Query No. 1: (Applicability of S. 50C to agricultural land)
An agriculturist sold his agriculture land to an infrastructure company for the commercial project after obtaining permission from the Collector under section 63 of the Bombay Agriculture & Tenancy Act. The sale deed was executed for agriculture land as per jantri value mentioning order number of Collector. One of the conditions of the order was that the stamp duty would be payable as per N.A land. Now the assessee has executed sale deed for agriculture land as per jantri value. The Assessing Officer has passed the order making addition of difference value of ₹ 90/- lakh as per non agriculture under section 50(C); though the assessee has executed sale deed for agriculture land. Whether action of Assessing Officer is right?
Section 50C reads as under:
“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 (hereinafter in this section 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 purpose of section 48 be deemed to be the value of the consideration received or accruing as a result of such transfer”.
Thus reading above, it is clear that this section is applicable to all kinds of land, whether agricultural [other than land situated in area stated in clause (iii) of section 2(14)] or non- agricultural. Therefore, action of the Assessing Officer is right in making addition of difference in value of land as per stamp duty value over Jantri value.
Query No. 2: (S. 56(2)(vii) not applicable to firm)
An immovable property is purchased by a firm at circle rate. Whether S. 56(2)(vii) is applicable? Further, registration would be in the name of individual partners. Will this alter the applicability of Section 56(2)(vii)?
S. 56(2)(vii) is applicable to only individual or HUF who receives any money, an immovable property or any property, other than immovable property without consideration or for consideration which is less than the aggregate stamp duty value, if fair market value of the property or value exceeds ₹ 50,000/-.
Thus if immovable property is purchased by the firm at circle rate, which is less than the stamp duty value then difference in value is not liable to be taxed in the hands of the firm.
This gets support from S. 56(2)(viia), which says that any property being shares of the company (not being a company in which public are substantially interested) received by a firm at less than fair market value would be taxed if it exceeds ₹ 50,000/-. Thus, it covers shares of
non-listed company only and not any other property.
Even registration in the name of individual partners would not attract section 56(2)(vii), if money has gone out of chest of the firm.
Query No. 3: (PAN card or Aadhaar Card necessary for genuineness)
Can the Assessing Officer disallow the amount in the hands of charitable trust, particularly when, the trust has given donation directly to hospitals with instructions that particular amount should be used only for treatment of a particular patient. In all cases the trust takes a printed application form duly filled and signed by patient or his kin and in the said form the complete address is available of the patient. In no case the copy of PAN card or Aadhaar Card is available with hospital.
If a charitable trust give donation to a hospital for a particular patient, then, the hospital would issue receipt for the said amount with its PANo.. In such case, it is not necessary for the trust to produce a copy of the PAN card or Aadhaar card of the patient.
However, if the payment is made directly by the trust to patient, it is necessary that trust should have a copy of PAN card or Aadhaar card to prove genuineness of the patient, only name and address of the patient would not be enough to prove genuineness of the patient.
Query No. 4: (Fee is not a penalty or interest)
Can fee paid under Section 234E be claimed as deduction while computing the total income under the head “Profit and gains of business or profession”?.
Fee paid u/s. 234E is not a penalty or interest under the Income-tax Act, 1961. It is a fee which is for late filing of statement of tax deduction at source u/s. 200(3) of the Act. Similarly fee paid for late filing of statement of tax collected at source u/s. 206C(3) of the Act. Hence there is no loss to the revenue, as tax deducted or tax collected had to be paid before filing the statement. So fee is payable by the tax deductor or tax collector for late compliance of law. Hence, the same can be claimed as deduction while computing the total income under the head “Profits and gains of business or profession.”
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