Applicability of Section 50C of Income Tax Act 1961

[Tax DEPTT]

As assessee has entered into an agreement to sell his agricultural land to a builder in FY 2011-12. Immediately, after agreement to sell, the builder applied for CLU (conversion for land use) and the land was approved for conversion into residential property.  Now, at the time of registration of land, the  Revenue authorities are insisting for registration of land as per applicable circle rates for residential property instead of agricultural land. Therefore, the builder will get the land registered as per circle rates applicable for residential property, but actual consideration is being paid as per rate decided for agricultural land.  

My query is whether in the hands of assessee, for the purpose of computation of capital gain, whether provision of Section 50C (Special Provision for full value of consideration in certain cases) will be applicable or not.

AI Summary

Section 50C Applicability Questioned in Sale of Agricultural Land Converted to Residential Property Before Registration A query was raised by a telecom circle regarding the applicability of Section 50C of the Income Tax Act, 1961, when agricultural land sold to a builder was converted to residential property before registration. The revenue authorities required registration at residential property rates, while the sale was agreed upon at agricultural land rates. The concern was whether Section 50C, which deals with the full value of consideration for capital gains, would apply. The response suggested checking if the agreement was written and registered, as these factors could influence the applicability and potential appeal outcomes, though the Assessing Officer might still invoke Section 50C.