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TMI BlogValuation - transfer of capital assets when the actual consideration is not ascertainable: Clause 80 of the Income Tax Bill, 2025 vs. Section 50D of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... os where the actual consideration cannot be quantified, thereby ensuring that tax liabilities are computed fairly and consistently. This commentary delves into the specifics of each provision, analyzing their objectives, implications, and potential areas of reform. Objective and Purpose The primary objective of both Clause 80 and Section 50D is to provide a clear mechanism for valuing consideration from the transfer of capital assets when the actual consideration is not ascertainable. This is crucial for the computation of capital gains, which is a significant component of income tax. The legislative intent behind these provisions is to prevent tax evasion and ensure that the tax liabilities reflect the true economic value of the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interpretation Issues: - While the provisions are clear in their intent, practical challenges may arise in determining FMV, especially for unique or illiquid assets. The lack of a standardized method for FMV calculation can lead to disputes between taxpayers and tax authorities. 4. Legal Principles and Precedents: - The principle of FMV as a proxy for consideration is well-established in tax law, supported by various judicial interpretations. Courts have generally upheld the use of FMV in scenarios where actual consideration is not determinable, emphasizing the need for consistency and fairness in tax assessments. Practical Implications The implications of these provisions are significant for taxpayers, tax authorities, and the broader ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g tax liabilities for capital gains. 2. Potential Updates in Clause 80: - Clause 80 may incorporate insights gained from the application of Section 50D, potentially addressing issues such as valuation disputes or the need for standardized FMV determination methods. 3. International Comparisons: - Similar provisions exist in other jurisdictions, reflecting a global trend towards using FMV as a basis for taxation when actual consideration is not ascertainable. This approach aligns with international best practices, ensuring that tax systems are fair and transparent. Conclusion Clause 80 of the Income Tax Bill, 2025, and Section 50D of the Income-tax Act, 1961, play a crucial role in ensuring the fair taxation of capital gains. By deemin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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