Shri Sachidanad Sharma, Ghaziabad V. ITO, Ghaziabad

ITA 1122/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7118 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 19-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition
• Section: 50C; 54

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 3 , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 1122 /DEL/201 6 AY: 200 7 - 08 SH. SACHIBANAD SHARMA VS. ITO, WARD 2(3) 137, PANCHWATI COLONY CGO COMPLEX II GT ROAD KAMLA NEHRU NAGAR GHAZIABAD 201 001 GHAZIABAD 201 002 PAN: BJGPS 9148 K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRATAP GUPTA, C.A. RESPONDENT BY : SH. AMRIT LAL, SR.D.R. O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) G H AZIABAD DATED 07 . 01 . 2016 FOR THE A SSESSMENT Y EAR (A.Y.) 2007 - 08 . 2. FACTS IN BRIEF : - THE ASSESSEE IS AN INDIVIDUAL. HE WAS ALLOTTED A PLOT OF LAND AT NO. 263, B LOCK JACRANDA E STATE, S ECTOR - ETA - 1, G REATER NOIDA I NDUS TRIAL D EVELOPMENT A UTHORITY ON LEASE, WITH RIGHT TO CONSTRUCT A RESIDENTIAL BUILDING OVER THE PLOT A S PER PLAN. THE ASSESSEE TRANSFERRED THE LEASEHOLD RIGHTS OVER THE PLOT BY WAY OF A TRANSFER DEED DATED 17 . 01 . 2007. THE ISSUE THAT ARISES BEFORE ME IS PAGE 2 OF 5 WHE THER SECTION 50C OF THE I NCOME T AX A CT , 1961 (THE ACT) CAN BE INVOKED BY THE A . O . ON THE TRANSFER OF LEASEHOLD RIGHTS. 3. THE HON BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX (APPEALS) VS SH. KISHAN D AS S IN ITA 64/2014 ORDER DATED 10 . 02 . 2014 HELD THAT : I N ALL THESE, THE VARIOUS BENCHES OF THE T RIBUNAL APPEARED TO HAVE STRICTLY CONSTRUED THE LETTER OF SECTION 50C TO SAY THAT THE CONVEYANCE HAS TO BE COMPLETE IN RESPECT OF ALL ENTITLEMENTS TO THE PROPERTY. IN THE PRESENT CASE, THE T R IBUNAL HAS UPHELD THE VALUATION OF THE ASSESSEE. WE NOTICE THAT APART FROM THE THREE B ENCHES, DECISIONS OF WHICH HAVE BEEN RELIED UPON, THE T RIBUNAL ALSO CONSIDERED THE DISTINCTION MADE BETWEEN SECTION 50C AND 5 4 D(1) WHICH SPECIFICALLY PROVIDES THAT CAPIT AL GAINS FROM TRANSFER BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW OF CAPITAL ASSET BEING LAND, BUILDING OR ANY RIGHT IN THE LAND OR BUILDING ? SECTION 50C, ON THE OTHER HAND, TALKS OF, TRANSFER BY ASSESSEE OF THE CAPITAL ASSET BEING LAND OR BUILDING O R BOTH? THE CONTRAST IN LANGUAGE, GIVEN THAT SECTION 50C IS A SPECIFIC PROVISION, WHICH SEEKS TO ENACT A PRESUMPTION IS SIGNIFICANT. THE VALUATION OF THE CONCERN ED STATE AGENCY OR THE GOVERNMENT THAT THE COST OF LAND IS, IN THE CIRCUMSTANCES HI GHER , IS DE TERMINATIVE. WE NOTICE THAT IN THE PRESENT CASE, THERE HAS BEEN NO SUCH VALUATION. THAT APART, THE T RIBUNAL ADOPTED AN APPROACH WHICH, APPEARS TO BE CORRECT, IN THAT IT TOOK NOTE OF THE PROPORTIONATE TRANSFER OF LEASEHOLD RIGHTS FOR 54 YEARS. IF THE PAGE 3 OF 5 REVEN UE S CONTENTION WERE TO BE CONCEDED, THEN IN THE GIVEN FACTS OF CASE, IF THE LEASEHOLD RIGHTS FOR RESIDUAL PERIOD OF 3 OF 4 YEARS WERE TO BE VALUED AT PAR WITH THE COST OF ACQUISITION OF THE FULL TENURE OF THE LEASE OF 90 YEARS, ABSURD AND ANOMALOUS RESULTS WOULD ENSUE. 3.1. THE HON BLE DELHI HIGH COURT UPHELD THE DECISION OF THE T RIBUNAL IN THE CASE OF ARIF AKHATAR HUSSAIN VS. IT O IN ITA NO. 543/MUM/2010 . 4. RESPECTFULLY FOLLOWING THE PROPOSITIONS LAID DOWN BY THE HON BLE DELHI HIGH COURT TO THE FACTS OF THE PRESENT CASE I HOLD AS FOLLOWS. 5. THE ASSESSEE WHO IS A PENSIONER AND SENIOR CITIZEN WAS ALLOTTED THE SAID PLOT OF LAND BY G REATER NOIDA D EVELOPMENT A UTHORITY ON 26 TH OF JUNE 2006. HE TRANSFERRED THE LEASEHOLD RIGHTS I N THE PLOT BY WAY OF TRANSFER DEED DATED 17/01/2007. TRANSFER TOOK PLACE WITHIN A PERIOD OF 6 TO 7 MONTHS OF ALLOTMENT. THE COST OF ACQUISITION OF WHAT WAS RS. 18,07,415 AND THE SALE CONSIDERATION WAS RS. 18,00,000/ . S HORT TERM CAPITAL LOSS OF RS.7415/ . THE AO TO OK THE CIRCLE RATE OF THE STATE AUTHORITIES AT RS. 33,00,000/ . WHEN G REATER NOIDA D EVELOPMENT A UTHORITY ALLOTS THE LEASEHOLD RIGHTS TO THE ASSESSEE AT RS. 18,07,415/ THE CONTENTION THAT THE MARKET VALUE OF THE CIRCLE RATE AS PER T HE SUB REGISTRAR OFFICE IS RS. 33,00,000 / - DOES NOT APPEAR TO BE CORRECT. IT APPEARS THAT THIS VALUATION IS FOR FREEHOLD PROPERTY AND NOT F O R LEASEHOLD PROPERTY. PAGE 4 OF 5 THUS ON TH ESE FACTS AND CIRCUMSTANCES I HOLD THAT, THE VALUATION OF RS. 33 LACS UNDER SECTION 50C IS FACTUALLY INCORRECT. 6. IN THE RESULT I DELETE THE ADDITION MADE BY INVOKING SECTION 50 C OF THE ACT BY THE AO AND ALLOW THE APPEA L . 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 R D SEPTEMBER, 2016. S D / - (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED: THE 2 3 R D SEPTEMBER, 2016 MANGA PAGE 5 OF 5 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR