Section 50D — the law in short
What the courts have decided on section 50D, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Madhur Coal Mining Pvt Ltd v DCIT (ITAT Kolkata) — s.50D used to substitute fair market value where shares were sold to group companies below value
ITATHelps departmentUnder appeal
My company sold unquoted shares of group companies below their Rule 11UA value in a year before section 50CA existed. The Assessing Officer has invoked section 50D and substituted fair market value. Can he do that when I have disclosed an actual sale price?
On these facts the Tribunal held he could. It upheld the section 50D addition for AY 2015-16 — a year before section 50CA was on the statute book — because the assessee produced no share purchase agreement, no sale deed and no valuation report to show that the price stated in the return had actually been received from the related-party buyers, so the consideration was treated as not ascertainable within section 50D.
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Trincas Vinimay (P) Ltd v ITO (ITAT Kolkata) — section 50D does not apply where the consideration can be ascertained, even if the transfer document is silent on price
ITATHelps taxpayerNo later treatment found
The transfer documents for my flat booking rights did not state a price, so the Assessing Officer says the consideration is not ascertainable and has substituted fair market value under section 50D. Is silence in the document enough for him to do that?
No. The Tribunal deleted the section 50D addition because, although the affidavits evidencing the transfer did not mention the consideration, the assessee produced copies of the transferees' accounts showing the amounts agreed, and the same amounts had been used to compute the capital gain declared in the return. Section 50D is engaged only where the consideration is genuinely not ascertainable or cannot be determined, and the authorities could not reach that conclusion without making any enquiry of the transferees.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
