INCOME TAX OFFICER, MATIGARA V. MATIGARA REALTORS PRIVATE LIMITED, SILIGURI

ITA 1904/KOL/2024

AI Insights

The case involves the Income Tax Officer (ITO), Matigara as the appellant and Matigara Realtors Pvt. Ltd. as the respondent. The dispute centered on whether the transactions concerning three properties taken by the assessee on leasehold basis were subject to the provisions of Section 56(2)(x) of the Income Tax Act, which pertains to the taxation of certain transactions involving immovable property. The Assessing Officer (AO) had treated these leasehold transactions as taxable under Section 56(2)(x), leading to an addition of Rs. 3,03,72,500 to the assessee's income. However, the CIT(A) reversed this decision, leading to the revenue's appeal to the tribunal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472676 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 09-09-2024
• Other Referred Cases: CIT Vs Greenfield Hotels and Estate (P) Ltd 2017(389 ITR 68 (Bom), Britannia Industries Ltd. Vs PCIT 2024(161) taxmann.com 705(Kolkata Tri)
• Laws Referred To: Section 56(2)(x) of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

" आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA Įी राजपाल यादव, उपाÚय¢ एबं Įी राजेश क ुमार, लेखा सदèय क े सम¢ [Before Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member ] I.T.A. No. 1904/Kol/2024 Assessment Year: 2018-19 ITO, Matigara Vs. Matigara Realtors Pvt. Ltd. (PAN: AALCM 3699 M) Appellant / ) अपीलाथȸ ( Respondent / (Ĥ×यथȸ) Date of Hearing / सुनवाई कȧ Ǔतͬथ 23.10.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 25.11.2024 For the Appellant/ Ǔनधा[ǐरती कȧ ओर से Shri Diraj Lakhotia, A.R For the Respondent/ राजèव कȧ ओर से Shri Pradip Kumar Biswas, Addl. CIT ORDER / आदेश Per Rajesh Kumar, AM: This is the appeal preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 29.07.2024 for AY 2018-19. 2. The only issue raised in the various grounds of appeal is against the order of Ld. CIT(A) accepting the contention of the assessee that the transactions in respect of 2 I.T.A. No.1904/Kol/2024 Assessment Year: 2018-19 Matigara Realtors Pvt. Ltd. properties were only on leasehold basis and therefore not covered by the provisions of Section 56(2)(x) of the Act. 3. Facts in brief are that the assessee filed return of income during the assessment year on 31.12.2018 declaring total income of Rs. 2,90,730/-. The case of the assessee was selected for scrutiny to examine the investment in the properties. Accordingly, statutory notices were duly issued and served on the assessee. During the course of assessment proceedings, the AO observed that the assessee company had purchased three immovable properties located at Siliguri, West Bengal on 06.02.2018 & 28.02.2018. As per stamp valuation authority, the value of properties were Rs. 46,41,840/-, Rs. 2,31,36,000/- and Rs. 39,51,360/- respectively. The assessee submitted before the AO that these properties were simply taken on leasehold basis and were not transactions of purchase of properties and therefore did not falls within the ambit of provisions of Section 56(2)(x) of the Act. However, the AO brushed aside the contentions of the assessee and invoked the provisions of Section 56(2)(x) and made an addition of Rs. 3,03,72,500/- to the income of the assessee by taking the value of properties as per stamp valuation authority by allowing the deduction of lease premium. 4. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by observing and holding that the provisions of section 56(2)(x) are not applicable to lease hold transactions. 5. After hearing the rival contentions and perusing the material on record, we find that undisputedly the assessee has not purchased any land or building but only taken three properties on lease for which the assessee has paid lease premium of Rs. 13,57,300/-. The AO invoked the provisions of Section 56(2)(x) of the Act by taking the value of these properties as per stamp valuation at Rs. 3,17,29,800/- and thus computed the difference at Rs. 3,03,72,500/- and added the same to income u/s 56(2)(x) of the Act.. The Ld. CIT(A) allowed the appeal of the assessee on the ground that the transfer of leasehold rights in land is not covered u/s 56(2)(x) of the Act and stamp duty valuation is not relevant in that case. We have perused the order of Ld. CIT(A) carefully and found 3 I.T.A. No.1904/Kol/2024 Assessment Year: 2018-19 Matigara Realtors Pvt. Ltd. that the Ld. CIT(A) has passed a correct and reasoned order on this issue. The case of the assessee finds support from the several decisions namely (i) CIT Vs Greenfield Hotels and Estate (P) Ltd 2017(389 ITR 68 (Bom) and Britannia Industries Ltd. Vs PCIT 2024(161) taxmann.com 705(Kolkata Tri). Accordingly, we are inclined to dismiss the appeal of the revenue by upholding the order of Ld. CIT(A). 6. In the result, the appeal of the revenue is dismissed. Order is pronounced in the open court on 25th November, 2024 Sd/- Sd/- (Rajpal Yadav /राजपाल यादव) (Rajesh Kumar/राजेश क ुमार) Vice-President/उपाÚय¢ Accountant Member/लेखा सदèय Dated: 25th November, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ITO, Matigara 2. Respondent – Matigara Realtors Pvt. Ltd, 1B, Sunny Tower Sevoke Road, Siliguri-734001 3. Ld. CIT(A)- NFAC, Delhi 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "