration is lower than the stamp valuation, the difference is already getting taxed and to an extent while

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section 50C or section 43CA invite taxation, the amended provision attracts penalty.

The amendments certainly deters the transactions from being back dated by use of cash consideration. For cash consideration or repayment in cash the penal provisions get attracted. At the same time cash consideration or repayment per se does not affect the validity of the transactions or does not affect the date of the transfer under the property laws concerning transfer or does not affect even the date of transfer under the provisions of the income tax law more particularly with reference to provisions contained in clauses (v) and (vi) of sub section (47) of section 2 of the Act.

The exact effects as well as limitations of the amendment read with existing provisions may be visualised as follows:

i. Harsh penal provisions for taking or accepting specified sum or for repayment thereof;

ii. Transaction continues to be valid under the laws concerning properties as well as under the contract law;

iii. The transaction continues to be valid under the income tax law;iv. The date of transfer remains unaffected by the amendment as

well as by the existing provisions of section 43CA;v. The taxation of income out of such cash transaction except for

the limited purpose of date of stamp valuation as provided in section 43CA also continues to be as before.

Thank you.

For Regular Direct Taxes and Professional Updates Email to :tarunghiadirtaxes-subscribe@yahoogroups.co.in

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