Section 50c of the Income Tax Act

As per Section 50C if a property is sold below the Circle Rate, the circle rate of the property would be deemed

to be the rate at which property has been sold and capital gains tax would be levied assuming that the property

has been sold at the Circle Rate.

Irrespective of the consideration for which the property has been sold, if it has been sold for a price below the

Circle Rate, the circle rate would be assumed to be the Sale Price and Capital Gains Tax would be levied.

However, in case the taxpayer claims before the Assessing Officer that the fair market value of the property is

genuinely lower than the Circle Rate, the Assessing Officer may request the Valuation Officer to conduct a

valuation of the property. In case a valuation is conducted by the Valuation Officer and

1. Value ascertained by the Valuation Officer is lower than the Circle Rate: The Value so ascertained by the

Valuation Officer would be deemed to be the Sale Price

2. Value ascertained by the Valuation Officer is more than the Circle Rate: The Circle Rate would be

deemed to be the Sale Price.

Thus, from the above it is clear that if a Reference is made to the Valuation Officer, the sale price to be

considered for the purpose of Capital Gains cannot be increased but can only be decreased.

As per Income tax act, for computation of Capital gain, higher of the two is considered as sale consideration,

1.stamp duty value or

2.agreement value

It is true that under Income Tax Act stamp duty value or actual consideration whichever is higher basis for levy of capital gains tax.

If the sale price is less than the price adopted for stamp duty purposes, the value adopted for stamp duty purposes will be considered as the deemed sale price u/s 50C of the Income Tax Act.

If you feel that the stamp duty value adopted is not correct , you may contest it before the assessing officer. Then the assessing officer will have to refer it to the valuation officer for valuation of the property.