• Section 56(2) vii

1.How is it applicable to the income of a seller, a partnership firm, who gets a consideration in cheque of the sale of an immovable property which is less than the circle rate? 
2.How is the circle rate value of a building calculated?
Asked 7 years ago in Property Law
Religion: Hindu

Ask a question and receive multiple answers in one hour.

Lawyers are available now to answer your questions.

4 Answers

1)if the sale consideration as mentioned in the sale deed is lower than the circle rate, the stamp duty would be calculated as per the value prescribed for circle rate

2) section 50C of the Income-tax Act, 1961 clearly mentions that the liability on capital gains would arise on the value of the property as fixed by the state valuation authority .

Thus, capital gains tax would be calculated on the value of the property as fixed by the Stamp Valuation Authority especially when such value is higher than the declared value of the property as appearing in the sale deed

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

purchase of property should be in name of partnership firm

2) You can claim exemption under Section 54 (EC) by investing the long-term capital gains for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house. However, one can invest only up to Rs 50 lakh in these bonds in a financial year.

3) you can use the entire gain from the transaction to buy another house within two years or construct one within three years.

4) This new house purchased or constructed must be situated in India

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

Gift is usually used to convert black money into white money. To stop practice of converting black money into white money a section 56(2)(Vii);

Provision Contained in Sec-56(2)(Vii)-

Where an individual or HUF receives in any previous year, from any person or persons-

(a) any sum of money, without consideration , the aggregate value of which exceeds Rs. 50,000/-, the whole of the aggregate value is taxable,

(b) any immovable property,-

I. without consideration, the stamp duty value of which exceeds Rs. 50,000/-, the stamp duty value of such property is taxable,

II. received for a consideration which is less than the stamp duty value of the property and difference is more than Rs.50,000/- then such difference is taxable

(c) any property other than immovable property,-

I. without consideration , the aggregate fair market value of which exceeds Rs. 50,000/-, the whole of the aggregate fair market value is taxable,

II. received for a consideration which is less than the aggregate fair market value of the property and difference is more than Rs.50,000/- then such difference is taxable

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

I. Any transfer of capital assets under gift, will or an irrevocable trust is not taxable under head Capital Gain. It is not regarded as transfer U/s 47.

II. Any distribution of capital assets on the partial or total partition of a Hindu Undivided Family is not taxable under head Capital Gain. Because it is not regarded as transfer U/s 47.

III. As per Sec-50C, 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 State Government for the purpose of payment of stamp duty, such value deemed as full consideration.

Q1.Do both these have to be in the name of the partnership firm(the seller) or can it be separately in the name of the two partners?

If the partnership company authorizes the purchase on the name of company or party or partners. You can find them in the articles of association.

Q2. Does the residential property have to be within India or can it be abroad?

The Indian laws can have control over the properties lying within India.

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

Ask a Lawyer

Get legal answers from lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer