M/s. Baniara Engineers Pvt. Ltd., , Kolkata V. ITO, Ward - 3(3), Kolkata , Kolkata

ITA 635/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6261 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADDEN
• Assessee Lawyers: S M SURANA
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B( SMC ) KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO.635/KOL/2018 ASSESSMENT YEAR:2013-14 M/S BANIARA ENGS. PVT. LTD., DN SECTOR-V, SALT LAKE, KOLKATA-91 [ PAN NO.AABCB 0610 M ] / V/S . INCOME TAX OFFICER, WARD-3(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKSATA-69 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.M. SURANA, ADVOCATE /BY RESPONDENT SHRI SALLONG YADDEN, ADDL. CIT-DR /DATE OF HEARING 26-06-2018 /DATE OF PRONOUNCEMENT 04-07-2018 /O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-1, KOLKATA PAS SED U/S 258 OF THE INCOME TAX ACT, 1962 IN SHORT (THE ACT) DATED 28.02.2018. 2. THE ASSESSEE IS A COMPANY THE ONLY ISSUE FOR MY ADJUDICATION IS WHETHER THE PROVISION OF SECTION 50C OF THE ACT WOULD APPLY IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. THE ASSESSEE ENTERED INTO AN AGREEMENT FOR P URCHASE OF UNCONSTRUCTED FLATS ON 24.01.2009 WITH SHRI RAMESH KR. GUPTA AND 21 OTHER CO-OWNERS INCLUDING M/S FLORIDA TOWERS PVT LTD. THUS, THE ASSESSEE ACQUIRE D CERTAIN RIGHTS TO PURCHASE THE SAID FLATS. BEFORE THE FLATS WERE COMPLETE, THE ASS ESSEE SOLD HIS RIGHTS SO ACQUIRED TO PURCHASE THE FLATS TO M/S BANIARA ENGINEERS PVT. LT D., AND NITU JAIN BY NOMINATING THEM FOR REGISTRATION OF THE SAID TWO FLATS. ACCORD ING TO THIS NOMINATION, THE SAID TWO ITA NO.635/KOL/2018 A.Y. 2013-1 4 M/S BANIARA ENGS. PVT. LTD. VS. ITO WD 3(3), KOL. PAGE 2 FLATS WERE REGISTERED BY THE ORIGINALLY VENDORS IN THE NAME OF THESE TWO ULTIMATE PURCHASERS ON 27.09.2012. THE ASSESSEE WAS THE CONF IRMING PARTY TO THIS TRANSACTION. THE ASSESSEE RECEIVED CONSIDERATION FOR SALE OF SUC H RIGHTS AND THE PROFIT FROM SALE WAS DECLARED AS LONG TERM CAPITAL GAINS. THE ULTIMA TE PURCHASES I.E. M/S BANARIA ENGINEERS PVT. LTD. AND NITU JAIN RECEIVED POSSESSI ON OF THE FLATS DIRECTLY FROM THE VENDORS SHRI RAMESH KR. GUPTA AND 21 OTHERS CO-OWNE RS INCLUDING M/S FLORIDA TOWERS PVT. LTD.. 3. ON THESE FACTS THE ISSUE IS WHETHER THE ASSESSIN G OFFICER WAS RIGHT IN INVOKING THE PROVISION OF SECTION 50C OF THE ACT ON GROUND T HAT THE ASSESSEE SOLD FLATS AND THEREFORE MARKET VALUE AS DETERMINED BY REGISTRATIO N AUTHORITY SHOULD BE APPLIED. THE ASSESSEE SUBMITS, IT HAD NOT TRANSFERRED ANY LAND O R BUILDING AND HENCE THE PROVISION OF SECTION 50C OF THE ACT DO NOT APPLY. THE REVENUE AUTHORITY DID NOT ACCEPT THIS CLAIM OF ASSESSEE. HENCE, THE ASSESSEE BEFORE ME. 4. I FIND THAT THE ISSUE IS NO MORE RES INTEGRA . THE ITAT B BENCH OF AHMEDABAD TRIBUNAL IN ITA NO.2519/AHD/2009 ORDER DATED 13.04. 2012 IN THE CASE OF INCOME TAX OFFICER VS. SHRI YASIN MOOSA GODIL, UNDER SIMIL AR FACTS AND CIRCUMSTANCES AT PARA-16 HELD AS FOLLOWS:- 16. FROM THE READING OF SEC. 50C, IT IS EVIDENT TH AT SEC. 50C IS A DEEMING PROVISION AND IT EXTENDS TO ONLY TO LAND OR BUILDIN G OR BOTH. SECTION 50C CAN COME INTO PLAY ONLY IN A SITUATION WHERE THE CONSID ERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN APPELLANT OF A CA PITAL ASSET, BEING LAND OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSES SABLE BY ANY AUTHORITY OF STATE GOVERNMENT THEREFORE FOR THE PURPOSE OF PAYM ENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. IT IS SETTLED LEGAL PROPO SITION THAT DEEMING PROVISION CAN BE APPLIED ONLY IN RESPECT OF THE SITUATION SPE CIFICALLY GIVEN AND HENCE CANNOT GO BEYOND THE EXPLICIT MANDATE OF THE SECTIO N. CLEARLY THEREFORE, IT IS ESSENTIAL THAT FOR APPLICATION OF SEC. 50C THAT THE TRANSFER MUST BE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH. IF THE CAPIT AL ASSET UNDER TRANSFER CANNOT BE DESCRIBED AS LAND OR BUILDING OR BOTH THEN SECTION 50C WILL CEASE TO APPLY. FROM THE FACTS OF THE CASE NARRATED ABOVE, I T IS SEEN THAT THE ASSESSEE HAS TRANSFERRED BOOKING RIGHTS AND RECEIVED BACK TH E BOOKING ADVANCE. BOOKING ADVANCE CANNOT BE EQUATED WITH THE CAPITAL ASSET AND THEREFORE SECTION 50C CANNOT BE INVOKED. ITA NO.635/KOL/2018 A.Y. 2013-1 4 M/S BANIARA ENGS. PVT. LTD. VS. ITO WD 3(3), KOL. PAGE 3 RESPECTFULLY FOLLOWING THE SAME, I HOLD THAT SECTIO N 50C OF THE ACT DOES NOT APPLY UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AS WH AT WAS SOLD WAS RIGHT IN PROPERTY BUT NOT LAND OR BUILDING. HENCE, THIS APPEAL OF ASS ESSEE IS ALLOWED. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 04/07/2018 SD/- (J.SUDHAKAR REDDY) ACCOUNTANT MEM BER KOLKATA, *DKP - 04/07/2017 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S BANIARA ENGS. PVT. LTD. DN SECTORV, SALTA LAKE, KOL-91 2. /RESPONDENT-ITO WARD-3(3), P-7, CHOWRINGHEE SQ. AAY AKARBHAWAN, KOL-69 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORD ER/ /TRUE COPY/ SR. PR IVATE SECRETARY, HEAD O F OFFICE/DDO ',