Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Revocation Of Gift Of Immovable Property Is Liable To Tax?

QUERY: Does section 50C applicable to a gift of a flat to a non-relative? What would be implication under section. 50C as well as section 56(2)(vii) if such gift is revoked afterwards?
ANSWER: A gift to non relative would attract section 56(2) and would be assessed in the hands of the recipient. In such case section 50C would not be attracted. Section 50C would be attracted when there is transfer of capital assets having consideration [see Sunil Sidharth v. CIT (156 ITR 509 – (SC)]. Thus if there is no consideration then section 50C would not be attracted.

First; this being immovable property it is necessary that gift should be on the stamp paper of Rs. 100/- and on which stamp duty is payable and therefore revocation would not affect the taxability of the recipient unless the property was gifted as per the clauses (b) & (d) of the second proviso of section 56(2)(vii) of the Act.
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