ITO 23(1)(1), MUMBAI V. ASHWIN G. SANGHVI, MUMBAI

ITA 5618/MUM/2010

• Counselvise Citation: 561819914 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: ASHOK J PATIL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI B.R. MITTAL, J.M. AND SHRI RAJENDRA SI NGH, A.M. ITA NO.5618/MUM/2010 ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER-23(1)(1) BLDG. C-10, 1 ST FLOOR, ROOM NO.101, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-400 051. SHRI ASHWIN G. SANGHVI C/O., SAGHVI TIMBER INDUSTRIES B-29, ADKE COMPOUND, LBS MARG, OPP. WESTERN INDIA PAPER MILL, VIKHROLI (W) MUMBAI-400 083. PAN NO. ACKPS 7291 M (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI V.V. SHASTRI RESPONDENT BY : SHRI ASHOK J. PATIL DATE OF HEARING : 21.5.2012 DATE OF PRONOUNCEMENT : 1.6.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORD ER DATED 27.4.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2007-08. T HE ONLY DISPUTE RAISED BY THE REVENUE IS REGARDING COMPUTATION OF CAPITAL GAIN FROM SALE OF LEASE HOLD RIGHTS IN THE LAND. ITA NO.5618/M/10 A.Y.07-08 2 2. FACTS IN BRIEF ARE THAT THE AO DURING THE ASSESSMENT P ROCEEDINGS NOTED THAT THE ASSESSEE DURING THE YEAR HAD SOLD LEASE HO LD PROPERTY ALONG WITH OTHER TWO CO-OWNERS FOR A SUM OF RS.18.00 L ACS VIDE DEED OF ASSIGNMENT DATED 20.6.2006 IN WHICH THE ASSESSEE HAD 1 /3 RD SHARE. THE ASSESSEE HAD NOT DECLARED ANY CAPITAL GAIN. FURTHER THE AO ON VERIFICATION WITH THE REGISTRATION AUTHORITIES NOTED T HAT THE STAMP DUTY VALUE OF THE SAID LEASE HOLD PROPERTY WAS RS.1,15,86,45 2/-. THE AO THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY CAPITAL GAIN SHOULD NOT BE COMPUTED UNDER THE PROVISIONS OF SECTION 50C ADO PTING STAMP DUTY VALUE AS SALE CONSIDERATION. THE ASSESSEE SUBMITTED THA T THE PROVISIONS OF SECTION 50C WERE APPLICABLE IN CASE OF TRANSF ER OF CAPITAL ASSET BEING LAND OR BUILDING OR BOTH AND SINCE ASSESSEE HAD TRANSFERRED LEASE HOLD INTEREST IN THE PROPERTY THE SAID PROVISION S WERE NOT APPLICABLE. THE AO HOWEVER DID NOT ACCEPT THE EXPLANA TION GIVEN AND ADOPTED STAMP DUTY VALUE FOR COMPUTATION OF CAPITAL GA IN UNDER SECTION 50C. SINCE THE COST OF ACQUISITION OF THE LEASE H OLD RIGHT WAS NIL AO COMPUTED LONG TERM CAPITAL GAINS AT RS.38,62,150 /- BEING 1/3 RD STAMP DUTY VALUE. 3. THE ASSESSEE DISPUTED THE DECISION OF AO AND REITERATE D THE SUBMISSION MADE EARLIER THAT THE PROVISIONS OF SECTION 50C WERE NOT APPLICABLE IN CASE OF TRANSFER OF LEASE HOLD RIGHTS. TH E ASSESSEE PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF KISHORE SHARAD ITA NO.5618/M/10 A.Y.07-08 3 GAITONDE VS. ITO IN ITA NO.1561/M/2009 FOR ASSESSMENT YE AR 2005- 06. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND OB SERVED THAT PROVISION OF SECTION 50C WERE APPLICABLE ONLY IN RESPECT OF TRANSFER OF LAND OR BUILDING OR BOTH. IN THE PRESENT CASE THE ASSET TRANSFERRED WAS LEASE HOLD RIGHT, THEREFORE, PROVISIONS OF SECTION 50C W ERE NOT APPLICABLE. CIT(A) THEREFORE DIRECTED THE AO TO COMPUT E CAPITAL GAIN UNDER THE PROVISIONS OF SECTION 50 AND NOT SECTION 50C. A GGRIEVED BY THE SAID DECISION REVENUE IS IN APPEAL BEFORE THE TRIBU NAL. 4. WE HAVE HEARD BOTH PARTIES, PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING COMPUTA TION OF LONG TERM CAPITAL GAINS FROM TRANSFER OF LEASE HOLD RIGHTS I N IMMOVABLE PROPERTY. THE ASSESSEE HAD COMPUTED LONG TERM CAPITAL GAI NS UNDER THE PROVISIONS OF SECTION 48. THE AO HAS HOWEVER APPLIED THE PROVISIONS OF SECTION 50C AS PER WHICH THE SALE VALUE IS R EQUIRED TO THE SUBSTITUTED BY STAMP DUTY VALUE IN CERTAIN CASES. THE SECTIO N IS APPLICABLE ONLY IN CASE OF SPECIFIED ASSETS BEING LAND OR B UILDING OR BOTH AND THEREFORE, WILL NOT BE APPLICABLE IN CASE OF ANY OTHER ASSET. IN THE PRESENT CASE THERE IS NO DISPUTE THAT THE ASSESSEE HAD TRANSFERRED LEASE HOLD RIGHTS IN THE LAND WHICH IS AN ASSET AND THER EFORE, IN RESPECT OF SUCH TRANSFER, THE PROVISIONS OF SECTION 50C ARE NOT AP PLICABLE. THIS VIEW IS SUPPORTED BY THE DECISION OF THE TRIBUNAL IN CA SE OF KISHORE SHARAD GAITONDE VS. ITO (SUPRA), IN WHICH THE CAPITAL GAIN HAD ARISEN ITA NO.5618/M/10 A.Y.07-08 4 ON ACCOUNT OF TRANSFER OF TENANCY RIGHTS. THE TRIBUNAL H ELD THAT PROVISIONS OF SECTION 50C WERE APPLICABLE IN CASE OF ASSETS B EING LAND AND BUILDING OR BOTH AND WERE NOT APPLICABLE IN RESPE CT OF ANY OTHER ASSETS SUCH AS TENANCY RIGHTS. WE, THEREFORE, SEE NO INFIRMI TY IN THE ORDER OF CIT(A) IN DIRECTING THE AO TO COMPUTE CAPITAL GAIN UNDER SECTION 48 OF THE ACT. ACCORDINGLY ORDER OF CIT(A) IS U PHELD. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1.6.2012. SD/- SD/- (B.R. MITTAL ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 1.6.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.