Section 80 is the substantive equivalent of 1961 s. 50 D. Where consideration received / accruing from transfer is NOT ASCERTAINABLE OR CANNOT BE DETERMINED, the FMV-on-transfer-date is deemed FVOC for s. 72 computation. This is a…
80
ITA 2025 · Section 80
Section 80 — FMV-AS-FVOC WHERE CONSIDERATION NOT ASCERTAINABLE
Section 80 is the substantive equivalent of 1961 s. 50D. Where consideration received / accruing from transfer is NOT ASCERTAINABLE OR CANNOT BE DETERMINED, the FMV-on-transfer-date is deemed FVOC for s. 72 computation. This is a residual deeming, complementing s. 78 (under-priced land/building), s. 79 (under-priced unquoted shares) — typically invoked for barter transactions, transfers in lieu of services, conversion / restructuring without explicit pricing.
STATUTORY ARCHITECTURE
Section 80 is the FMV-RESIDUAL provision. It activates only where consideration is genuinely unascertainable or undeterminable — NOT where consideration is merely low or contested (which falls under s. 78/79 mechanisms). Typical scenarios: (a) Asset exchanged for goods or services (barter); (b) Transfer in lieu of past services (e.g., shares to lawyer / consultant); (c) Transfer in restructuring without itemised pricing (where slump-sale s. 77 doesn't apply); (d) Court / arbitral disposal where consideration is non-cash or contingent; (e) Strategic disinvestment with deferred / earn-out components.
CASE LAW
B.C. Srinivasa Setty v. CIT (SC) — capital gains charge requires both 'cost' and 'consideration' to be determinable. Section 80 closes the consideration-side gap where machinery would otherwise fail. CIT v. Excel Industries Ltd (SC) — accrual of consideration / FVOC requires real income, not notional. Govind Saran Ganga Saran v. CIT (Bom HC) — barter transactions: FMV of received goods/services = FVOC.
PLANNING NOTES
(i) For barter transactions (e.g., property-for-shares swap), document FMV both ways — FVOC = FMV of asset received. (ii) For asset transfers in lieu of services, value the services at arm's length (related-party? — TP / s. 9 considerations). (iii) For earn-out / contingent consideration deals, the determinable portion at transfer-date is FVOC; subsequent earn-out crystallisation is FRESH CG event in year of receipt. (iv) Maintain valuer-report contemporaneous to transfer-date — Rule 11UA / 11UAE valuation methods may apply mutatis mutandis.
CROSS-REFERENCES