Latest Expert Exchange Queries

Make your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: form 3cd :: VAT Audit :: empanelment :: TDS :: VAT RATES :: cpt :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment
 
 
News Headlines »
 Last minute checklist for filing income tax return
 Filing tax returns? Here are seven things to remember
 Clarifications on computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies.
 Mistakes in filing income tax returns that may get you a tax notice
 Know how you can claim return of income in Form 26 AS case
 What you must know for tax filing this year
 How to file tax return if you have two Form 16s
 10 things you should know about Form 26 AS
 How to file income tax return without Form 16
 How to rectify income tax returns
 Income-tax (21st Amendment) Rules, 2017

Annual value vs guideline value
November, 23rd 2006

The Government has always been sceptical about transactions in real estate. And its abiding suspicion is indeed not misplaced or exaggerated, what with black money playing a significant role in such transactions. Therefore, the owner of a building comes under the microscope of the tax authorities not only all through the period he owns it but even when it is disposed of. When he owns it and lets it out, he has to pay tax on a notional income, which broadly is actual rent or fair rent, whichever is greater.

This regime was put in place to checkmate the landlords who often took a hefty sum outside the books, as it were, to avoid tax. A ham-handed law with noble intent hits as much the noble-minded as it hits the deviants even if you charge less on charitable or sympathetic considerations from your tenant, the tax would be on the higher notional value. This regime is as old as the income-tax law in India itself is.

When one sold a building, there was no such presumption as to the consideration till the assessment year 2002-2003, except that in respect of high-value transactions consideration, for example, being in excess of Rs 75 lakh in Mumbai the Government had the right to make pre-emptive purchase at its discretion wherever it suspected under-declaration of the true consideration, with cash or other extraneous consideration accounting for the difference.

Stamp duty authorities

But with effect from the AY 2003-2004, guideline value fixed by stamp duty authorities is deemed to be the consideration uniformly in respect of all sale transactions big or small where the reported consideration is less in terms of Section 50C of the Income-Tax Act, 1961.

Stamp duty authorities have the reputation of going for the jugular with a high-pitched assessment both in a spirit of sadism as well as to worm into the hearts of the C&AG. But to the credit of Section 50C it must be said that it has at least put in place an authority to determine the guideline value, who is accountable to appellate authorities or, at the option of the assessee, to the valuation officer.

Market rent

No such authority is there to ascertain the market rent which normally corresponds to the fair rent contemplated by Section 23 while dealing with annual value. One wishes that the apex court, while casting its imprimatur on the concept of annual value and squelching all doubts on its constitutional validity in Bhagwan Das Jain vs UOI (1981 128 ITR 315), had ordained setting up of an authority akin to the one under Section 50C.

That this case arose in respect of a self-occupied house does not make it any less relevant in the context of debate on annual value, which applies as much to let-out houses as it does to the self-occupied ones. Such an authority could well be the stamp duty officer himself in which case he would be playing a dual role one for fixing rental value and another for fixing fair value of the property itself.

But having no authority at all leaves the assessee at the tender mercies of the assessing officer (AO). And to be fair to the AO, he cannot be expected to make a roving enquiry as to the fair rent, especially if the assessee has a house at a place which does not come under his jurisdiction. One hopes this omission would be made good at the earliest.

S. Murlidharan
(The author is a Delhi-based chartered accountant.)

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Company Overview

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions