s.50D — Fair market value as full value where consideration cannot be determined
Where the consideration for a transfer is not ascertainable or cannot be determined, the fair market value of the asset transferred on the date of transfer is deemed to be the full value of consideration.
Inserted after section 50C by section 17 of the Finance Act, 2012 with effect from 1 April 2013, so it applies from assessment year 2013-14. The Department's 2026 edition carries the same text with no later amendment noted. The counterpart in the Income-tax Act, 2025 is section 80.
Income-tax Act, 1961
s.50D
Income-tax Act, 2025
s.80
In force from 1 April 2026, but s.536(2)(c) preserves the 1961 Act for tax years beginning before that date.
In short
Section 50D of the Income-tax Act, 1961 provides: "Where the consideration received or accruing as a result of the transfer of a capital asset by an assessee is not ascertainable or cannot be determined, then, for the purpose of computing income chargeable to tax as capital gains, the fair market value of the said asset on the date of transfer shall be deemed to be the full value of the consideration received or accruing as a result of such transfer." It was inserted by the Finance Act, 2012 with effect from 1 April 2013. It is not a non obstante provision, so it does not displace section 45(5A), which fixes its own full value for an individual or Hindu undivided family under a registered agreement. Its work in joint development is for landowners outside section 45(5A) who are paid in built-up area not yet built. In Vivekanand Padegal (3 September 2020, assessment year 2013-14) the Bangalore Tribunal applied it at paragraph 6 because "such cost of construction to be constructed in future cannot be determined in the year of transfer", and accepted the owner's guidance value of the land at Rs 3,200 a sq ft on the agreement date over the developer's letter of Rs 1,575 a sq ft. The Karnataka High Court in Sarojini M. Kushe (1 December 2021, paragraph 13) said the section, though later than the year before it, would "throw some light". In L.K. Trust (9 June 2026, paragraphs 8.11 to 9) the Bangalore Tribunal, computing business income on land the trust had converted into stock-in-trade, refused the owner's plea to value the land, took the guideline value of the constructed area received, Rs 1,208 a sq ft or about Rs 33.14 crore, as fair market value under section 50D read with section 43CA, and then accepted the owner's own higher figure of Rs 48 crore. Section 50D by its words applies only in computing capital gains, so the order is an analogy for a capital asset, not a holding on one. The counterpart in the Income-tax Act, 2025 is section 80, which states the same rule for computing income under the head "Capital gains".
What the provision does
Supplies a full value of consideration where none can be ascertained or determined, by taking the fair market value of the asset transferred on the date of transfer. It does not apply where the consideration is fixed or measurable; on its words it values what was given up rather than what was received, though one business-income order has valued the area received; and it does not override section 45(5A). Where the agreement is stamped as a transfer of the land, whether it or section 50C governs is open.
Threshold questions
- Is the consideration genuinely not ascertainable or incapable of determination, as distinct from unrecorded or disputed
- Does section 45(5A) apply, supplying its own full value for an individual or Hindu undivided family under a registered agreement
- What is the date of transfer on which fair market value is to be taken
- Is the asset valued the land or undivided share given up, rather than the flats or revenue received
- Is the land stamped as transferred, so that the Revenue will rely on section 50C instead
- Is the transfer in assessment year 2013-14 or later
In practice
The recurring disputes.
Whether a defined share of built-up area is consideration that cannot be determined
The owner's argument is that on the date of transfer the consideration is a building not yet constructed, whose value cannot be determined then, which is what the Bangalore Tribunal held in Vivekanand Padegal (paragraph 6). The Revenue argued there, and will argue again at full strength, that the agreement fixes a measurable consideration, a stated area to a stated specification, that the developer's cost or the market value of that area can be determined, and that section 50D is a fallback that never arises where section 48 can work on the actual consideration. The Visakhapatnam Tribunal in Sitha Mahalakshmi Katamaneni (31 August 2026, paragraph 11) took fair market value on the date of transfer, citing the logic of section 50D and section 45(5A). The Benches that have decided the point favour the owner; no Gujarat decision was found.
Which asset is valued
The text values "the said asset", the asset transferred, on the date of transfer, so the owner gets the value of the land or undivided share he gave up, as in Vivekanand Padegal. L.K. Trust, a business-income case on stock-in-trade, instead took the guideline value of the constructed area received (paragraphs 8.14 and 8.15). The Revenue will prefer whichever is higher, and will say the area received is the true measure of what the owner got. The owner's answer is the text, which points to the land; the Revenue's reply is that a valuation of the area received is simply the actual consideration under section 48, which leaves section 50D no room at all. Padegal valued the land; L.K. Trust rejected the land in terms (paragraph 8.11) and valued the area received under section 50D itself; no order has dealt with the section 48 reply.
Section 50D against section 50C where the agreement is stamped
Where a development agreement is registered and stamped as a conveyance of the land, the Revenue applies section 50C to the land, as the Hyderabad Tribunal upheld in revision in Sanjay Kumar Sanghi (23 March 2022, paragraph 11). The owner's argument is that section 50C needs a money consideration that is "less than" the stamp duty value, which consideration in kind cannot be, and that the Ahmedabad Tribunal in Minal Urmil Shah (2 January 2025, paragraph 10) said section 50C "is not found applicable on the transfer of development rights", though that was an additional reason in a case decided mainly on its facts. Which provision governs a stamped agreement for built-up area is open, and the Ahmedabad statement is not a full holding.
Revenue-sharing agreements
Where the owner is to receive a percentage of future sales, the consideration is not ascertainable when the agreement is signed. The Revenue's argument is that if a transfer takes place on signing or possession, section 50D values the land on that date and the gain is taxed then. The owner's answer is that nothing accrues until the share is realised, drawing on the Supreme Court's reasoning in Balbir Singh Maini (4 October 2017, paragraphs 27 and 28) that no income accrued where the project failed. No decision applying section 50D to a revenue-sharing agreement was found; the owner's case is strongest where the project has not progressed.