Sri Tummala Vidyapal Reddy, Hyderabad V. ITO, Ward-1, Nizamabad, Nizamabad

ITA 48/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6605 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 22-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2015
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ES B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 4 8 /H YD /201 5 ASSESSMENT YEAR: 20 0 9 - 1 0 SRI TUMMALA VIDYAPAL REDDY, NIZAMABAD [PA N: AA MPT0902E ] VS THE INCOME TAX OFFICER , WARD - 1, NIZAMABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD , AR FOR REVENUE : SHRI B. KURMI NAIDU , DR DATE OF HEARING : 22 - 0 2 - 201 6 DATE OF PRONOUNCEMENT : 29 - 0 4 - 201 6 O R D E R PER B. RAMAKOTAIAH, A.M. : TH I S IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - V I , HYDERABAD DATED 17 - 1 0 - 201 4 . THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO THE APPLICATION OF PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT [ACT] ON THE TRANSACTION ENTERED BY ASSESSEE BY WAY OF SALE OF AGRICULTURAL LAND ON 26 - 07 - 2008. 2. ASSESSEE HAS RAISED AS MANY AS SIX GROUNDS AND FILED ADDITIONAL GROUNDS OF APPEAL ALSO. IN THE COURSE OF ARGUMENTS, LD. COUNSEL DID NOT PRESS GROUND NO. 2 PERTAINING TO THE I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 2 - : CONTENTION THAT THE TRANSACTION PERTAINS TO STATUS OF HUF WHICH CANNOT BE MADE SUBJECT MATTER OF ASSESSMENT IN THE STATUS OF INDIVIDUAL. SINCE THE GROUND IS NOT PRESSED, THE SAME IS TREATED AS DISMISS ED. 3. AS FAR AS THE ADDITIONAL GROUNDS, GROUND NO. 1 PERTAINS TO A CLAIM THAT TRANSFER OF THE LAND WAS COMPL ETED IN THE YEAR 2000 ITSELF, T HIS CLAIM WAS NEITHER MADE BEFORE THE AUTHORITIES NOR ANY EVIDENCE THAT ASSESSEE HAS ENTERED INTO ANY TRANSACTI ON FOR HANDING OVER THE POSSESSION WAS PLACED BEFORE US. THE ONLY RECITAL IN CL A USE - 2 IN PAGE NO.2 INDICATES THAT PROPERTY WAS HANDED OVER IN 2000. SINCE THIS IS A FACT WHICH REQUIRE FRESH EXAMINATION, THE LEGAL GROUNDS CANNOT BE ENTERTAINED. THEREFORE, ADDITIONAL GROUND NO. 1 IS REJECTED. 4. ADDITIONAL GROUND NO. 2 IS SIMILAR TO THE OTHER GROUNDS ON THE ISSUE OF INVOKING THE PROVISIONS OF SECTION 50C( 1 ), ACCORDINGLY, THE SAME IS ALLOWED TO BE CONSIDERED. THUS, THE MATERIAL GROUNDS REQUIRED FOR ADJUDI CATION ARE AS UNDER: 3. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE APPLICATION OF THE PROVISIONS OF SECTION 50C(1) OF THE I.T. ACT, TO THE PROPERTY IN QUESTION. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIO NER OF INCOME TAX (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 44,92,475/ - AS LONG TERM CAPITAL GAINS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN NOT CONSIDERING THE DISPUTES OVER TITLE OF THE LAND AND THE FACT THAT THE POSSESSION OVER THE LAND WAS HANDED OVER MUCH EARLIER TO THE ACTUAL DATE OF SALE. I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 3 - : ADDITIONAL GROUND : 2. THE LEARNED FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE VIDE DOC NO. 8799/08 DT. 26 - 07 - 2008 THE APPELLANT HAD ONLY SURRENDERED HIS DISPUTED RIGHTS AND HENCE THE PROVISIONS OF SEC 50C ARE NOT APPLICABLE TO THE FACTS OF THE CASE. 5. BRIEFLY STATED, DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS ENTERED INTO A SALE DEED ON 26 - 07 - 2008 IN WITH ONE MUNDLA NARAYANA REDDY FOR A CONSIDERATION O F RS. 5 LAKHS WHICH WAS STATED TO HAVE BEEN RECEIVED BY WAY OF CASH. THE SAID TRANSACTION WAS NOT SHOWN IN THE INCOME TAX RETURN FILED AND SUBSEQUENTLY, AO HAVING COME TO KNOW OF THE TRANSACTION , INITIATED PROCEEDINGS U/S. 147. IT WAS ASSESSEES CONTENTI ON THAT THE TRANSACTION PERTAINS TO HUF STATUS NOT INDIVIDUAL WHICH CONTENTION WAS NEGATIVED BY THE AO AND CIT(A). THE GROUND ON THAT HAS BEEN WITHDRAWN. CONSEQU ENTLY, THE ISSUE OF REOPENING AND STATUS OF ASSESSEE HAVE BECOME FINAL. 6. COMING TO THE MA IN CONTENTION ON INVOKING THE PROVISIONS OF SECTION 50C , AS ASSESSEE HAS ENTERED INTO A SALE AGREEMENT FOR A VALUE OF RS. 5 LAKHS AND THE REGISTERED SALE DEED INDICATE T HE MARKET VALUE AT RS. 45 LAKHS, AO INVOKED THE PROVISIONS OF SECTION 50C. IT WAS THE SUBMISSION OF ASSESSEE THAT THE SALE DEED EXECUTED ON 26 - 07 - 2008 DOES NOT REPRESENT THE ACTUAL TRANSFER OF THE PROPERTY BUT IT ONLY CONFIRMS THE PROPER TITLE OVER THE PROPERTY IN FAVOUR OF SHRI MUNDLA NARAYANA REDDY . IN THIS REGARD, IT WAS SUBMITTED TO T HE AO THAT: A) THE PROPERTY ORIGINALLY BELONGS TO SRI KATAKAM JOSEPH REDDY, SON OF SRI MARREDDY, SECUNDERABAD. HE, VIDE SALE DOCUMENT DATED 24 - 03 - 1983, TRANSFERRED THE PROPERTY IN FAVOUR OF SRI M.LAXMA REDDY, SON OF I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 4 - : SRI JANARDHANA REDDY AND THE SAID DOC UMENT WAS REGISTERED AS DOC.NO.1374/1983 DATED 24 - 03 - 1983. B) THE ASSESSEE ACQUIRED THE SAID PROPERTY ON 23 - 03 - 1984 FROM SRI LAXMA REDDY, SON OF SRI JANARDHANA REDDY. THE SAID TRANSACTION WAS NOT ENTERED INTO IN THE REVENUE RECORDS BY WAY OF MUTATION. C) IN THE MEANTIME, SRI M.NARAYANA REDDY, SON OF LATE SRI SUBBAIAH, PURCHASED THE PROPERTY 26 - 08 - 1996 THROUGH REGD. SALE DEED NO.5258/96 AND PAID CONSIDERATION TO SRI K.JOSEPH REDDY. SRI K.JOSEPH REDDY, IN TURN, REGISTERED THE PROPERTY IN FAVOUR OF SRI M.N ARAYANA REDDY, WHO GOT THE PROPERTY MUTATED IN HIS NAME AND GOT NECESSARY ENTRIES MADE IN THE REVENUE RECORDS. HE PROCEEDED TO CONSTRUCT A COMPOUND WALL AND TOOK POSSESSION OF THE PROPERTY. D) THE ASSESSEE REALIZED THAT THE PROPERTY WAS OCCUPIED BY SRI M .NARAYANA REDDY AND APPROACHED THE MRO FOR MUTATION OF THE PROPERTY IN HIS NAME. E) IN THE MEANTIME, SRI M.NARAYANA REDDY APPROACHED THE ASSESSEE AND SOUGHT COMPROMISE. THE ASSESSEE SURRENDERED THE RIGHTS IN THE PROPERTY IN FAVOUR OF SRI M.NARAYANA REDDY AS HE PROMISED TO PAY AN AMOUNT OF RS.5 LAKHS. THOUGH IT WAS AGREED BY SRI M.NARAYANA REDDY THAT HE WOULD MAKE PAY M ENT OF RS.5 LAKHS, HE DID NOT PAY SUCH AN AMOUNT AND CONTINUED TO BE IN POSSESSION OF THE PROPERTY. F) REALISING THAT THE PROMISED SUM CAN NOT BE RECOVERED FROM SRI M.NARAYANA REDDY, THE ASSESSEE FILED A PETITION BEFORE THE MANDAL REVENUE OFFICER FOR MUTATION OF THE PROPERTY IN HIS FAVOUR. THE MRO VIDE ORDER NO.A/631/97 DATED 31/10/1997 REJECTED THE REQUEST FOR MUTATION IN THE ASSESSEE'S FAV OUR. G) THE ASSESSEERTHEREAFTER APPROACHED THE DY.COLLECTOR. THE DY.COLLECTOR HELD THAT THE ISSUE IS A CIVIL LITIGATION AND THAT SUCH CIVIL LITIGATION CAN NOT B E ADJUDICATED UPON BY THE REVENUE AUTHORITY. H) THE ASS ESSEE, THEREAF TER, APPROACHED THE JOI NT COLLECTOR FOR GETTING THE MUTATION IN HIS FAVOUR. HOWEVER, THE JOINT COLLECTOR ALSO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE; AS ACCORDING TO THE JT.COLLECTOR, IT IS ONLY A CIVIL LITIGATION AS HELD BY THE DY. COLLECTOR. I ) THE O NLY COURSE LEFT FOR THE ASSESSEE AT THAT STAGE WAS EITHER TO APPROACH THE APPROPRIATE COURT FOR EVICTION OR TO COMPROMISE THE ISSUE. IT IS FELT BY THE ASSESSEE THAT IT WOULD TAKE A LONGER TIME TO FIGHT THE CIVIL LITIGATION. THE FACT THAT THE PROPERTY WAS IN POSSESSIO N OF SRI M.N ARAYANA REDDY ALSO WAS CONSIDERED BY THE ASSESSEE. IN THE MEANTIME, SRI M.NARAYANA REDDY APPROACHED THE ASSESSEE AND PROMISED TO PAY THE COMPENSATION AS AGREED TO IN THE YEAR 2000. ACCORDINGLY, THE BALANCE OF AMOUNT WAS PAID BY SRI M.NARAYANA REDDY DURING THE YEAR UNDER I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 5 - : CONSIDERATION. HOWEVER, WITH A VIEW TO GET ABSOLUTE TITLE IN HIS FAVOUR, SRI M.NARAYANA REDDY REQUIRED THE ASSESSEE TO EXECUTE THE SALE DOCUMENT. ACCORDINGLY, THE SALE DOCUMENT WAS EXECUTED BY THE A SSESSEE. 7. IT WAS CONTENDED THAT ASSES SEE IS NOT HAVING ANY MARKETABLE TITLE AND THE VENDOR SHRI MUNDLA NARAYANA REDDY WAS IN POSSESSION OF THE PROPERTY AND ALSO GOT ITS NAME MUTATED IN THE GOVT. RECORDS. O NLY CLAIMS WERE TRANSFERRED IN FAVOUR OF SHRI MUNDLA NARAYANA REDDY. THEREFORE, THE PR OVISIONS OF SECTION 50C HAVE NO APPLICATION. THE AO DID NOT AGREE . T HE SAME CONTENTIONS WERE RAISED BEFORE THE LD. CIT(A), WHO AFTER RE MANDING THE MATTER TO THE AO AND AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, PARTLY ACCEPTED WITH THE CONTENTIONS BU T ULTIMATELY DID NOT AGREE WITH THE OBJECTION OF INVOKING THE PROVISIONS OF SECTION 50C. LD. CIT(A)S ORDER IN PARA 6.2 & 6.3 ARE AS UNDER: 6.2 PERUSED THE SUBMISSIONS OF THE APPELLANT AS REGARD TO THE FACTS OF THE CASE AND THE APPLICATIONS OF THE PROVI SIONS OF SECTION 50 C, AS TO SUCH FACTS. AS COULD BE SEEN FROM THE FACTS OF THE CASE, THE APPELLANT ACQUIRED THE PROPERTY UNDER REFERENCE, IN THE YEAR 1984 FROM MR.LAXMA REDDY AND SOLD THE SAID PROPERTY VIDE SALE DEED DATED 26.07.2008 FOR RS. 5 , 00 , 000 / - TO M R.NARAYANA REDDY, THUS BRINGING THE MATTER UNDER THE PURVIEW OF A.Y. 2009 - 10. THE ASSESSING OFFICER APPLIED THE PROVISIONS OF SECTION 50 C TO ADOPT THE MARKET VALUE OF THE PROPERTY AS PER VALUES DETERMINED BY OFFICE OF SRO, WHICH HAS PUT THE VALUE AT RS.4 5 , 00 , 000/ - , AND BROUGHT THE RESULTANT CAPITAL GAINS TO TAX: HOWEVER; THE APPELLANT'S CONTENTION WAS THAT THE SALE DEED DATED 26.07.2008 WAS ONLY TOWARDS THE TRANSFER OF CLAIM , WHEREAS THE REAL POSSESSION W AS GIVEN IN YEAR 2000 ONLY, BECAUSE OF C I V I L DISPUTE S AND PET I TIONS WERE MA D E BE F ORE REVENUE AUTHORITIES, AS THE TRANSFEREE MR. NARAYANA REDDY DID NOT PAY THE CONSIDERATION OF RS.5,00,000 / - AS PROMISED. HOWEVER, THE PROPERTY WAS TR A NSFERRED TO MR. NARAYANA REDDY AS A FINAL SETTLEMENT AND REGISTERED THE PROP ERTY ON 26.07.2008 AND SHOWN TO HAVE RECEIVED THE CONSIDERATION OF RS.5,00,000 / - , AS SUCH COULD NOT PURSUE THE MATTER TO COURT AS INDICATED IN THE ORDER OF RDO, R.R. D ISTRICT (EAST) DATED 15.04.20085, AND FILED A COMPROMISE MEMO BEFORE JOINT COLLECTOR, R.R . D ISTR I CT ON 02.08.2008. HENCE, IT WAS PLEADED THAT PROVISIONS OF SECTION SOC ARE NOT APPLICABLE AND THE ASSESSING OFFICER DID NOT FOLLOW THE I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 6 - : PROCEDURE AS LAID DOWN, BY NOT REFERRING TO THE VALUATION AS PER PROVISIONS OF SECTION 50C(2), IN CASE OF APPLICA TION OF SECTION 50 C TO THE FACTS OF THIS CASE, WHERE THE MATTER WAS INDICATIVE OF INVOLVEMENT OF CIVIL DISPUTES. 6.3 THOUGH THERE IS SOME STRENGTH IN THE ARGUMENT OF THE APPELLANT, IT IS NOT ENOUGH TO SUPPORT HIS CAUSE. IN THIS CASE, FACTS ARE NOT CLEAR, AS REGARD TO THE COMPROMISE FORMULA OF HANDING OVER THE POSSESSION OF LAND TO MR. NARAYANA REDDY AND THE CONSIDERATION DECIDED FOR IT, SINCE NO WRITTEN AGREEMENTS WERE FURNISHED IN THIS REGARD. IT IS ALSO NOT KNOWN HOW MR.NARAYANA REDDY, WHO IS SHOWN TO H AVE BEEN IN POSSESSION OF THE LAND, AGREED TO PAY RS. 5 , 00 , 000/ - IN YEAR 2000, BUT ENDED UP PAYING THE SAME AMOUNT EVEN IN THE YEAR 2008. IT IS ALSO NOT CLEAR AS TO HOW THE APPELLANT BEING THE FIRST PURCHASER AND THE INITIAL TITLE HOLDER INDICATED TO BE TH E BUYER ENTITLED FOR BETTER RIGHTS OVER THE SUBSEQUENT BUYER OF THE SAME LAND, HAD ENTERED INTO A COMPROMISE AGREEMENT WITH MR. NARAYANA REDDY, AND AGREED TO RECEIVE THE SAME PRICE, IN 2008, WHICH WAS PROMISED IN YEAR 2000. ALL THESE DEVELOPMENTS THAT HAVE TAKEN PLACE IN THIS CASE, APPEARED TO BE MAKE BELIEVE AND THERE IS NO STRENGTH IN THE ARGUMENT OF THE APPELLANT. FURT H ER, THE ASSESSEE NEVER APPEARED TO HAVE ARGUED / REQUESTED FOR VALUATION OF THE PROPERT Y AS PER THE PROVISIONS OF SECTION 50 C(2) DURING T HE ASSESSMENT PROCEEDINGS. FURTHER, AS PER THE FACTS THAT WERE EMERGED AS PER THE ORDER OF R D O , RR - DIST(EAST), THE APPELLANT WAS ENTITLED FOR THE T ITLE /OW NERSHIP OVER LAND, BE I N G THE ORIGINAL BUYER O F THE L AND AN D WAS ADVISED TO MOVE THE COURTS FOR ENFORC ING THE SAID RIGHTS. HOWEVER, THE APPELLANT WI T HDRAWN FROM SUCH CHANCE, VOLUNTARILY, FOR THE REASONS BEST KNOWN TO HIM AND HAVING CHOSEN TO FORGO THE RIGHTS TO HIS CONTENDER, IT WAS NOT RIGHT ON THE PART OF THE APPELLANT TO ARGUE THAT PROVISIONS OF SECTION 50 C ARE NOT APPLICABLE. IT IS ALSO A FACT THAT THE CATENA OF JUDICIAL DECISIONS HELD THAT THE PROVISIONS OF SECTION 50 C ARE MANDATORY AND DEEMING IN NATURE, AND THE ASSESSING OFFICER HAS NO ALTERNATIVE BUT TO ADOPT THE SAID PROVISIONS, WHERE THE VALUE ADO PTED BY THE TRANSFEROR OF THE IMMOVABLE PROPERTY, IS 'LESS THAN THE MARKET VALUE. IN THIS CASE, THE TRANSFER OF PROPERTY ESTABLISHED TO HAVE TAKEN PLACE ON 26.07.2008, WHERE THE APPELLANT FAILED TO ESTABLISH THAT TRANSFER HAS TAKEN PLACE IN THE YEAR 2000, AS CLAIMED BY HIM, AND AS SUCH THE PROVISIONS OF SECTION 50 C ARE APPLICABLE TO THE TRANSACTION DATED 26.07.2008, IN TERMS OF SECTION 2(47) OF THE I T.ACT. ACCORDINGLY, IT IS REASONABLE TO HOLD THAT PROVISIONS OF SECTION 50 C ARE APPLICABLE TO THIS CASE, AND THE ADDITION MADE BY THE ASSESSING OFFICER, BY APPLYING THE PROVISIONS OF SECTION 50 C OF I. T.ACT, STAND SUSTAINED. ON THIS GROUND, THE APPEAL IS TREATED AS DISMISSED . 8. LD. COUNSEL REFERRING TO THE PAPER BOOK AND THE SUBMISSIONS MADE BEFORE THE AUTHO RITIES SUBMITTED THAT ASSESSEE EVEN THOUGH HAS A TITL E IN HIS FAVOUR , BUT IS NOT IN POSSESSION OF I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 7 - : THE PROPERTY. THEREFORE, THERE IS NO OPTION THAN TO ENTER INTO COMPROMISE FORMULA AND ACCORDING TO THE COMPROMISE FORMULA ONLY THE PROPERTY WAS REGISTERED IN FAVOUR OF MR. MUNDLA NARAYANA REDDY AND REFERRED TO THE COMPROMISE MEMO FILED WITH JOINT CO LLECTOR IN APPEAL NO. 3341/2008. I T WAS SUBMITTED THAT THE TRANSACTION WAS CONCLUDED BY WAY OF COMPROMISE FORMULA IN WHICH ASSESSEE HAS SURRENDERED HIS CLAIM FO R TI TLE FOR A VALUE OF RS. 5 LAKHS AND SINCE THE S AME CANNOT BE CONSIDERED AS BUILDING OR LAND PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. HE RELIED ON THE CO - ORDINATE BENCH DECISION IN THE CASE OF D. ANITHA IN ITA NO. 394/HYD/2014 / 373/HYD/2014 DT. 24 - 1 2 - 2014 . 9. LD. DR HOWEVER, SUBMITTED THAT ASSESSEE HAVING REGISTERED THE PROPERTY AS A TRA NSFER OF AGRICULTURAL LAND OF ACR . 1.20 CENTS, PROVISIONS OF SECTION 50C ARE CORRECTLY INVOKED. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DO CUMENTS PLACED ON RECORD. AS FAR AS THE FACTS ARE CONCERNED, THERE IS NO DISPUTE THAT ASSESSEE HAD PURCHASED THE PROPERTY WAY BACK IN 1984 BUT FAILED TO MUTATE THE PROPERTY IN HIS FAVOUR IN THE REVENUE RECORDS. ASSESSEE PURCHASED ONLY ACR 1.20 CENTS OF LA ND FROM SHRI K. JOSEPH REDDY, HOWEVER, SHRI MUNDLA NARAYANA REDDY, PROPRIETOR, SUDHA ENTERPRISES HAS PURCHASED MORE LAND , ABOUT FOUR ACRES , VIDE THE REGISTERED DEED DT. 26 - 08 - 1996 , GOT HIS NAME ENTERED IN THE PAHANIS IN 1999 ITSELF AND IS IN CONTINUOUS POS SESSION OF THE LAND. ASSESSEE FILED A PETITION BEFORE SPECIAL GRADE DY. COLLECTOR FOR MUTATING THE LAND IN HIS FAVOUR. THE LD. DY. COLLECTOR WHILE RECORDING THAT ASSESSEE HAS PRIOR CLAIM OVER THE LAND HAVING BEEN REGISTERED IN 1984 , HOWEVER, STATED THAT THERE IS A TITLE DISPUTE BETWEEN TWO PARTIES AND I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 8 - : THEREFORE, THE ENTRIES MADE IN THE R EGISTER WERE SET ASIDE AND AGGRIEVED PARTIES WERE DIRECTED TO SEEK REMEDY BEFORE THE CIVIL COURT. THIS ORDER WAS ISSUED IN 15 TH MARCH 2008. SUBSEQUENTLY, AN APPEAL WAS F ILED BEFORE THE JOINT COLLECTOR BY MR. MUNDLA NARAYANA REDDY. IN THOSE PROCEEDINGS, A COMPROMISING MEMO WAS UNDERTAKEN WHEREIN IT IS CLEARLY STATED THAT THE RESPONDENT (ASSESSEE) HAS RECEIVED AN AMOUNT OF RS. 5 LAKHS AND EXECUTED A REGISTERED SALE DEED BE ARING DOCUMENT NO. 8799/2008 DT. 26 - 07 - 2008 IN FAVOUR OF THE MANAGING PARTNER OF SUDHA ENTERPRISES, TRANSFERRING HIS RIGHT OF OWNERSHIP. 10.1. THUS, IT IS CLEAR THAT EVEN THOUGH THE SALE DEED IS STATING THAT ASSESSEE HAD FULL OWNERSHIP AND TRAN S FERRED IN FAVOUR OF SHRI MUNDLA NARAYANA REDDY, WHAT ACTUA L L Y TRANSPIRED BETWEEN THE PARTIES AND THE CLAIMS MADE BEFORE THE AUTHORITIES IS THAT ASSESSEE HAS A TITLE OVER THE PROPERTY BUT NOT COMPLETE OWNERSHIP AND POSSESSION OF THE PROPERTY. IT IS ALLEGED BY T HE OTHER PARTY I . E ., MUNDLA NARAYAN A REDDY THAT THE DOCUMENTS ARE FABRICATED. WHATEVER MAY BE THE CONTENTIONS BEFORE THE AUTHORITIES, THE FACT IS THAT ASSESSEE HAD INDEED SETTLED THE ISSUE BY ACCEPTING THE CONSIDERATION OF RS. 5 LAKHS AND PARTED WITH THE CLAIM OF OWNERSHIP ON THE SAID PROPERTY. THE RECORD INDICATES THAT ASSESSEE IS NOT COMPLETE OWNER OF THE PROPERTY AS IN THE GOVT. RECORDS SHRI MUNDLA NARAYANA REDDY WA S ALREADY SHOWN AS OWNER OF THE PROPERTY AND CONTINUES TO BE IN POSSESSION OF THE PROPER TY BY VIRTUE OF REGISTERED SALE DEED IN HIS FAVOUR DT. 26 - 08 - 1996 . IN VIEW OF THIS, WE AGREE WITH THE CONTENTIONS THAT ASSESSEE HAS TRANSFERRED ONLY A RIGHT OF OWNERSHIP BUT NOT THE LAND AND BU I LDING. I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 9 - : 11. SIMILAR FACTS WERE CONSID ERED IN THE DECISION OF THE CO - ORDINATE BENCH DECISION IN THE CASE OF D. ANIT H A IN ITA NO. 394/HYD/2014 / 373/HYD/2014 DT. 24 - 12 - 2014 (SUPRA), WHEREIN ASSESSEE WAS ALSO NOT THE OWNER OF THE PROPERTY AND HAD ONLY LIMITED RIGHTS OVER THE PROPERTY. IT WAS H ELD THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. THE RELEVANT PARA ( P ARA 9 ) OF THE SAID ORDER IS AS UNDER: 9. AS REGARDS THE ISSUE INVOLVED IN THE APPEAL OF THE RELATING TO THE APPLICABILITY OF THE PROVISIONS OF S.50C IN THE CASE OF THE ASSE SSEE, IT IS OBSERVED THAT THE MARKET VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSE WAS DETERMINED BY THE CONCERNED AUTHORITY AT RS.3,99,55, 000 AND ACCORDINGLY THE STAMP DUTY THEREON WAS ALSO DULY PAID, WHILE REGISTERING THE RELEVANT AGREEMENT. THE VALUE ADO PTED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY THUS WAS NOT DISPUTED BY THE RELEVANT PARTIES, INCLUDING THE ASSESSEE. THE LEARNED CIT(A), HOWEVER, HELD THAT THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY AND SINCE SHE HAD ONLY LIMITED RIGHTS OVER THE PROPER TY, WHICH WAS ALSO ENCUMBERED, THE MARKET VALUE OF THE PROPERTY AS TAKEN FOR THE PURPOSE OF PAYMENT OF STAMP DUTY COULD NOT BE ADOPTED AS THE SALE CONSIDERATION BY APPLYING THE PROVISIONS OF S .50C. WE HAVE ALREADY CONCURRED WITH THE LEARNED CIT(A) WHILE DE CIDING THE ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE THAT THE ASSESSEE WAS NOT THE ABSOLUTE OWNER OF THE PROPERTY, AND WHAT THE ASSESSEE HELD WAS ONLY CERTAIN LIMITED RIGHTS OVER THE SAID PROPERTY. IT, THEREFORE, FOLLOWS THAT THE CAPITAL ASSET HELD BY T HE ASSESSEE ITSELF WAS NEITHER THE LAND NOR THE BUILDING AS ENVISA G ED IN SUB - SECTION (1) OF S.50C, AND WHILE COMPUTING THE CAPITAL GAINS ARISING FROM TRANSFER OF SUCH ASSET, THE VALUE ADOPTED BY ANY AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY CANNOT BE TAKEN AS FULL VALUE OF CONSIDERATION BY APPLYING THE PROVISIONS OF S.50C, AS RIGHTLY HELD BY THE LEARNED CIT(A). WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AS WELL, AND DISMISS THE APPEAL FILED BY T HE REVENUE . 11.1. NOT ONLY THAT, IN THE CO - ORDINATE BENCH DECISION IN THE CASE OF ATUL G. PURANIK VS. ITO [132 ITD 499], IT WAS CONSIDERED AS UNDER: THE ASSESSING OFFICER ADOPTED THE VALUE OF ASSET SOLD ON 25 - 8 - 2005 AT RS. 2.88 CRORES BY APPLYING TH E PROVISIONS OF SECTION 50C FOR THE PURPOSES OF COMPUTING CAPITAL GAIN. HIS VIEW WAS BASED ON THE ASSESSEE S SUBMISSION THAT THE MARKET RATE PREVAILING FOR LAND DURING 1 - 4 - 2004 TO I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 10 - : 31 - 12 - 2001 WAS RS. 3950 PER SQ METER. THE COMMISSIONER (APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER ON THIS SCORE. ON GOING THROUGH THE PROVISION OF SECTION 50C(1), IT TRANSPIRES THAT WHERE THE FULL VALUE OF CONSIDERATION SHOWN TO HAVE BEEN RECEIVED OR ACCRUING ON THE TRANSFER OF AN ASSET, BEING LAND OR BUILDING OR BOT H, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY STAMP VALUATION AUTHORITY, THE VALUE SO ADOPTED ETC. SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THIS S ECTION HAS BEEN INSERTED BY THE FINANCE ACT, 2002 WITH EFFECT FROM 1 - 4 - 2003 WITH A VIEW TO SUBSTITUTE THE DECLARED FULL VALUE OF CONSIDERATION IN RESPECT OF LAND OR BUILDING OR BOTH TRANSFERRED BY THE ASSESSEE WITH THE VALUE ADOPTED OR ASSESSED OR ASSESS ABLE BY STAMP VALUATION AUTHORITY. BUT FOR THIS PROVISION, THERE IS NOTHING IN THE ACT, BY WHICH THE FULL VALUE OF A CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF LAND OR BUILDING OR BOTH IS DEEMED TO BE ANY AMOUNT OTHER THAN THAT ACTUALLY RECEIVED. FROM THE LANGUAGE OF SUB - SECTION (1), IT IS CLEAR THAT THE VALUE OF LAND OR BUILDING OR BOTH ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY SHALL, FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERAT ION RECEIVED OR ACCRUING AS A RESULT OF SUCH A TRANSFER. TWO THINGS ARE NOTICEABLE FROM THIS PROVISION. FIRSTLY, IT IS A DEEMING PROVISION AND SECONDLY, IT EXTENDS ONLY TO LAND OR BUILDING OR BOTH. IT IS MANIFEST THAT A DEEMING PROVISION HAS BEEN INCORPORA TED TO SUBSTITUTE THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY STAMP VALUATION AUTHORITY IN PLACE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER, IN CASE THE LATTER IS LOWER THAN THE FORMER. IT IS FURTHER RELEVANT TO NOTE THAT THE MANDATE OF SECTION 50C EXTENDS ONLY TO A CAPITAL ASSET WHICH IS 'LAND OR BUILDING OR BOTH. IT, THEREFORE, FOLLOWS THAT ONLY IF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS TRANSFERRED AND THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER I S LESS THAN THE VALUE ADOPTED OR ASSESSED ASSESSABLE BY THE STAMP VALUATION AUTHORITY, THE DEEMING FICTION UNDER SUB - SECTION (1) SHALL BE ACTIVATED TO SUBSTITUTE SUCH ADOPTED OR ASSESSED OR ASSESSABLE VALUE AS FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUI NG AS A RESULT OF SUCH TRANSFER IN THE GIVEN SITUATION. IT IS A SETTLED LEGAL PROPOSITION THAT A DEEMING PROVISION CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS ENACTED. IT IS THUS CLEAR THAT A DEEMING PROVISION CAN BE APPLIED ONLY IN RESPECT OF THE SITUATION SPECIFICALLY GIVEN AND HENCE CANNOT GO BEYOND THE EXPLICIT MANDATE OF THE SECTION. TURNING TO SECTION 50C, IT IS SEEN THAT THE DEEMING FICTION OF SUBSTITUTING ADOPTED OR ASSESSED OR ASSESSABLE VALUE BY THE STAMP VALUATION AUTHORITY AS FUL L VALUE OF CONSIDERATION IS APPLICABLE ONLY IN RESPECT OF 'LAND OR BUILDING OR BOTH. IF THE CAPITAL ASSET UNDER TRANSFER CANNOT BE DESCRIBED AS 'LAND OR BUILDING OR BOTH, I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 11 - : THEN SECTION 50C WILL CEASE TO APPLY. FROM THE FACTS OF THIS CASE NARRATED ABOVE , IT IS SEEN THAT THE ASSESSEE WAS ALLOTTED LEASE RIGHT IN THE PLOT A PERIOD OF SIXTY YEARS, WHICH RIGHT WAS FURTHER ASSIGNED TO P' IN THE YEAR IN QUESTION. IT IS AXIOMATIC THAT THE LEASE RIGHT IN A PLOT OF LAND ARE NEITHER LAND OR BUILDING OR BOTH' AS SU CH NOR CAN BE INCLUDED WITHIN THE SCOPE OF 'LAND OR BUILDING OR BOTH. THE DISTINCTION BETWEEN A CAPITAL ASSET BEING 'LAND OR BUILDING OR BOTH' AND ANY 'RIGHT IN LAND OR BUILDING OR BOTH' IS WELL RECOGNIZED UNDER THE I.T. ACT. SECTION 54D DEALS W ITH CERT AIN CASES IN WHICH CAPITAL GAIN ON COMPULSORY ACQ U ISITION OF LAND AND BUILDING IS CHARGED. SUB - SECTION (1) OF SEC TI ON 54D OPENS WITH: 'SUBJECT TO THE PROVISIONS OF SUB - SECTION (2), WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER BY WAY OF COMPULSORY ACQUI SITIO N UNDER ANY LAW OF A CAPITAL ASSET, BEING LAND OR BUILDING OR ANY RIGHT IN LAND OR BUILDING, FORMING PART OF AN INDUSTRIAL UNDERTAKING, ...... IT IS PALPABLE FROM SECTION 54D THAT LAND OR BUIL D ING' IS DISTINCT FROM ANY RIGHT IN LAND OR BUILDING. SIMILAR POSITION PREVAILS UNDER THE WEALTH TAX ACT, 1957 ALSO. SECTION 5(1) AT THE MATERIAL TIME PROVIDED FOR EXEMPTION IN RESPECT OF CERTAIN ASSETS, CLAUSE (XXXII) OF SECTION 5(1) PROVIDED THAT 'THE VALUE AS DETERMINED IN THE PRESCRIBED MANNER, OF THE INT EREST OF THE ASSESSEE IN THE ASSETS (NOT BEING ANY LAND OR BUILDING OR ANY RIGHTS IN LAND OR BUILDING OR ANY ASSET REFERRED TO IN ANY OTHER CLAUSES OF THIS SUB - SECTION) FORMING PART OF AN INDUSTRIAL UNDERTAKING SHALL BE EXEMPT FROM TAX. HERE ALSO IT IS W ORTH NOTING THAT A DISTINCTION HAS BEEN DRAWN BETWEEN 'LAND OR BUILDING' ON ONE HAND AND OR ANY RIGHTS IN LAND OR BUILDING' ON THE OTHER. CONSIDERING THE FACT THAT TRIBUNAL IS DEALING WITH SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES UNDER SECTION 50C, WHICH IS A DEEMING PROVISION, THE FICTION CREATED IN THIS CANNOT BE EXTENDED 10 ANY ASSET OTHER THAN THOSE SPECIFICALLY PROVIDED THEREIN. AS SECTION 50C APPLIES ONLY TO A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IT CANNOT BE MADE APPLICABLE TO LEASE RIGHTS IN A LAND. AS THE ASSESSEE TRANSFERRED LEASE RIGHT FOR SIXTY YEARS IN THE PLOT AND NOT LAND ITSELF, THE PROVISIONS OF SECTION 50C CANNOT BE INVOKED. THEREFORE, THE FULL VALUE OF CONSIDERATION IN THE INSTANT CASE BE TAKEN AS RS . 2.50 CRORES. TO SUM UP, IT IS TO BE HELD THAT CAPITAL GAIN ON THE TRANSACTION OF ASSIGNMENT OF LEASE RIGHTS IN THE PLOT IS TO BE COMPUTED IN THE YEAR IN QUESTION BY ADOPTING THE FULL VALUE OF CONSIDERATION ON 25 - 8 - 2005 AT RS. 2.50 CRORES AND THE COST O F ACQUISITION SHALL BE WORKED OUT AFRESH AS PER LAW BY THE ASSESSING OFFICER BY TAKING THE MARKET VALUE OF LEASE RIGHTS FOR SIXTY YEARS IN THE PLOT AS ON 16 - 8 - 2004. 11.2. IN VIEW OF THE PRINCIPLES LAID DOWN BY THE CO - ORDINATE BENCHES AND ALSO ON THE FAC TS, WE ARE OF THE OPINION THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE IN THE GIVEN CASE. I.T.A. NO. 48 / HYD / 20 1 5 SRI TUMMALA VIDYAPAL REDDY : - 12 - : ACCORDINGLY, AO IS DIRECTED TO COMPUTE THE CAPITAL GAINS ON THE VALUE RECEIVED ONLY. ASSESSEES GROUNDS ARE ALLOWED ACCORDINGLY. 12. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016 SD/ - SD/ - (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 29 TH APRIL , 2016 TNMM COPY TO : 1. SRI TUMMALA VIDYAPAL REDDY, 11 - 1 - 1927/2, GANGASTHAN PHASE - I, NIZAMABAD. C/O. CH. PARTHASARATHY & CO. 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD. 2 . THE INCOME TAX OFFICER , WARD - 1, NIZ AMABAD. 3. COMMISSIONER OF INCOME TAX (APPEALS) - V I, HYDERABAD. 4 . COMMISSIONER OF INCOME TAX - V , HYDERABAD. 5 . D.R. ITAT, HYDERABAD. 6 . GUARD FILE.