Value of FSI and TDR not to be included in Land Value u/s 50C of IT Act

Generally, the provisions of Indian tax laws provide that transfers of immovable property must be at a fair valuation. However, the Income Tax Appellate Tribunal (‘ITAT’), Mumbai Bench, has ruled, in Income-tax Officer v. Shri Prem Rattan Gupta, that the value of TDR and FSI cannot be the subject mattter of section 50C of the Income Tax Act, 1961.

Section 50C of ITA not applicable to transfer of Immovable Property held through Co.

In Irfan Abdul Kader Fazlani vs. ACIT (ITAT Mumbai) (Entire order available here) the assessee was the shareholder of a company called Kamala Mansion Pvt. Ltd (KMPL). KMPL owned flats in a building known as Om Vikas Apartments, located at Walkeshwar Road, Mumbai- 400 026. The assessee sold the shares for a sum of approximately  Rupees Thirty Seven Lakhs and Fifty One Thousand Only and capital gains were offered on that basis. The AO & CIT(A) held that by the sale of shares in the company, the assessee had in actual fact transferred the immovable property belonging to him, and it was merely an indirect way of transferring the flats, for lesser consideration

Introduction to Property Tax in India

Property tax in India is not as easy to understand as someone might think. However, if we dissect it into smaller and simpler to understand parts, it will definitely make things a lot easier.

The property tax rates in India have been rationalized to make them easier for public to understand. The changes have been made to make the tax system comply with the international property tax standards. Capital Value System (CVS) has been introduced in Bangalore. Similarly Delhi has set up a website making tax payments a lot easier. However, there are still a lot of misconceptions about property tax in India that need to be cleared. The most important question that often goes unanswered is