Income Tax Officer-2(2) , Kanpur V. Shri Hari Om Gupta , Kanpur

ITA 222/LKW/2013

• Counselvise Citation: 22223714 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Reasonable cause; Condonation of delay
• Section: 50C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.222/LKW/2013 ASSESSMENT YEAR:2007-08 INCOME TAX OFFICER 2 (2) KANPUR V. SHRI. HARI OM GUPTA 117/K/106, R.S. PURAM SAROVDAYA NAGAR KANPUR TAN/PAN:ABZPG1262C (APPELLANT) (RESPONDENT) C.O. NO.08/LKW/2015 [ARISING OUT OF ITA NO.222/LKW/2013] ASSESSMENT YEAR:2007-08 SHRI. HARI OM GUPTA 117/K/106, R.S. PURAM SAROVDAYA NAGAR KANPUR V. INCOME TAX OFFICER 2 (2) KANPUR TAN/PAN:ABZPG1262C (CROSS-OBJECTOR) (RESPONDENT) DEPARTMENT BY: SHRI. AMIT NIGAM, D.R. ASSESSEE BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 29 09 2015 DATE OF PRONOUNCEMENT: 03 11 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEAL)-II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF :- 2 -: RS.2,03,09,196/- MADE BY THE AO ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF LEASE HOLD PROPERTY BY THE ASSESSEE. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, KANPUR HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE ASSESSEE WAS NOT EH OWNER OF THE LAND BUT WAS ONLY THE HOLDER OF LEASE HOLD RIGHTS FOR 99 YEARS AS PER LEASE DEED DATED 27.09.1984. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II KANPUR HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE LEASE RIGHT HAD BEEN ENJOYED BY THE ASSESSEE TILL 27.10.2006 (DATE OF TRANSFER) AND AFTER THAT THE LEASE RIGHT WERE TRANSFERRED TO M/S MED SASSOMECCANICA (I) PVT. LTD. FOR REMAINING PERIOD OF LEASE. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, KANPUR HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT SECTION 50C OF THE I.T. ACT, 1961 IS RELATED ONLY TO TRANSFER OF CAPITAL ASSETS AND NOT TO THE TRANSFER OF LEASE HOLD RIGHT IN CAPITAL ASSETS. 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, KANPUR HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE PROPERTY SO TRANSFERRED IS NOT CAPITAL ASSET AS PER THE PROVISION OF THE I.T. ACT, 1961. 6. THAT THE ORDER OF THE LD. CIT (A)-II, KANPUR DATED 21.12.2012 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 23.12.2010 BE RESTORED. 7. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION ASSAILING THE VALIDITY OF REOPENING OF THE ASSESSMENT. THE CROSS OBJECTION IS FILED LATE BY 203 :- 3 -: DAYS, FOR WHICH APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED BY THE ASSESSEE EXPLAINING THE DELAY IN FILING OF THE CROSS OBJECTION. 3. HAVING CAREFULLY EXAMINED THE EXPLANATIONS FOR DELAY IN FILING OF THE CROSS OBJECTION, WE FIND THAT THERE IS A REASONABLE CAUSE FOR DELAY IN FILING OF THE CROSS OBJECTION. ACCORDINGLY WE CONDONE THE DELAY AND ADMIT THE CROSS OBJECTION FOR HEARING. 