• Value of property lower than circle rate

Hi sir,
I purchased a land at vale 410,000 as per purchase deed , however the circle rate for that land  was 1625000 and I had pay to stamp duty as per circle rate. That was registered on 31 march 2014 but I missed that 410000 in my ITR. Tough the amount is mentioned in deed 410000 I got income tax notice for 1625000 as per the stamp duty for which I failed to reply to notice. Now I got another notice for same I have an ITR of 475000 for the same financial year plus I took a personal loans of 250000 in January 2014 .  Still I need to pay tax for the stamp duty amount as it would  double taxation. Please suggest how I could reply to this notice..
Asked 3 months ago in Property Law from Sitamarhi, Bihar
Religion: Muslim
as per section 50 C of income tax act if property is sold for rate below the circle rate then circle rate would be determined to be sale price of property by income tax authorities and capital gains  tax levied accordingly  to the seller 

2) if you claim that fair market value  is below the circle rate then in such case I0  would request valuation officer to carry valuation of property 

3) the valuation determined by valuation officer would be sale price of the property if  valuation determined by valuation officer is lower than circle rate 

4) if valuation officer determines sale price to be higher than circle rate than circle rate would be deemed to be sale price of property 

5) under section 56(2) vii) in case of buyer the difference between sale price and circle rate would be determined to be the income of purchaser and taxed under head income from other sources


6) in your case sale price is mentioned as 4,10,000 but circle rate is Rs 16,25,000

7) the difference of Rs 12,15000 would be determined to be your income and you have to pay tax accordingly 

8) contact a local CA and reply to notice .

Ajay Sethi
Advocate, Mumbai
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1. If you register a property below circle rate the consequences may be disastrous. For the buyer, the amount arrived at (circle rate - purchase price ) would get added as his income (as income from other sources), whereas for the seller (circle rate - sell price ) would get added as his capital gain. Sec 50C of Income Tax Act, 1961 says that if an assessee transfers a capital asset being Land or Building or both at a value less than the value adopted or assessed (in case of registry) or assessable (in case transfer is by power of attorney) by 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 be deemed to be the Sale Consideration of the Capital Asset. So it is advisable always to make an Agreement to sale at least at Stamp Duty Value.

2. If the assessee claims on notice that the value so assessed or assessable exceeds the fair market value of the property and value so assessed or assessable has not been disputed in any appeal or revision before any authority or court the assessing officer may refer the case to valuation officer.

3. Where the value ascertained by the valuation officer: Exceeds the Stamp Duty value, the stamp duty value shall be taken as sales price, whereas if it is lower than the Stamp Duty value then the value so ascertained by the Valuation officer shall be taken as sale consideration.

4. Meet an Income Tax lawyer to reply to the notice. 

Ashish Davessar
Advocate, Jaipur
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Now I got another notice for same I have an ITR of 475000 for the same financial year plus I took a personal loans of 250000 in January 2014 .  Still I need to pay tax for the stamp duty amount as it would  double taxation. Please suggest how I could reply to this notice..

If you feel that you have been slapped with double tax for the same matter, then you have to compile the details of the taxes paid and with the proof of the same you have to give a reply to the notice you have received. 
You may consult an auditor on all such further issues and proceed as per his advise. 
T Kalaiselvan
Advocate, Vellore
13934 Answers
127 Consultations
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