ITO, Rampur V. M/s. Pashupati Electrodes Pvt. Ltd., Rampur

ITA 3892/DEL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69197 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 30-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHUBAR KUMAR BHAGAT
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C

Judgement Text

ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F NEW DELHI BEFORE SHRI B.C.MEENA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3892/DEL/2010 ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER-II, VS M/S PASHUPAT I ELECTRODES PVT. LTD., RAMPUR. AJ EETPUR, RAMPUR (U.P.) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MADHUBAR KUMAR BHAGAT, SR.DR RESPONDENT BY : NONE O R D E R PER CHANDRAMOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX(A), BAREILLY DATED 13.4. 2010 IN APPEAL NO. 155/ITO-II/RAMPUR/09-10 FOR AY 2007-08. 2. GROUND NO. 5 AND 6 OF THE REVENUE ARE GENERAL IN NATURE WHICH NEED NO ADJUDICATION. REMAINING GROUNDS READ AS UNDER:- 1. UNDER THE CIRCUMSTANCES OF THE CASE WHETHER THE CIT (A), BAREILLY IS JUSTIFIED IN LAW IN NOT TR EATING THE TRANSFER OF FACTORY BUILDING AS TRANSFER OF CAPITAL ASSETS AS PER PROVISIONS OF SECTION 2(47) AND SECTION 45 O F THE INCOME TAX ACT, 1961, WHEREAS IT HAS BEEN HELD BY HON'BLE HIGH COURT OF MADRAS IN CASE [2007] 160 TAXMAN 183 (MAD) THAT TRANSFER OF LEASEHOLD RIGHTS IS CAPITAL GAIN. ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 2 2. UNDER THE CIRCUMSTANCES OF THE CASE WHETHER THE CIT (A), BAREILLY IS JUSTIFIED IN LAW IN NOT APPREC IATING THE FACT THAT INCOME AND/OR LOSS ARISING ON TRANSFE R OF SUCH FACTORY BUILDING IS ASSESSABLE AS SHORT TERM C APITAL GAIN IN TERMS OF PROVISIONS OF SECTION 45 OF THE I. T. ACT APPLICABLE FOR COMPUTATION OF CAPITAL GAIN. 3. UNDER THE CIRCUMSTANCES OF THE CASE, WHETHER THE CIT (A), BAREILLY IS JUSTIFIED IN LAW IN NOT APPRECIATI NG THE FACT THAT SPECIAL PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961 APPLICABLE IN RESPECT OF TRANSFER OF CAPITAL ASSETS, BEING LAND OR BUILDING OR BOTH ARE SQUARELY APPLICABLE ON THE TRANSFER OF SUCH FACTORY BUILDING AS THESE ARE SPECIAL DEEMING PROVISIONS FOR TREATING F ULL VALUE OF CONSIDERATION IN CERTAIN CASES. 4. UNDER THE CIRCUMSTANCES OF THE CASE WHETHER THE CIT (A), BAREILLY IS JUSTIFIED IN LAW IN NOT APPREC IATING THE FACT THAT THE PRESCRIBED CIRCLE RATES FIXED BY DISTRICT MAGISTRATE OF EACH DISTRICTS SEPARATELY FOR INDUSTR IAL LANDS GIVEN ON LEASEHOLD BASIS IN ORDER TO ARRIVE A FFAIR MARKET VALUE AND THE RATES PRESCRIBED IN PUBLIC DOM AIN HAVE BEEN VERIFIED BY THE AO FROM OFFICIAL WEBSITE. 3. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER FIN ALIZED THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT SHOWN CORRE CT AND TRUE SHORT TERM CAPITAL GAIN ACCRUED ON SALE OF LAND SITUATED AT AZ EETPUR INDUSTRIAL ESTATE, DISTRICT RAMPUR, BAREILLY. THE AO FINALIZED THE AS SESSMENT BY MAKING AN ADDITION OF RS.10,83,136.57 TO THE RETURNED INCOME OF THE ASSESSEE. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, THE ASSESS EE FILED AN APPEAL BEFORE ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 3 THE COMMISSIONER OF INCOME TAX(A), BAREILLY WHICH W AS ALLOWED BY THE IMPUGNED ORDER WITH AN OBSERVATION THAT SECTION 50C OF THE ACT HAS NO APPLICATION TO THE CASE OF THE ASSESSEE. NOW, THE REVENUE IS BEFORE THIS TRIBUNAL WITH THE SECOND APPEAL WITH THE GROUNDS AS MENTIONED HEREINABOVE. GROUNDS NO. 1 TO 4 4. THE MAIN POINT OF CONTROVERSY EMERGING FROM THES E GROUNDS IS THAT THE REVENUE IS AGGRIEVED BY THE OBSERVATIONS AND FI NDINGS OF THE COMMISSIONER OF INCOME TAX(A) THAT THE PROVISIONS O F SECTION 50C OF THE ACT ARE NOT APPLICABLE IN RESPECT OF IMPUGNED TRANS FER OF ASSET IN THE CASE AND THE COMMISSIONER OF INCOME TAX(A) WRONGLY DELET ED THE ADDITION MADE BY THE ASSESSING OFFICER O ACCOUNT OF SHORT TERM CA PITAL GAIN. 5. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD, INTER ALIA IMPUGNED ORDER AND T HE ASSESSMENT ORDER. 6. LD. DR SUBMITTED THAT AS PER FACTS AND CIRCUMSTA NCES OF THE CASE, THE ASSESSING OFFICER RIGHTLY OBSERVED THAT THE TOTAL V ALUE OF TRANSFER OF PROPERTY IS TO BE TAKEN AT FULL VALUE OF CONSIDERATION U/S 5 0C OF THE ACT FOR COMPUTING CORRECT AND TRUE SHORT TERM CAPITAL GAIN. THEREFOR E, THE ASSESSING OFFICER RIGHTLY COMPUTED THE SHORT TERM CAPITAL GAIN DECLAR ED BY THE ASSESSEE AND MADE ADDITION IN THIS REGARD. THE DR FURTHER SUBMI TTED THAT THE COMMISSIONER OF INCOME TAX(A) IGNORED THE FACTUAL A ND LEGAL POSITION OF ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 4 IMPUGNED TRANSFER OF ASSET AND THE COMMISSIONER OF INCOME TAX(A) GROSSLY ERRED IN NOT TREATING THE TRANSFER OF FACTORY BUILD ING AS TRANSFER OF CAPITAL ASSET AS PER PROVISIONS OF SECTION 2(47) AND SECTIO N 45 OF THE ACT. THE DR FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME T AX(A) WAS NOT JUSTIFIED IN NOT APPRECIATING THE FACT THAT INCOME OR LOSS AR ISING ON TRANSFER OF SUCH FACTORY BUILDING WAS ASSESSABLE AS SHORT TERM CAPIT AL GAIN IN TERMS OF PROVISIONS OF SECTION 45 OF THE ACT APPLICABLE FOR COMPUTATION OF CAPITAL GAIN. THE DR ALSO SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) DID NOT APPRECIATE THE FACT THAT SPECIAL PROVISIONS OF SECTION 50C OF THE ACT ARE APPLICABLE IN RESPECT OF TRANSFER OF CAPITAL ASSET BEING LAND OR BUILDING OR BOTH ARE SQUARELY APPLICABLE ON THE IMPUGNED TRANSF ER OF FACTORY BUILDING IN THE PRESENT CASE BECAUSE THESE ARE DEEMING PROVISIO NS FOR TREATING FULL VALUE OF CONSIDERATION. 7. THE DR PARTED HIS ARGUMENT WITH THE SUBMISSION T HAT THE COMMISSIONER OF INCOME TAX(A) ALSO ERRED IN LAW AND ON FACT IN NOT APPRECIATING THE FACT THAT THE PRESCRIBED CIRCLE RA TES FIXED BY DM, BAREILLY SEPARATELY FOR INDUSTRIAL USE GIVEN ON LEASEHOLD BA SIS IN ORDER TO ARRIVE AT FAIR MARKET VALUE AND THE RATES PRESCRIBED IN PUBLIC DOM AIN HAVE ALSO BEEN VERIFIED BY THE ASSESSING OFFICER BEFORE PASSING TH E ASSESSMENT ORDER. ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 5 8. WE HAVE HEARD ARGUMENTS OF DR. WHEN THE CASE WA S CALLED FOR HEARING, NEITHER THE ASSESSEE NOR HIS REPRESENTATIV E ATTENDED THE PROCEEDING BEFORE THIS TRIBUNAL. ON CAREFUL PERUSAL OF RECORD , IMPUGNED ORDER AND ASSESSMENT ORDER, WE FIND IT APPROPRIATE TO DECIDE THE CASE AFTER HEARING THE DR. THEREFORE, WE PROCEED TO DECIDE THE APPEAL. 9. WE OBSERVE THAT AS PER IMPUGNED ORDER, THE ASSES SEES REPRESENTATIVE MADE FOLLOWING SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX(A):-- THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN APPLYING THE PROVISION OF SECTION 50C OF INCOME TAX ACT REGARDING THE TRANSFER OF LEASE HOLD RIGHTS IN THE INDUSTRIAL PLOT SITUATED AT AZEETPUR INDUSTRIAL EST ATE, RAMPUR. THE PROVISION OF SECTION 5OC(1) ARE APPLICA BLE WHEN THE OWNERSHIP OF THE LAND AND BUILDING OR BOTH ARE TRANSFERRED FOR CONSIDERATION AND THE CONSIDERATION IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTH ORITY OF STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY IN RESPECT OF SUCH TRANSFER. THE RELEVANT SECT ION IS ENUMERATED AS UNDER:- 'WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITA L ASSET BEING LAND AND BUILDING OR BOTH IS LESS THAN THE VA LUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYME NT OF ST4MP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED SHALL FOR THE PURPOSE OF SECTIO N 48 BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THE AJEETPUR INDUSTRIAL AREA HAD BEEN DEVELOPED BY THE GOVERNMENT FOR THE PURPOSE OF SETTING UP AN INDUSTRIAL ESTATE WITH ABSOLUTE RIGHTS AND DECIDED TO SUB ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 6 DIVIDE THE ABOVE LAND INTO SMALL PLOTS FOR INDUSTRI AL UNITS AND HAD SUBSEQUENTLY DECIDED TO GRANT ON LEASE SUCH PLOT TO THE INDUSTRIALISTS FOR ERECTION ON SUCH DIVIDED PLOTS FACTORIES ACCORDING THE FACTORY BYE LAWS. THIS PROPERTY IS ONLY LEASE HOLD PROPERTY FOR 99 YEARS AND AS PER THE TERMS AND CONDITIONS OF LEASE AGREEMENT THIS PROPERTY COULD NOT BE TRANSFERRED /S UBLET TO ANY OTHER PERSONS WITHOUT THE PRIOR PERMISSION F ROM DISTRICT INDUSTRIES CENTRE, RAMPUR. THIS CONTENTS I S CLEARLY MENTIONED ON THE PAGE NO 5 AT POINT NO K OF ORIGINAL LEASE DEED. ' THAT THE LEASE WILL IN NO CASE ASSIGN, RELINQUIS H, MORTGAGE, SUBLET, TRANSFER OR PART WITH THE POSSESS ION OF ANY PORTION LESS THAN THE WHOLE OF THE DEMISED PREM ISES NOR CAUSE ANY SUBDIVISION THEREOF BY MATES AND BOUN D OR OTHERWISE, AND WILL NOT, WITHOUT THE PREVIOUS CONSE NT IN WRITING OF THE DIRECTOR OF INDUSTRIES U.P. SUBLET, RELINQUISH, MORTGAGE OR ASSIGN HIS INTEREST IN THE DEMISED PREMISES, OR THE BUILDINGS ERECTED THEREON OR BOTH AS A WHOLE, AND EVERY SUCH TRANSFER, ASSIGNMENT, RELINQUISHMENT, MORTGAGE OR SUBLETTING OF THE WHOLE OF THE DEMISED PREMISES OR BUILDINGS OR BOTH SHALL BE SUBJECT TO AND THE TRANSFEREES AND ASSIGNEES SHALL BE BOUND BY ALL THE COVENANTS AND CONDITIONS HEREIN CONTAINED AND BE ANSWERABLE TO THE DIRECTOR OF INDUSTRIES U.P. IN ALL RESPECTS THEREOF. PROVIDED ALWAYS THAT NO SUCH ASSIGNMENT, RELINQUISHMENT OR TRANSFER WILL BE VALID OR PERMISS IBLE WHERE THE ASSIGNEE IS NOT AN INDUSTRIALIST APPROVED BY THE DIRECTOR OF INDUSTRIES U.P.'. THE ASSESSEE HAD TRANSFERRED THE LEASEHOLD RIGHTS IN THE PLOT OF DIC, RAMPUR TO MR VINEET KUMAR GUPTA ON THE PREMIUM AMOUNT OF RS. 32400/-AS PER THE DIRECTION/TERMS AND CONDITION OF DISTRICT INDUSTRIE S CENTRE, RAMPUR AND PAID THE STAMP DUTY OF RS. 3400/ - AND ALSO GOT THE REGISTERED AGREEMENT FROM SUB ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 7 REGISTRAR, TEHSIL SADAR, RAMPUR ON DT. 14/3/2007. T HE ASSESSEE WAS HAVING ONLY LEASE HOLD RIGHTS. HE HAD NO ABSOLUTE RIGHTS TO SALE/EXCHANGE/RELINQUISH OF THIS PROPERTY. THE ACTUAL RIGHTS WAS IN THE HAND OF GENE RAL MANAGER OF DISTRICT INDUSTRIES CENTRE ON BEHALF OF GOVERNOR OF U.P. THE LEASE TRANSFER AGREEMENT IS EXECUTED AS TRIPARTY AGREEMENT AMONGST OURSELF, SHRI VINEET KUM AR GUPTA AND GENERAL MANAGER, DISTRICT INDUSTRIES CENT RE, RAMPUR ON BEHALF OF UP GOVERNOR. THE DEED WAS EXECUTED AFTER GRANTING APPROVAL BY THE DISTT. MAGISTRATE, RAMPUR WITH CERTAIN CONDITIONS MENTIONE D IN THE APPROVAL/PERMISSION, THE COPY OF THE SAME IS EN CLOSED HEREWITH. IN OUR CASE THE VALUE OF LEASEHOLD RIGHTS IN THE LAND AS PREMIUM AMOUNT HAS BEEN ASSESSED BY THE SUB REGISTRAR, RAMPUR OF RS. 32400/- FOR THE STAMP DUTY PURPOSES AND TAKEN THE STAMP OF RS. 3400/- AND ISSU ED THE REGISTERED DOCUMENTS TO THE ASSESSEE. THE COMPANY HAS ONLY TRANSFERRED LEASEHOLD RIGHTS IN THE PLOT WHICH WAS GIVEN ON LEASE BY DIST RICT INDUSTRIES CENTER, RAMPUR VIDE REGISTERED LEASE DEE D DATED 15/5/1992 AND ALL THE TERMS AND CONDITION OF THE ORIGINAL LEASE DEED DATED 12/5/1992 HAS BEEN MADE APPLICABLE IN THE TRANSFER AGREEMENT DATED 14/3/200 7. THE LEASE HAS BEEN TRANSFERRED TO SHRI VINEET KUMAR GUPTA ONLY ON THE PERMISSION GRANTED BY AN ORDER NO 2502 DATED 4/1/2007 AS PER G 0 NO 1888/18/2/92 DT 30/4/92. THIS TRANSFER DEED IS ONLY EXECUTED BY ALL THE THREE PARTS AS PER TERNS AND CONDITIONS OF ORIGINAL LEASE DEED DT 15/5/92 AND THE TRANSFER RIGHT IN THE LEASE LAND AS PER ORIGINAL LEASE DEED EXECUTED BETWEEN DISTRICT INDUSTRIES CENTER, RAMPUR AND THE ASSESSEE. THE ASSESSEE HAS NOT TRANSFERRED/SOLD THE PLOT TO MR VI NEET KUMAR GUPTA FOR ANY CONSIDERATION. THE ASSESSEE HAD PAID PREMIUM OF RS. 32400/- ORIGINAL AT THE TIME OF LEASE DEED DT 15/5/92 WHICH HAS ALSO BEEN DETERMINED FOR THIS ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 8 TRANSFER AGREEMENT OF LEASE RIGHT AS MENTIONED IN T HE FIRST PAGE OF THE TRANSFER AGREEMENT RS 32400/. THE PROVI SION OF SECTION 50C ARE NOT APPLICABLE AT ALL IN OUR CAS E AS THERE IS NO CONSIDERATION OF LAND FROM SHRI VINEET KUMAR GUPTA. THE LAND IS OF U P GOVERNMENT AND WE HAVE ON LY LEASE HOLD RIGHT FOR RUNNING THE INDUSTRIES IN THE SAID PLOT. WE HAVE NOT SOLD THE PLOT TO SHRI VINEET KUMA R GUPTA WHICH IS ALSO CLEAR FROM THE TRANSFER AGREEME NT ITSELF. WHERE THERE IS NO SALE CONSIDERATION RECEIV ED FOR THE SALES OF LAND, THE PROVISION OF SECTION 5OC DOE S NOT ATTRACTS. WITHOUT PREJUDICE TO THE ABOVE, IF FOR SAKE OF THE ARGUMENT IT IS PRESUME THAT THE ASSESSEE HAD RECEIV ED CONSIDERATION FOR SALES OF LAND THOUGH THERE IS NO SALES, EVEN THAN AS PER SECTION 5OC THE CONSIDERATION IS T O BE TAKEN ONLY THAT AMOUNT WHICH HAS BEEN ADOPTED OR ASSESSED BY AUTHORITY -OF STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STATE STAMP DUTY IN RESPECT O F SUCH TRANSFER AND NOT MORE THAN THAT. THE COMPETENT AUTH ORITY, SUB REGISTRAR HAS ASSESSED AND ADOPTED FOR THIS TRA NSFER AGREEMENT, THE PREMIUM AMOUNT OF RS. 32,400/- ONLY. WHICH HAS ALSO BEEN TAKEN BY US. THEREFORE THE CONSIDERATION OF MORE THAN 32400/- CAN NOT BE TAKEN FOR DETERMINING CAPITAL GAIN/LOSS U/S 5OC OF INCOME TAX ACT. THEREFORE THE CONSIDERATION ADOPTED BY THE LEARNED ASSESSING OFFICER OF RS. 9,72,000.00 IS AGA INST THE PROVISION OF SECTION 5OC. THE CONSIDERATION REC EIVED AND ASSESSED AND ADOPTED BY THE SUB REGISTER FOR RE GISTRY PURPOSE OF RS. 32,400.00 HAS TO BE TAKEN AS PER PRO VISION OF SECTION 50C OF INCOME TAX ACT. THE ADDITION MAD E ON THIS ACCOUNT MAY PLEASE BE DELETED. THEREFORE ALSO THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN ADOPTING THE BOOK VALUE AS CONSIDE RATION IN PLACE OF CONSIDERATION RECEIVED BY THE ASSESSEE OF RS. 1,17,600.00. ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 9 THEREFORE THE ADDITION MADE OF RS. 1,43,536.57 IS AGAINST THE PROVISION OF ACT WHICH MAY PLEASE BE DELETED.' 10. THE COMMISSIONER OF INCOME TAX(A), BAREILLY DEC IDED THE ISSUE WITH THE FOLLOWING OBSERVATIONS AND FINDINGS:- THE FACTS IN ISSUE ARE THAT THE ASSESSEE GOT LEASEHOLD RIGHTS IN THE PLOT FROM THE DISTRICT INDU STRY CENTER RAMPUR FOR LEASE OF 99 YEARS FOR SETTING UP AN INDUSTRIAL UNIT. THE REQUIRED PERMISSION WAS OBTAIN ED FROM THE CONCERNED AUTHORITY FOR TRANSFER OF LEASEH OLD RIGHTS AFTER MAKING PAYMENT OF DUES AND TRANSFER CHARGES. ACCORDINGLY, AN AGREEMENT WAS MADE BETWEEN THE ASSESSEE AND SHRI VINEET KUMAR GUPTA ON 14.3.20 07 FOR RS. 1.5 LAKH. THE ASSESSEE FILED RETURN OF INCO ME BY DISCLOSING LOSS OF RS. 1,72,134/-. ADMITTEDLY, IT WAS A TRANSFER OF LEASEHOLD RIGHTS GIVEN BY THE DISTRICT INDUSTRY CENTER RAMPUR TO THE LEASEHOLDER FOR THE REMAINING LEASE TENURE. IT WAS ALSO A FACT THAT THE TRANSFER AGREEMENT WAS REGISTERED WIT H THE SUB-REGISTRAR ON 14.3.2007 AND PAID STAMP VALUE OF RS. 3,000/- ON IT. THE A.O. MADE ADDITION ON THE GROUND THAT THE FACTS AND SUBMISSIONS FILED BY THE ASSESSEE WERE NO T ACCEPTABLE BECAUSE THEY WERE FOUND BASELESS. THE A. O. GAVE HIS FINDING THAT THE LEASEHOLD LAND COMPRISED OF 648 SQ. MTR., LOCATED IN INDUSTRIAL AREA OF RAMPUR FOR WHICH CIRCLE RATE WAS PRESCRIBED AT RS. 15,000/- PER SQ. MTR. THEREFORE, HE WORKED OUT SALE VALUE OF RS. 9,72,000 /- .BESIDES, HE CONSIDERED THE VALUE OF FACTORY BUILDI NG AT RS. 5,83,200/- @ 600/0 OF THE VALUE OF THE PLOT. TH US, THE TOTAL SALE CONSIDERATION FOR LAND AND BUILDING WAS DETERMINED AT RS. 15,55,200/- . IT WAS FURTHER MENT IONED THAT THE DOCUMENTS FURNISHED BY THE ASSESSEE WERE EXAMINED BUT THEY DID NOT HAVE ANY FORCE. ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 10 THE CONTENTION OF THE ASSESSEE WAS THAT THE VALUE DETERMINED U/S 50C WAS NOT APPLICABLE IN THE CASE O F THE ASSESSEE BECAUSE THE GENERAL MANAGER DISTRICT INDUS TRY CENTER RAMPUR ITSELF CONFIRMED IN ITS LETTER DATED 12.10.2009 THAT THE RATE OF THE INDUSTRIAL AREA AND PLOTS THEREIN WAS DETERMINED BY A COMMITTEE AS PER GOVERNMENT ORDERS. THE FINAL RATE OF THE INDUSTRIAL PLOTS ARE APPROVED BY THE COMMISSIONER AND DIRECTOR OF INDUSTRIES, U.P. KANPUR. IT WAS SPECIFICALLY MENTIO NED THAT THE DISTRICT CIRCLE RATES DETERMINED BY THE DI STRICT MAGISTRATE ARE NOT APPLICABLE IN THE CASE OF PLOTS IN INDUSTRIAL AREA. HOWEVER, THE A.O. DID NOT CONSIDER THIS SUBMISSION OF THE ASSESSEE. HE WORKED OUT SHORT TER M CAPITAL GAINS AT RS. 10,83,136/-IN PLACE OF SALE CONSIDERATION OF RS. 1,50,000/-. IN THE GIVEN FACTS AND CIRCUMSTANCES, IT IS IMPORTANT TO ANALYZE AND DISCUSS THE FACTS OF THE P RESENT CASE IN THE LIGHT OF THE FINDINGS OF THE A.O. THE P ROPERTY UNDER CONSIDERATION BELONGS TO THE DEPARTMENT OF INDUSTRIES OF THE STATE GOVERNMENT OF U.P. IT ALLOT TED LEASEHOLD RIGHT/LICENSE TO THE ALLOTTEE FOR USING T HE SAME FOR CERTAIN TENURE MENTIONED IN THE LEASE AGREEMENT AND ALSO SUBJECT TO THE CONDITIONS INCLUDING PAYMENT OF SERVICE AND MAINTENANCE CHARGES, MONTHLY RENT AND O THER LIABILITIES WHICH WOULD BE RAISED BY STATE GOVERNME NT FROM TIME TO TIME. MOREOVER, THE LESEE WOULD BE OBL IGED TO COMPLY WITH THE CONDITION TO ESTABLISH ARID COMM ENCE INDUSTRIAL ACTIVITY IN THE INDUSTRIAL PLOT WITHIN S TIPULATED PERIOD. IN CASE OF FAILURE TO DO SO, THE ALLOTTEE W OULD BE LIABLE TO LOOSE THE LEASEHOLD RIGHTS. IT IS ALSO AN ADMITTED FACT THAT THE TRANSFER DEED I.E. AGREEMENT BETWEEN THE ASSESSEE AND THE BUYER WITH THE REGISTRATION AUTHOR ITY OF THE U.P. GOVERNMENT. THE A.O. DID NOT GIVE ANY FIND ING TO THE FACT THAT THE ASSESSEE RECEIVED CONSIDERATIO N IN ADDITION TO THE CONSIDERATION MENTIONED IN THE SALE AGREEMENT AND DID NOT GATHER ANY MATERIAL TO ESTABL ISH WITH COGENT EVIDENCE THAT THERE WAS EVASION OF TAX BY SUPPRESSING THE TRUE AND CORRECT CONSIDERATION OF TRANSACTION. AFTER CONSIDERING THE FACTS OF THE CAS E, ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 11 CONTENTS OF THE ORDER OF THE A.O. AND SUBMISSION OF THE APPELLANT, IT IS MY CONSIDERED VIEW THAT THE ADDITI ON MADE BY THE A.O. ON THE BASIS OF CIRCLE RATES GATHE RED FROM THE REGISTRY OFFICE OF U.P. GOVERNMENT SHOWING CIRCLE RATE OF PROPERTIES CANNOT BE APPLIED AS THER E WAS NO APPLICATION OF SECTION 50C IN THE CASE. ACCORDI NGLY, ADDITION ON THIS GROUND IS DELETED. 11. IN VIEW OF ABOVE, WE OBSERVE THAT THE MAIN CONT ENTION OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX(A) WAS THAT T HE ASSESSING OFFICER IS NOT JUSTIFIED IN APPLYING THE PROVISIONS OF SECT ION 50C OF THE ACT TO THE TRANSFER OF LEASEHOLD RIGHTS IN THE INDUSTRIAL PLOT . THE COMMISSIONER OF INCOME TAX(A) CONSIDERED THE CONTENTIONS MENTIONED ON PAGE 5 AT POINT NO. K OF ORIGINAL LEASE DEED WHEREIN IT HAS BEEN STIPUL ATED THAT THE WHOLE PREMISES OR BUILDING SHALL BE SUBJECT TO AND THE TR ANSFEREES AND ASSIGNEES SHALL BE BOUND BY ALL THE COVENANTS AND CONDITIONS CONTAINED IN THE LEASE DEED AND SHALL BE ANSWERABLE TO THE DIRECTOR OF IND USTRIES, U.P. IN ALL RESPECTS. THE ASSESSEE HAD TRANSFERRED LEASEHOLD R IGHTS IN THE PLOT OF DISTRICT INDUSTRIAL CENTRE, RAMPUR TO SHRI V.K. GUPTA AS PER DIRECTIONS/TERMS OR CONSIDERATION OF DISTRICT RAMPUR AND PAID STAMP DUT Y OF RS.3400 AND ALSO GOT REGISTERED AGREEMENT FROM SOME REGISTRAR, TEHSI L SADAR, RAMPUR ON 14.3.2007. IN VIEW OF ABOVE, WE CLEARLY OBSERVE TH AT THE ASSESSEE WAS HAVING ONLY LEASEHOLD RIGHTS AND IT HAD NO ABSOLUTE RIGHT TO SALE, EXCHANGE OR RELINQUISH THE PROPERTY. AS PER RECITAL OF THE ORI GINAL LEASE DEED, ACTUAL ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 12 RIGHTS WERE IN THE HANDS OF GENERAL MANAGER OF DIST RICT INDUSTRIAL CENTER ON BEHALF OF GOVERNMENT OF U.P. WE ALSO OBSERVE THAT THE TRIPARTY AGREEMENT WAS EXECUTED BETWEEN THE ASSESSEE, SHRI V.K. GUPTA AND GENERAL MANAGER, DISTRICT INDUSTRIAL CENTER, RAMPUR ON BEHALF OF GOV T. OF UP AND THE DEED WAS EXECUTED AFTER GRANTING APPROVAL BY THE DISTRIC T MAGISTRATE, RAMPUR WITH CERTAIN CONDITIONS MENTIONED IN THE APPROVAL/P ERMISSION. 12. IN THIS CASE, IT IS THE FACTUAL MATRIX THAT THE ASSESSEE GOT A LEASEHOLD PLOT FROM DISTRICT INDUSTRIAL CENTER, RAMPUR FOR LE ASE OF 99 YEARS FOR SETTING UP AN INDUSTRIAL UNIT. THE ASSESSEE OBTAINED REQUI RED PERMISSION FROM THE CONCERNED AUTHORITIES FOR TRANSFER OF LEASEHOLD RIG HTS AFTER MAKING PAYMENTS OF DUES AND TRANSFER CHARGES. SUBSEQUENTLY, AN AGR EEMENT WAS MADE BETWEEN THE ASSESSEE AND SHRI V.K. GUPTA ON 14.3.20 07 FOR RS.1.5 LAKH AND THE ASSESSEE FILED A RETURN OF INCOME BY DISCLOSING LOSS OF RS.1,72,134. FROM THE IMPUGNED ORDER, WE CLEARLY OBSERVE THAT TH E ASSESSING OFFICER DID NOT GIVE ANY FINDING TO THE FACT THAT THE ASSESSEE RECEIVED ADDITIONAL CONSIDERATION IN ADDITION TO THE CONSIDERATION MENT IONED IN THE SALE AGREEMENT AND ALSO THE ASSESSING OFFICER DID NOT GA THER ANY MATERIAL TO ESTABLISH WITH COGENT EVIDENCE THAT THERE WAS EVASI ON OF TAX BY SUPPRESSING OR CONCEALING THE TRUE AND CORRECT CONSIDERATION OF TRANSACTION. THEREFORE, WE HOLD THAT THE COMMISSIONER OF INCOME TAX(A) RIGH TLY HELD THAT THE ITA NO.3892/DEL/2010 ASSTT.YEAR: 2007-08 13 ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF CIRCLE RATE GATHERED FROM SUB-REGISTRAR OFFICE OF RAMPUR SHOWING CIRCLE RATE OF PROPERTIES CANNOT BE APPLIED AS THERE WAS NO APPLICATION OF SE CTION 50C IN THE CASE. ACCORDINGLY, WE HOLD THAT THE COMMISSIONER OF INCOM E TAX(A) RIGHTLY HELD THAT THE ASSESSING OFFICER WRONGLY INVOKED THE DEEM ING PROVISION AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS RIGHTLY DELETED BY THE IMPUGNED ORDER. 13. IN THE RESULT, GROUNDS NO. 1 TO 4 OF THE REVENU E BEING DEVOID OF MERITS ARE DISMISSED AND APPEAL OF THE REVENUE STANDS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 08.08.13. SD/- SD/- ( B.C. MEENA ) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 8TH AUGUST 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR