An owner of the property enters into a development agreement and receives consideration either in whole or in part by way of construction of superstructure on the part of the plot retained by him. Registration in favour of flat buyers is made sometimes after the agreement at a price below the guideline value, which may have been meanwhile escalated. In such a case, Sec. 50C which requires stamp value to be adopted as sale consideration for purposes of computation of capital gains becomes unworkable. Can the owner take it that Sec. 50C will not apply to him.
In the case of a development agreement, the land is ultimately registered in favour of the ultimate purchasers of flats usually effected by the developer as a power of attorney holder either earlier or at a later date on which the owner becomes liable to tax under the development agreement. Transfer implied under the development agreement is not what is got registered by the developer in favour of the various purchasers of undivided interest in the plot while acquiring the flat with separate construction contract for the superstructure, but still as part of a single transaction of sale of a readymade flat. Sec. 50C is not capable of being applied in such a case, so that it could have no application. If the owner has received any on-money payment either from the developer or the purchasers of the flats, such amount should certainly be assessable and not otherwise. There are other situations, where applicability of Sec. 50C may not be possible. Where registration is made long after agreement for sale, stamp value may be much higher than the agreed price for the property. Similar is a case, where there is auction sale by the court or where the transaction is approved by the RBI or any other government agency, Sec. 50C should not be applicable, though the law has not made any specific exception even for such sales.