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Scouting the Overhaul of Deemed Income Provisions A Critical Analysis of S.56(2)(X) & S.50CA of the Income Tax Act, 1961

Digvijay Singh & Ranjeet Soni
Dr. Ram Manohar Lohiya National Law University, Lucknow
Uttar Pradesh, India

Volume II – Issue II, 2019

Finance Act, 2017 brought major changes in Income Tax Act, 1961 for the purpose of creating new ways through which government can tax the assessees to overcome demonetization drive. Point worth noting is government has followed a very consultative approach by asking for opinions from public regarding implementation of new provisions. For this purpose, Section 50CA & 56(2)(x) was inserted in the Act. In this paper we have examined and analyzed these Sections and the loopholes which existed before the amendment and why there was a need to bring the amendment. As there were various ambiguities resided regarding the computational formulas of Fair Market Value (FMV) of certain assets, for this we have studied problem subsisted in erstwhile laws and examined the solution given by the government to encounter those problems and to tackle the void which still remains we have given some suggestive measures. We have also analyzed that the new approach of the legislature is focused to enhance the revenue of the government as it tax both buyer and seller in a single transaction and thus results in the double taxation. This approach of the government hurts the property transfer and immediate amendments are needed to address this problem. This paper delves into impact created difference for minorities, capital assets, and discuses the retrospective application of new provisions. We have also tried to explain the broad meaning of words in the bare provisions of the income tax act through leading judgements related to them.

 

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