ITO 16(2)(4), MUMBAI V. ABDUL AZIZ ABDUL KADAR, MUMBAI

ITA 6934/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1741 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 13-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURINDER JIT SINGH
• Assessee Lawyers: AJEET MANWANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL, JUDICIAL MEMBER A ND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.6934/M/2011 ASSESSMENT YEAR:2007-2008 INCOME TAX OFFICER-16(2)(4), MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007. VS MR. ABDUL AZIZ ABDUL KADAR, 90, MISTRY BLDG., MAHILA PATEL AGIARY LANE, GRANT ROAD, MUMBAI-400 007. PAN: AAAPE0298E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SURINDER JIT SINGH, CIT-DR RESPONDENT BY : SHRI AJEET MANWANI DATE OF HEARING: 21.1.2013 DATE OF ORDER: 15.2.2013 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 13.10.2011 IS A GAINST THE ORDER OF CIT (A)-27, MUMBAI DATED 7.7.2011 FOR THE ASSESSMENT YE AR 2007-2008. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROU NDS WHICH READ AS UNDER: 1. THE LD CIT (A) HAS ERRED IN HOLDING THAT THE IM PUGNED TRANSACTION OF TRANSFER OF TENANCY RIGHTS IS NOT ATTRACTED BY THE PROVISIONS OF SECTION 50C OF THE IT ACT, 1961 . 2. THE LD CIT (A) HAS ERRED IN FOLLOWING THE DECISI ON OF THE HONBLE ITAT MUMBAI IN THE CASE OF SMT. KISHORI SHARAD GAITONDE VS. ITO-18(1)(1) VIDE ITA NO.1561/M/09 AND SHRI ATUL G. PURANIK VS. ITO 1 2(1)(1) VIDE ITA NO.3051/M/2010 WHEREIN IT IS HELD THAT THE SECTION 50C HAS NO APPLICATION AND THE CAPITAL GAINS HAVE TO BE COMPUT ED ON THE BASIS OF THE ACTUAL CONSIDERATION AND NOT THE STAMP DUTY V ALUE. 3. THE LD CIT (A) HAS FAILED TO APPRECIATE THE DECI SION OF THE HONBLE ITAT IN THE CASE OF ARIF AKHTAR HUSSAIN VS. ITO WHE REIN THE HONBLE ITAT HELD THAT U/S 2(47)(V) THE GIVING OF POSSESSION IN PART PERFORMANCE OF A CONTRACT AS PER SECTION 53A OF THE TRANSFER OF PROP ERTY ACT IS DEEMED TO BE A TRANSFER. 3. AT THE OUTSET, SHRI AJEET MANWANI, LD COUNSEL FO R THE ASSESSEE MENTIONED THAT THE ISSUE RAISED IN THE GROUNDS BY THE REVENUE ESSENTIALLY RELATES TO IF THE PROVISIONS OF SECTION 50C OF THE ACT APPLY TO THE C APITAL RIGHTS EARNED ON TRANSFER OF THE TENANCY RIGHTS. LD COUNSEL BROUGHT OUR ATTENT ION TO THE EXPRESSIONS USED IN THE 2 SAID PROVISIONS OF SECTION 50C IE LAND OR BUILDING OR BOTH AND MENTIONED THAT THE SAME IS APPLICABLE TO THE CAPITAL ASSETS BEING LAN D OR BUILDING OR BOTH ONLY. FURTHER, HE MENTIONED THAT THE TENANCY RIGHTS BEING NEITHER OF THEM, THE PROVISIONS OF SECTION 50C OF THE ACT HAVE NO APPLICATION. FOR THIS PROPOSITION, THE LD COUNSEL BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 4 OF THE IMPUGNED ORDER WHERE THE CIT (A) GRANTED RELIEF TO THE ASSESSEE, RELYING ON THE DECISION OF THE DIVISION BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. KISHORI SHARAD GAITONDE VS. ITO-18(1)(1) VIDE ITA NO.1561/M/09 AND SHRI ATUL G. PURANIK VS. ITO 1 2(1)(1) VIDE ITA NO.3051/M/2010. