Insertion of Proviso to Section 50C by Finance Act, 2016

Section 50C is introduced by Finance Act, 2002 w.e.f. 1st April 2003 to curb the evasion of tax by taxpayers in case of transfer of immovable property being land or building or both. Before introducing the provisions, the Revenue noticed that the tax payers are transferring the immovable property being land or building or both below the value adopted or assessed or assessable by an authority of a State Government. The section basically refers to the "Stamp Valuation Authority" who assess the value of transaction as described in the instrument of transfer to levy stamp duty under respective state law.

Basic Intent of Introducing Section 50C

The notes on clauses to the insertion of section 50C 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 by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the [full value of the consideration received or accruing as a result of such transfer] even though assessee has received consideration which is below the value adopted or assessed.

Section further provided that where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer, and assessee has disputed the value so adopted or assessed in any appeal or revision or reference before any authority or Court, the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A of the Income-tax Act. If the fair market value determined by the Valuation Officer is less than the value adopted for stamp duty purposes, the Assessing Officer may take such fair market value to be the full value of consideration. On the other hand, if the fair market value determined by the Valuation Officer is more than the value adopted or assessed for stamp duty purposes, the Assessing Officer shall not adopt such fair market value and will take the full value of consideration to be the value adopted or assessed for stamp duty purposes.