Mr. Arjun entered into an agreement with Mr. Siddharth on 5th April 2024 for sale of a plot for 45 lakhs. An advance of 15 lakhs was received…

I Tax consequences in the hands of Mr. Arjun As per section 50C, where the actual sale consideration is less than the value adopted by the Stamp Valuation Authority for the purpose of charging stamp duty, and such stamp duty value exceeds 110% of the actual sale consideration, then, the value adopted by the Stamp Valuation Authority shall be taken to be the full value of consideration. In a case where the date of agreement is different from the date of registration, stamp duty value on the date of agreement can be considered provided the whole or part of the consideration is received by way of account payee cheque/bank draft or by way of ECS through bank account or through such other electronic mode as may be prescribed, on or before the date of agreement. In this case, since 15lakhs is received through account payee cheque on the date of agreement, stamp duty value on the date of agreement would be considered for determining the full value of consideration. Accordingly, in this case, capital gains would be computed in the hands of Mr. Arjun, for A.Y. 2025-26, taking the actual consideration of 45lakh of plot as the full value of consideration arising on transfer of such plot, since the stamp duty value on the date of agreement does not exceed 110% of the actual consideration. II Tax consequences in the hands of Mr. Siddharth In case immovable property is received for inadequate consideration, the difference between the stamp duty value and actual consideration would be taxable under section 56(2)(x) in the hands of the recipient, if such difference exceeds the higher of 50,000 and 10% of actual sales consideration. In a case where the date of agreement is different from the date of registration, stamp duty value on the date of agreement can be considered provided the whole or part of the consideration is paid by way of account payee cheque/bank draft or by way of ECS through bank account or through such other electronic mode as may be prescribed, on or before the date of agreement. In this case, since 15lakhs is paid through account payee cheque on the date of agreement, stamp duty value on the date of agreement would be considered. Therefore, nothing would be taxable in the hands of Mr. Siddharth under the head "Income from Other Sources" in A.Y.2025-26 since the difference between stamp duty value on the date of agreement and actual consideration does not exceed - 4,50,000, being the higher of 50,000 and 10% of consideration. At the time of subsequent sale of property by Mr. Siddharth to Ms. Nisha (on 21.3.2025), short-term capital gains would arise in the hands of Mr. Siddharth in A.Y.2025-26, since the property is held by him for less than 24 months. Particulars ₹ Full value of consideration (Since actual consideration of 55lakh is higher than stamp duty value of 54lakh) 55 lakhs Less: Cost of acquisition 45 lakhs Short-term capital gains 10 lakhs