4. IN THE REVENUES APPEAL, THOUGH THE REVENUE HAS RAISED VARIOUS GROUNDS, BUT THEY ALL RELATE TO THE INVOCATION OF THE PROVISIONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') IN TRANSFER OF LEASEHOLD RIGHT BY THE ASSESSEE IN FAVOUR OF M/S MED SASSOMECCANICA (I) PVT. LTD. 5. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ACQUIRED PLOT NOS.34E, 34D, 34C (PART), BLOCK-A, SCHEME NO.40, PANKI, HAVING AN AREA OF 7990.40 SM SITUATED AT PANKI INDUSTRIAL AREA, KANPUR, ON LEASE FOR 99 YEARS FROM KANPUR DEVELOPMENT AUTHORITY VIDE LEASE DEED DATED 27.2.1984. THE ASSESSEE, IN THE IMPUGNED ASSESSMENT YEAR, HAS EXECUTED THE REGISTERED LEASE DEED OF THE AFORESAID PLOT ON 27.10.2006 IN FAVOUR OF M/S MED SASSOMECCANICA (I) PVT. LTD. AND THEREBY LEASEHOLD RIGHTS OF THE ASSESSEE IN THE SAID PROPERTY WAS TRANSFERRED TO THE SAID COMPANY. THE ASSESSEE DID NOT FILE THE RETURN OF INCOME AND FAILED TO DECLARE ANY CAPITAL GAIN ON ACCOUNT OF TRANSFER OF LEASEHOLD RIGHTS IN THE ABOVE SAID PLOTS. THEREFORE, THE ASSESSING AUTHORITY INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT AND CALLED UPON THE ASSESSEE AS TO WHY CAPITAL GAINS ON THE SALE OF PROPERTY IN QUESTION CANNOT BE WORKED OUT AS PER PROVISIONS OF SECTION 50C OF THE ACT, AS THERE IS A DIFFERENCE BETWEEN THE SALE PRICE AS APPEARING IN THE SALE DEED DATED 27.10.2006 AT RS.45 LAKHS AND VALUE OF RS.3,43,80,320/- ADOPTED BY THE STAMP VALUATION AUTHORITY. THE ASSESSING OFFICER ACCORDINGLY COMPLETED THE ASSESSMENT FOR THE :- 4 -: IMPUGNED ASSESSMENT YEAR AND WORKED OUT THE CAPITAL GAIN AT RS.2,03,09,196/- AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE IS SIMPLY LESSEE OF THE PROPERTIES IN QUESTION, THEREFORE, HAD ONLY THE RIGHT TO TRANSFER THE LEASEHOLD RIGHTS IN THE PROSPERITIES. HENCE NO CAPITAL GAIN IS CHARGEABLE ON ACCOUNT OF SALE/TRANSFER OF THE LEASEHOLD RIGHTS OF THE PROPERTY IN QUESTION BECAUSE THE ASSESSEE HAD NO ABSOLUTE RIGHT TO SELL THE IMPUGNED PROPERTY. HE FURTHER PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NARENDRA DHAR VS. STATE OF UP & OTHERS, IN WHICH IT IS HELD THAT THE MARKET VALUE CANNOT BE DETERMINED FOR THE PURPOSES OF STAMP DUTY IN CASE OF TRANSFER OF LEASE BY WAY OF ASSIGNMENT. HE HAS FURTHER PLACED RELIANCE UPON THE ORDER OF THE KOLKATA BENCH OF THE TRIBUNAL, IN WHICH IT IS HELD THAT THE TRANSFER OF LEASEHOLD RIGHTS, DENOTED AS SALE AGREEMENT, CANNOT QUALIFY FOR SALE OF PROPERTY. HENCE PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPLICABLE TO THE INSTANT CASE INVOLVING TRANSFER OF LEASEHOLD RIGHTS. THE LD. CIT(A) RE-EXAMINED THE CLAIM OF THE ASSESSEE AND BEING CONVINCED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE, HELD THAT ON TRANSFER OF LEASEHOLD RIGHTS, THE PROVISIONS OF SECTION 50C OF THE ACT CANNOT BE INVOKED. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 6.3- I HAVE CONSIDERED THE SUBMISSIONS MADE, PERUSED THE MATERIAL ON RECORD AND I HAVE GONE THROUGH THE DEED DATED 27- 10-2006 WHICH IS REFERRED TO IN THE A.O.'S ORDER WHICH IS CAPTIONED AS 'SALE DEED.' THIS DEED HAS BEEN EXECUTED BY THE APPELLANT IN FAVOUR OF M/S. VED SASSOMECCANICA (I) PVT. LTD. AT PAGE NO. 7 OF THE DEED I FIND THAT IT HAS BEEN CLEARLY MENTIONED THAT THE APPELLANT- :- 5 -: '.........OBTAINED ON LEASE FOR A TERM OF 99 YEARS, FACTORY PREMISES ON PLOT NO. 34E, 34D, 34C PART, BLOCK-E, SCHEME NO] 40, PANKI HAVING AN AREA 7990.40 SQ. METERS SITUATED AT PANKI INDUSTRIAL AREA FROM KANPUR DEVELOPMENT AUTHORITY BY VIRTUE OF LEASE DEED DATED 27-2-1984..................' 6.4- IT REVEALS THAT UNDISPUTEDLY APPELLANT POSSESSED LEASE HOLD RIGHTS IN THE PROPERTIES IN QUESTION FOR A TERM OF 99 YEARS. THUS, THE APPELLANT WAS NOT THE OWNER OF THE PROPERTIES IN QUESTION AND WAS NOT AT ALL CAPABLE OF TRANSFERRING THE PROPERTIES IN QUESTION BY WAY OF SALE TO M/S. VED SASSOMECCANICA (I) PVT. LTD. WITHOUT THE PRIOR PERMISSION OF THE OWNERS THE PROPERTIES I.E. KANPUR DEVELOPMENT AUTHORITY, KANPUR. 6.5- NOW, IT HAS TO BE SEEN THAT WHAT HAS BEEN TRANSFERRED BY MEANS OF DEED DATED 27-6-2010 (SUPRA) BY THE APPELLANT IN FAVOUR OF M/S. VED SASSOMECCANICA (I) PVT. LTD. AND FOR THAT IT IS NECESSARY TO QUOTE CONDITION NO. 1 OF THE DEED APPEARING AT PAGE-12 WHICH RUNS AS UNDER :- 1- THAT IN PURSUANCE OF AFOREMENTIONED AGREEMENT AND IN LIEU OF CONSIDERATION OF RS.45,00,000/- (RUPEES FORTY FIVE LACS) BEING PAID BY THE TRANSFEREE TO THE TRANSFEROR AS PER HIS WISH IN THE MANNER HEREINAFTER STATED AT THE FOOT OF THE DEED, THE RECEIPT OF WHICH THE TRANSFERORS HEREBY ACKNOWLEDGES AND AS HAVING RECEIVED AND NOW NOTHING REMAINS DUE, THE TRANSFEROR DOTH HEREBY ASSIGNS CONVEYS AND ALIENATES AND TRANSFERS BY WAY OF ABSOLUTE ASSIGNMENT/TRANSFER TO THE TRANSFEREE M/S. VED SASSOMECCANICA (I) PVT. LTD. FREE FROM ALL SORTS OF THE ENCUMBRANCES CHARGES, DEMANDS ASSIGNMENTS LIENS AND ANY PRIOR AGREEMENT ETC. AND ALSO FREE FROM ANY INJUNCTION FROM ANY LAWFUL COURT ALONGWITH PRESENT AND FUTURE RIGHT, TITLE AND INTEREST THE AFORESAID FACTORY PLOT NOS. 34E, 34B AND 34CPART ALONGWITH THE LEASE RIGHT OF THE LAND THE SAID :- 6 -: CONSTRUCTIONS ETC. STANDING THEREON FULLY DESCRIBED AND DETAILED AT THE FOOT OF THIS DEED ALONGWITH ALL FIXTURES AND FITTINGS ETC. TOGETHER WITH ALL RIGHTS, TITLE, INTEREST, EASEMENTS AND APPURTENANCES ETC. WHATSOEVER UNTO AND UPON THE SAID PROPERTY TO THE TRANSFEREE TO HAVE AND TO HOLD THE SAID PROPERTY HEREBY ASSIGNED FOR THE REMAINDER TERMS OF THE LEASE OR AS MAY BE EXTENDED FROM TIME TO TIME AND TRANSFEROR HAS DELIVERED ACTUAL PHYSICAL VACANT POSSESSION OVER THE SAID PROPERTY TO THE TRANSFEREE AND WHO ARE NOW ENTITLED TO USE, POSSESS AND ENJOY AND OCCUPIER THE SAME AS OWN PROPERTY IN ANY WAY WISE OR MANNER.' 6.6- LIKEWISE CONDITION NO. 2 AND 3 OF THE AFORESAID DEED DATED 27-10-2006 COVENANT TRANSFER OF LEASE HOLD RIGHTS. IN CONDITION NO. 7 THE TRANSFEREE M/S. VED SASSOMECCANICA (I) PVT. LTD. DECLARES AND COVENANTS THAT THE TRANSFEREE SHALL ABIDE BY ALL TERMS AND CONDITIONS OF THE ORIGINAL LEASE DEED DATED 27-9-1984 DULY REGISTERED ON 28-9-1984 EXECUTED BY K.D.A.. KANPUR. IN FAVOUR OF APPELLANT (TRANSFEROR). 6.7- IT IS ABUNDANTLY CLEAR FROM THE UNDISPUTED DOCUMENTS, NAMELY- THE DEED DATED 27-10-2006 (SUPRA) READ WITH LEASE DEED DATED 27-9-1984 EXECUTED BY KANPUR DEVELOPMENT AUTHROITY, KANPUR, IN FAVOUR OF SRI HARI OM SUPTA (THE APPELLANT) THAT THE APPELLANT WAS A LESSEE IN THE PROPERTIES IN QUESTION AND THE APPELLANT TRANSFERRED LEASE HOLD RIGHTS IN FAVOUR OF M/S. VED SASSOMECCANICA (I) PVT. LTD. THERE IS NO DISPUTE OF THIS ASPECT OF THE MATTER, YET THE A.O. TREATED THE APPELLANT AS AN OWNER AND SELLER OF THE PROPERTIES IN QUESTION BECAUSE OF THE FACTS THAT THE DEED DATED 27-10-2006 IS CAPTIONED AS SALE DEED AND THERE IS MENTION OF CONSIDERATION OF RS. 45 LACS. 6.8- I FIND THAT THE APPELLANT PLACED RELIANCE ON THE CASE LAWS OF SHASHANK SINQH CHANDEL V/S U.P. & OTHERS. WRIT PETITION NO. 29672 OF 2009 DECIDED BY HON'BLE MR. JUSTICE PANKAJ MITTAL OF :- 7 -: ALLAHABAD HIGH COURT DECIDED BY JUDGMENT AND ORDER DATED 26-7- 2010, INCOME TAX OFFICER 8(2)(4) V/S PRADEEP STEEL RE-ROLLING MILLS PVT. LTD.; JUDGMENT AND ORDER DATED 15 JULY, 2011 MADE IN APPEAL ITA NO. 341/MUM/2010 (ASSESSMENT YEAR 2003-04) BY DIVISION BENCH, INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI; AND DY. COMMISSIONER OF INCOME TAX MR. TAJENDRA SINGH, ITA NO. 1459/KOL/2011 (ASSESSMENT YEAR 2008-09) 72 DTR (KOL) (TRIB.)-160. RATIO OF THESE CASES ARE TO THE EFFECT THAT TRANSFER OF CAPITAL ASSET CANNOT BE EQUATED WITH A TRANSFER OF LEASE HOLD RIGHTS IN PROPERTY. IN DY.CIT V/S TAJENDRA SINGH, (2012) 72 OTR (KOL) (TRIB.)-160 IT HAS BEEN CLEARLY HELD THAT 'IT IS SINE QUA NON FOR APPLICATION OF SECTION 50C THAT THE TRANSFER MUST BE OF A 'CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH', BUT THEN A LEASEHOLD RIGHT IN SUCH A CAPITAL ASSET CANNOT BE EQUATED WITH THE CAPITAL ASSET PER SE.' 6.9- UNDER THE FACTS AND CIRCUMSTANCES DISCUSSED ABOVE, I AM OF THE WELL CONSIDERED OPINION THAT SECTION-50C CANNOT BE INVOKED IN THE PRESENT CASE. SECTION-50C CAN COME INTO PLAY ONLY IN A SITUATION 'WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT... FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER.' IT IS ESTABLISHED THAT THE APPELLANT WAS NOT OWNER OF THE LAND BUT WAS ONLY THE HOLDER OF LEASE HOLD RIGHTS FOR 99 YEARS AS PER LEASE DEED (CAPTIONED AS SALE DEED) DATED 27-09-1984 AND THE SUCH RIGHTS HAVE BEEN ENJOYED BY THE ASSESSEE TILL 27-10-2006 WHEN THE LEASE RIGHTS HAS BEEN TRANSFERRED TO M/S. VED SASSOMECCANICA (I) PVT. LTD., FOR REMAINING PERIOD OF LEASE WITH THE PRIOR APPROVAL OF OWNER OF THE LAND I.E. K.D.A. 6.10- THUS, UNDER SECTION-50C IT IS ONLY TRANSFER OF CAPITAL ASSET WHICH IS COVERED AND NOT TRANSFER OF LEASE HOLD RIGHTS IN CAPITAL ASSETS (PROPERTIES IN QUESTION), HENCE THE LEASE HOLD RIGHTS IN SUCH :- 8 -: CAPITAL ASSET CANNOT BE EQUATED WITH A CAPITAL ASSET. ON PERUSAL OF CASE LAWS (SUPRA), I, FIND JUSTIFICATION IN THE APPELLANT'S CONTENTION AND ACCORDINGLY ADDITION MADE BY THE ASSESSING OFFICER U/S.50C IS HEREBY DELETED. 7. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER; WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT THE ASSESSEE HAD AGREED TO SELL THE PROPERTY INITIALLY TO SHRI. MONU DUA UNDER DISTRESS, AS HE WAS NOT IN A POSITION TO REPAY THE LOAN OBTAINED FROM THE SBI, IFB, KANPUR AGAINST EQUITABLE MORTGAGE ON THE PROPERTY IN QUESTION. IN ORDER TO PAY THE BANK DUES, THE ASSESSEE APPROACHED ONE SHRI. MONU DUA, WHO OFFERED THE ASSESSEE A SUM OF RS.45 LAKHKS AND THEREAFTER AGREEMENT TO SELL WAS EXECUTED IN RESPECT OF THE PROPERTY IN QUESTION. IN SALE AGREEMENT, THERE WAS A SPECIFIC CLAUSE THAT THE PROPERTY WOULD EITHER BE SOLD TO SHRI. MONU DUA OR TO ANY OTHER PERSON AT HIS INSTANCE. THEREAFTER, A SALE DEED WAS EXECUTED IN FAVOUR OF M/S. VED SASSOMECCANICA (I) PVT. LTD. AT THE INSTANCE OF SHRI. MONU DUA. SINCE THE SALE WAS DISTRESS SALE AND TRANSFER WAS OF ONLY LEASEHOLD RIGHTS IN FAVOUR OF M/S. VED SASSOMECCANICA (I) PVT. LTD., THE PROVISIONS OF SECTION 50C OF THE ACT CANNOT BE INVOKED. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS:- 1. CIT VS. DADHA AND CO., 142 ITR 792. 2. RAM NARAIN AND BROTHERS VS. CIT, 73 ITR 423 3. ABDUL KAREEMIA AND BROS. VS. CIT, 145 ITR 442. 4. CIT VS. BHARATI ENGINEERING CORPORATIION, 180 ITR 32. 5. ATUL G. PURANIK VS. ITO, 141 TTJ 69. :- 9 -: 6. INCOME TAX OFFICER, MUMBAI VS. PRADEEP STEEL REROLLING MILLS PVT. LTD I.T.A. NO. 341/MUM/2010. 7. SMT. KISHORI SHARAD GAITONDE VS. INCOME TAX OFFICER, MUMBAI I.T.A. NO. 1561/MUM/2009. 8. ACIT VS. M/S MUNSONS TEXTILES, MUMBAI I.T.A. NO. 6320/MUM/2010. 9. KANCAST PVT. LTD. VS. INCOME TAX OFFICER, PUNE IN I.T.A. NO. 1265/PN/2011. 8. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS ACQUIRED THE IMPUGNED PROPERTY ON LEASE FROM KANPUR DEVELOPMENT AUTHORITY VIDE LEASE DEED DATED 27.9.1984 FOR A PERIOD OF 99 YEARS. FROM A PERUSAL OF THE AGREEMENT TO SELL OF THE IMPUGNED PROPERTY EXECUTED BY THE ASSESSEE IN FAVOUR OF SHRI. MONU DUA, WE FIND THAT IT WAS A DISTRESS SALE, AS THE ASSESSEE WAS NOT IN A POSITION TO PAY ALL BANK DUES AND THE PROPERTY IN QUESTION WAS KEPT AS COLLATERAL SECURITY WITH BANK BY CREATING EQUITABLE MORTGAGE. AS PER THIS AGREEMENT TO SELL, SHRI. MONU DUA HAS OFFERED THE ASSESSEE A SUM OF RS.45 LAKHS, OUT OF WHICH RS.15 LAKHS WAS PAID AT THE TIME OF EXECUTION OF AGREEMENT TO SELL. IN THIS AGREEMENT TO SELL, IT WAS SPECIFIED THAT THE BALANCE PAYMENT OF RS.30 LAKHS WAS TO BE PAID TO SBI TO CLEAR THE DUES. THEREAFTER A SALE DEED WOULD BE EXECUTED EITHER IN FAVOUR OF SHRI. MONU DUA OR TO SOME OTHER PERSON AT HIS INSTANCE. IT IS ALSO EVIDENT FROM THE LEASE DEED FINALLY EXECUTED IN FAVOUR OF M/S. VED SASSOMECCANICA (I) PVT. LTD. THAT A PAYMENT OF RS.40 LAKHS WAS MADE TO SHRI. MONU DUA, FOR WHICH ACKNOWLEDGEMENT WAS GIVEN BY THE ASSESSEE. :- 10 -: 9. FROM THESE TRANSACTIONS, IT APPEARS THAT IT WAS A DISTRESS SALE AND THE MARKET VALUE OF THE PROPERTY CANNOT BE ASSESSED FOR COMPUTING THE LONG TERM CAPITAL GAIN. MOREOVER, WE HAVE ALSO EXAMINED THE OTHER ASPECTS OF INVOCATION OF PROVISIONS OF SECTION 50C OF THE ACT RELATING TO LEASEHOLD RIGHTS. THE ISSUE WAS EXAMINED BY DIFFERENT BENCHES OF THE TRIBUNAL IN A NUMBER OF CASES REFERRED TO BY THE ASSESSEE, IN WHICH THE TRIBUNAL HAS HELD THAT THE PROVISIONS OF SECTION 50C OF THE ACT CANNOT BE INVOKED IN TRANSFER OF LEASEHOLD RIGHTS. 10. IN THE CASE OF KANCAST PVT. LTD. VS. INCOME TAX OFFICER, PUNE (SUPRA), THE PUNE BENCH OF THE TRIBUNAL HAS ELABORATELY DISCUSSED THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND HAS CATEGORICALLY HELD THAT SECTION 50C OF THE ACT DOES NOT COME INTO OPERATION IN TRANSFER OF LEASEHOLD RIGHTS. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. SECTION 50C OF THE ACT PROVIDES THAT IF THE CONSIDERATION RECEIVED OR ACCRUING IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY OF THE STATE GOVERNMENT FOR SUCH TRANSFER THEN THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION AND THE CAPITAL GAINS WILL BE COMPUTED ACCORDINGLY. THE PHRASEOLOGY OF SECTION 50C OF THE ACT CLEARLY PROVIDES THAT IT WOULD APPLY ONLY TO A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH. THE MOOT QUESTION BEFORE US IS AS TO WHETHER SUCH EXPRESSION WOULD COVER THE TRANSFER OF A CAPITAL ASSET BEING LEASEHOLD RIGHTS IN LAND OR BUILDING. THERE CANNOT BE A DISPUTE TO THE PROPOSITION THAT THE EXPRESSION LAND BY ITSELF CANNOT INCLUDE WITHIN ITS FOLD LEASEHOLD RIGHT IN LAND ALSO. OF-COURSE, LEASEHOLD RIGHT IN LAND IS ALSO