Assistant Commissioner of Income-tax, Circle - 1, Aurangabad V. M/s. Badve Engineering Ltd, Aurangabad

ITA 2096/PUN/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3307 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-10-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, A PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.2096/PUN/2017 / ASSESSMENT YEAR : 2014-15 ACIT, CIRCLE-1, AURANGABAD VS. M/S. BADVE ENGINEERING LTD., P.NO.D-39, MIDC, WALUJ, AURANGABAD 431 136 PAN : AAACB9378F APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-1, AURANGABAD ON 23-06-2017 IN RELATION TO THE ASSESSMENT YEAR 2014-15. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF AU TOMOBILE PRESS COMPONENTS AND WIND MILL GENERATION. IN THE RETURN F ILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED LONG TE RM CAPITAL GAIN OF RS.2,84,77,186/-. THE ASSESSING OFFICER (AO) DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSES SEE SOLD TWO LEASEHOLD LANDS SITUATED AT PLOT NO.C-5-2, SHENDRA MIDC, DIST. ASSESSEE BY SHRI NIKHIL S. PATHAK REVENUE BY SHRI S.P. WALIMBE DATE OF HEARING 21-10-2021 DATE OF PRONOUNCEMENT 21-10-2021 ITA NO.2096/PUN/2017 M/S. BADVE ENGINEERING LTD., 2 AURANGABAD AND RANJANGAON, DIST. AURANGABAD FOR A CONS IDERATION OF RS.6.95 CRORE AND RS.5.50 CRORE RESPECTIVELY ON 03- 03-2014 TO SHREEPRIYA AUTO PARTS PVT. LTD. THERE IS NO DISPUTE AS REGAR DS THE CAPITAL GAIN ARISING FROM RANJANGAON LAND WHICH WAS TRANSFERR ED AT A CONSIDERATION HIGHER THAN THE STAMP VALUE. THE ONLY ISSUE IN THIS APPEAL IS ABOUT THE CAPITAL GAIN DECLARED BY THE ASSESSEE FRO M SALE OF LAND SITUATED AT SHENDRA MIDC, DIST. AURANGABAD. THE AO OBSERVED THAT WHILE COMPUTING THE CAPITAL GAIN, THE ASSESSEE DID NOT TAKE STAMP VALUE OF THE LAND AND ONLY THE FULL VALUE OF CONSID ERATION RECEIVED WAS CONSIDERED. INVOKING THE PROVISIONS OF SEC TION 50C OF THE ACT, THE AO COMPUTED THE ADDITIONAL AMOUNT OF CAPITAL GAIN CHARGEABLE TO TAX AT RS.5,81,60,000/-. THE LD. CIT(A), RELYING ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CIT VS. GREENFIELD HOTELS & ESTATES (P) LTD. (2017) 77 TAXMANN.COM 308 (BOMBA Y), ALLOWED THE ASSESSEES CONTENTION. THE REVENUE HAS COME UP IN APPEAL AGAINST THE DECISION OF THE LD. CIT(A). 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE CORE OF CONTROVERSY IS AS TO WHE THER SECTION 50C IS APPLICABLE IN RESPECT OF LEASEHOLD LAND TRANSFERRED BY THE ASSESSEE. THE ASSESSEE ACQUIRED RIGHT IN THE LEASEHOLD LAN D FROM MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION ON 10-01-200 6 FOR ITA NO.2096/PUN/2017 M/S. BADVE ENGINEERING LTD., 3 A CONSIDERATION OF RS.17.10 LAKH. A COPY OF THE LEASE A GREEMENT HAS BEEN PLACED AT PAGE 7 OF THE PAPER BOOK, WHICH INDIC ATES THAT THE ASSESSEE WAS INITIALLY CONFERRED WITH 5 YEARS LEASE TO ENTER U PON THE LAND AND EXECUTE CONSTRUCTION THEREON. THEREAFTER, THE LEA SE ON THE LAND WAS TO CONTINUE. ON 03-03-2014, THE ASSESSEE ENTER ED INTO AN AGREEMENT WITH SHREEPRIYA AUTO PARTS PVT. LTD. FOR TRANSFER OF THE LEASEHOLD RIGHT IN THE LAND ALONG WITH BUILDING CONSTRUCTED THERE ON. BEFORE TRANSFERRING SUCH LEASEHOLD RIGHT, THE ASSESSEE WAS REQUIRED TO TAKE PERMISSION FROM MIDC, WHICH IT OBTAINED. PURSUANT TO S UCH PERMISSION, THE ASSESSEE EXECUTED DEED OF ASSIGNMENT UNDE R WHICH THE LEASEHOLD LAND ALONG WITH BUILDING CONSTRUCTED THEREON WAS TRANSFERRED. WHILE DETERMINING THE AMOUNT OF CAPITAL GAIN ON THE TRANSFER OF THE LAND, THE ASSESSEE SEPARATELY TOOK THE AMO UNT OF FULL VALUE OF CONSIDERATION OF LAND. THE AO OPINED THAT SECTION 50C GOVERNS THE SITUATION AND HENCE STAMP VALUE OUGHT TO HAVE BEEN CONSIDERED AS FULL VALUE OF CONSIDERATION. HE, THEREFORE, SUBSTITUTED THE FULL VALUE OF CONSIDERATION WITH THE STAMP VALUE AND ACCOR DINGLY MADE THE ADDITION. THE MOOT QUESTION WHICH OBTAINS BEFORE THE TRIBUNAL IS AS TO WHETHER SECTION 50C IS ATTRACTED ON THE TRANS FER OF A LEASEHOLD LAND. THIS ISSUE IS NO MORE RES INTEGRA VIEW OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ITA NO.2096/PUN/2017 M/S. BADVE ENGINEERING LTD., 4 GREENFIELD HOTELS & ESTATES (P) LTD. (SUPRA) IN WHICH IT HAS BEEN HELD THAT SECTION 50C CANNOT BE APPLIED WHILE COMPUTING CAPITAL GAIN ON TRANSFER OF LEASEHOLD RIGHTS IN LAND. SINCE THE FACTS OF THE INSTANT CASE ARE FULLY GOVERNED BY THE JUDGMENT OF THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF GREENFIELD HOTELS & ESTATES (P) LTD. (SUPRA), WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED ORDER, WHICH LAID DOWN THAT SECTION 50C DOES NOT APPLY ON THE TRANSFER OF RIGHTS IN LEASEHOLD LAND. WE, THEREFORE, COUN TENANCE THE VIEW TAKEN BY THE LD. CIT(A). 4. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2021. SD/- SD/- ( S.S. VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 21 ST OCTOBER, 2021 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, AURANGABAD 4. 5. 6. THE PCIT-1, AURANGABAD DR, ITAT, A BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO.2096/PUN/2017 M/S. BADVE ENGINEERING LTD., 5 DATE 1. DRAFT DICTATED ON 21-10-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 21-10-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *