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CS Professional · Corporate Restructuring, Valuation and Insolvency · Taxation and Stamp Duty Aspects of Corporate Restructuring

Meera Textiles Ltd sold a factory building held as a capital asset under an agreement. The sale consideration was ₹5,00,000 less than the stamp duty value, but the stamp duty value was only 105% of the consideration received. Under the Income-tax Act, 2025 (section 78), what is the full value of consideration for computing capital gains?

The full value of consideration is the actual consideration received. Under section 78(1)(b), where the stamp duty value does not exceed 110% of the consideration, the consideration is used. Since the stamp duty value here is 105% of it, the deeming of the stamp duty value does not apply.

  1. AThe stamp duty value, because consideration is lower than it
  2. BThe consideration actually received, because the stamp duty value does not exceed 110% of itCorrect
  3. CThe average of the stamp duty value and the consideration
  4. DThe fair market value fixed by a Valuation Officer in every case

Explanation

Section 78(1)(b) provides that if the stamp duty value does not exceed 110% of the consideration received or accruing, the consideration is deemed to be the full value of consideration. Here the stamp duty value is 105% of the consideration, so the actual consideration applies. Option A ignores this tolerance band.

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