A CAPITAL ASSET AND WE FIND NO FAULT WITH THIS STAND OF THE REVENUE. SO HOWEVER, EVERY KIND OF A CAPITAL ASSET IS NOT COVERED WITHIN :- 11 -: THE SCOPE OF SECTION 50C OF THE ACT FOR THE PURPOSES OF ASCERTAINING THE FULL VALUE OF CONSIDERATION. IN-FACT, THE HEADING OF SECTION ITSELF PROVIDES THAT IT IS SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. THEREFORE, THERE IS A SIGNIFICANCE TO THE EXPRESSION A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH CONTAINED IN SECTION 50C OF THE ACT. THE SIGNIFICANCE IS THAT ONLY CAPITAL ASSET BEING LAND OR BUILDING OR BOTH ARE COVERED WITHIN THE SCOPE OF SECTION 50C OF THE ACT, AND NOT ALL KINDS OF CAPITAL ASSETS. 10. IN-FACT, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ATUL G. PURANIK (SUPRA) WHICH WAS PRESSED INTO SERVICE BY THE ASSESSEE BEFORE THE LOWER INCOME-TAX AUTHORITIES, CLEARLY BRINGS OUT THE AFORESAID PROPOSITION. IN OUR VIEW, THE SAID DECISION OF THE TRIBUNAL HAS BEEN WRONGLY DISREGARDED BY THE CIT(A). THE PLEA OF THE CIT(A) IS BASED ON THE MEANING OF EXPRESSION IMMOVABLE PROPERTY CONTAINED IN EXPLANATION BELOW SECTION 269UA(D)(I) OF THE ACT. ACCORDING TO THE CIT(A), THE EXPLANATION BELOW SECTION 269UA(D)(I) OF THE ACT MAKES IT CLEAR THAT THE LAND, BUILDING, ETC. INCLUDED IN THE PHRASE IMMOVABLE PROPERTY ALSO INCLUDES ANY RIGHTS THEREIN. THE CIT(A) HAS CORRELATED THIS TO SECTION 2(47) OF THE ACT WHICH DEFINES THE EXPRESSION TRANSFER IN RELATION TO CAPITAL ASSET. AS PER THE CIT(A), SECTION 2(47) OF THE ACT CONTAINS A REFERENCE TO THE MEANING OF THE IMMOVABLE PROPERTY CONTAINED IN SECTION 269UA(D) OF THE ACT AND THEREFORE TRANSFER IN RELATION TO A CAPITAL ASSET DEFINED IN SECTION 2(47) OF THE ACT WOULD INCLUDE WITHIN ITS PURVIEW TRANSFER OF A CAPITAL ASSET, BEING LEASEHOLD RIGHTS IN LAND ALSO. UPTO THIS STAGE, THERE CAN BE NO QUARREL WITH THE STAND OF THE CIT(A). THE INCONGRUITY STARTS WHEN THE CIT(A) FURTHER GOES TO SAY THAT BECAUSE OF THE AFORESAID PROVISIONS, IT WAS NOT NECESSARY TO MENTION RIGHTS IN LAND OR BUILDING SPECIFICALLY U/S 50C OF THE ACT ALSO. :- 12 -: 11. IN OUR CONSIDERED OPINION, THE POINT MADE BY THE CIT(A) IS QUITE FALLACIOUS. FIRSTLY, IT HAS TO BE UNDERSTOOD THAT THE MEANING OF THE EXPRESSION IMMOVABLE PROPERTY CONTAINED IN SECTION 269UA(D) OF THE ACT HAS BEEN REFERRED TO IN SECTION 2(47) OF THE ACT ONLY IN RELATION TO SUB-CLAUSE (V) AND (VI) THEREOF. SECONDLY, FROM THE MEANING OF EXPRESSION IMMOVABLE PROPERTY CONTAINED IN SECTION 269UA(D) OF THE ACT, THE ONLY THING THAT CAN BE INFERRED IS THAT EVEN LEASEHOLD RIGHTS IN LAND IS A CAPITAL ASSET. HOWEVER, THE SAID INFERENCE DOES NOT JUSTIFY THE INCLUSION OF A TRANSACTION INVOLVING TRANSFER OF LEASEHOLD RIGHTS IN LAND WITHIN THE PURVIEW OF SECTION 50C OF THE ACT. QUITE CLEARLY, SECTION 50C OF THE ACT APPLIES ONLY TO CAPITAL ASSET BEING LAND OR BUILDING OR BOTH. IT DOES NOT APPLY TO LEASEHOLD RIGHTS IN THE LAND OR BUILDING. THE STAND OF THE CIT(A) THAT IT WAS NOT NECESSARY TO MENTION RIGHTS IN LAND OR BUILDING SPECIFICALLY IN SECTION 50C OF THE ACT, IN OUR VIEW, IS QUITE MISCONCEIVED. 12. APART FROM THE AFORESAID DISCUSSION, WE FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S PRADEEP STEEL RE-ROLLING MILLS PVT. LTD. (SUPRA) HAS CONSIDERED AN IDENTICAL CONTROVERSY WHEREIN IT HAS BEEN HELD THAT SECTION 50C OF THE ACT WOULD APPLY ONLY TO CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH AND IT WOULD NOT APPLY IN RELATION TO LEASEHOLD RIGHTS IN LAND OR BUILDING. TO THE SIMILAR EFFECT IS THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF M/S JAIPUR TIMES INDUSTRIES (SUPRA). THE JAIPUR BENCH OF THE TRIBUNAL FOLLOWED AN EARLIER DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHAVO NORGREN (I) LTD. VS. DCIT VIDE ITA NO.8101 OF 2011 DATED 14.12.2012 TO HOLD THAT SECTION 50C OF THE ACT DOES NOT APPLY TO TRANSFER OF LEASEHOLD RIGHTS IN LAND. THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHRI YASIN MOOSA GODIL (SUPRA) IS ALSO ON SIMILAR LINES. :- 13 -: 13. IN VIEW OF THE AFORESAID LEGAL POSITION AND IN THE ABSENCE OF ANY DECISION TO THE CONTRARY BROUGHT OUT BY THE REVENUE, WE CONCLUDE BY HOLDING THAT SECTION 50C OF THE ACT DOES NOT COME INTO OPERATION IN THE PRESENT FACTS WHERE WHAT IS TRANSFERRED BY THE ASSESSEE IS ONLY THE LEASEHOLD RIGHTS IN LAND WHICH WERE ACQUIRED BY IT FROM MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION (I.E. MIDC) ON A 99 YEARS LEASE BASIS. AS A CONSEQUENCE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE LONG TERM CAPITAL GAIN ON TRANSFER OF LEASEHOLD LAND BY ADOPTING THE FULL VALUE OF CONSIDERATION OF RS.2,35,04,000/- DECLARED BY THE ASSESSEE IN THE COMPUTATION OF INCOME AND ALLOW THE APPROPRIATE RELIEF TO THE ASSESSEE. THUS, ON THIS GROUND ASSESSEE SUCCEEDS. 11. SINCE IT HAS BEEN REPEATEDLY HELD BY DIFFERENT BENCHES OF THE TRIBUNAL THAT PROVISIONS OF SECTION 50C OF THE ACT CANNOT BE INVOKED IN RESPECT TO THE TRANSFER OF LEASEHOLD RIGHTS, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY ADJUDICATED THE ISSUE FOLLOWING THE ORDER OF THE TRIBUNAL. WE ACCORDINGLY CONFIRM THE SAME. 12. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE, WE FIND NO JUSTIFICATION TO DEAL WITH THE ISSUES RAISED IN THE CROSS OBJECTION. ACCORDINGLY, THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED. 13. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:3 RD NOVEMBER, 2015 :- 14 -: JJ:2610 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR