SECTION 45(3) AND 50C

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AS PER SECTION 45(3), PROFIT OR GAIN ARISING FROM THE TRANSFER OF A CAPITAL ASSET BY A PERSON TO A FIRM, IN WHICH HE IS OR BECOMES A PARTNER, BY WAY OF CAPITAL CONTRIBUION OR OTHERWISE, AMOUNT CHARGEABLE TO TAX IS ' AMOUNT RECORDED IN THE BOOKS OF ACCOUNT '.

AS PER Section 50C, WHERE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE B 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 OR ASSESSABLE SHALL, FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER.

NOW MY QUERY IS, IF PARNER OF FIRM TRANSFER LAND IN FIRM AS A CAPITAL CONTRIBUTION BY RS. 15 LACS AND ASSESSABLE (SINCE DOCUMENT IS NOT REGISTERED)VALUE OF SUCH LAND IS 25 LACS. IN SUCH SITUATION, 50C OVERRIDE SECTION 45(3) OR NOT.IF RELEVANT JUDGMENT IS AVALIABLE, IT WOULD BE BETTER.

AI Summary

Debate on whether Section 50C overrides Section 45(3) of Income Tax Act in land transfer as capital contribution. A query was raised regarding the interaction between Section 45(3) and Section 50C of the Income Tax Act when a partner transfers land to a firm as capital contribution. The issue was whether Section 50C, which assesses value based on stamp duty valuation, overrides Section 45(3), which considers the value recorded in the firm's books. One response suggested that Section 50C would apply, affecting capital gains tax. Another response argued that Section 45(3) prevails, as both are deeming provisions but 45(3) specifically addresses the value recorded in the firm's books.