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SA ID PARA IS REPRODUCED HERE UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE APPELLANT IN THIS REGARD. AS ON DATE, THE ISSUE UNDER CONSIDERA TION IS COVERED IN FAVOUR OF THE APPELLANT BY THE ITAT, MUMBAI DECISIONS IN THE CASES OF SMT. KISHORI SHARAD GAITONDE VS. ITO-18(1)(1) VIDE ITA NO.1561/M /09 AND SHRI ATUL G. PURANIK VS. ITO 12(1)(1) VIDE ITA NO.3051/M/2010 FO R THE AY 2006-2007 DATED 13 TH MAY, 2011. IN VIEW OF THE ABOVE DECISIONS, I HOLD THE ISSUE IN FAVOUR OF THE APPELLANT THAT THE IMPUGNED TRANSACTION OF TRANSFER OF TENANCY RIGHTS IS NOT ATTRACTED BY THE PROVISIONS O F SECTION 50C. THE APPELLANT SUCCEEDS ON THIS GROUND. SECONDLY, AS PO INTED OUT BY THE APPELLANT THERE WAS AN ERROR IN THE COMPUTATION OF THE CAPITA L GAINS THAT THE INDEXED COST OF ACQUISITION WAS ADOPTED AT RS. 2.30 CRORES INSTEAD OF 3.27 CRORES NOTED IN THE BODY OF THE ASSESSMENT ORDER. THE AO IS DIR ECTED TO CORRECT THE SAID MISTAKE WHILE GIVING EFFECT TO THIS ORDER. APPELLA NT SUCCEEDS ON THIS GROUND. 4. ON PERUSAL OF THE SAID ORDERS WHICH ARE PLACED B EFORE US AS WELL AS THE SAID CONTENTS OF THE ORDER OF THE CIT (A), WE FIND THE O RDER OF THE TRIBUNAL IN THE CASE OF SHRI ATUL G. PURANIK VS. ITO 12(1)(1) VIDE ITA NO.3 051/M/2010, DATED 13.5.2011 WHICH IS SUBSEQUENT IN TIME QUA THE ORDER OF THE ANOTHER ORDER OF THE TRIBUNAL IN THE CASE OF ARIF AKHTAR HUSSAIN VS. ITO VIDE ITA NO.541 /MUM/2010 (AY 2006-2007), WHICH WAS RELIED UPON BY THE REVENUE. IN THIS REGARD , WE HAVE PERUSED THE RELEVANT PORTION OF THIS ORDER IN THE CASE OF SHRI ATUL G. P URANIK VS. ITO (SUPRA) AND THE SAME IS EXTRACTED AS UNDER: (IV) THAT UNDER SECTION 50C THE DEEMING FICTION OF SUBSTITUTING ADOPTED OR ASSESSED OR ASSESSABLE VALUE BY THE STAMP VALUAT ION AUTHORITY AS FULL 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, SECTION 50C WILL NOT APPLY. THE LEASE RIGHTS IN A PLOT OF LAND ARE NEITHER LAND OR BUILDING OR BOTH NOR CAN THEY BE INCLUDED WITHIN THE SCOPE OF LAND OR BUILDING OR BOTH. 3 5. WE HAVE HEARD, BOTH THE PARTIES, PERUSED THE REC ORD PLACED BEFORE US AS WELL AS THE DECISIONS REFERRED BY THE BOTH REPRESENTATIV ES. THE ESSENTIAL ISSUE TO BE ADDRESSED BY US IN THIS APPEAL RELATES TO IF THE IM PUGNED TRANSACTION IE TRANSFER OF TENANCY RIGHTS, ATTRACTS THE PROVISIONS OF SECTION 50C OF THE IT ACT, 1961. IN OUR OPINION, THE TRIBUNALS DECISION IN THE CASE OF SHR I ATUL G. PURANIK VS. ITO (SUPRA), WHICH OF COURSE DEALS WITH THE CASE OF TRANSFER OF LEASE RIGHTS IN PRINCIPLE SHALL APPLY TO THE IMPUGNED TRANSFER OF TENANCY RIGHT, WHICH IS NEITHER LAND NOR BUILDING NOR BOTH. LIKE THE LEASE RIGHTS, THE TENANCY RI GHTS ARE ALSO THE CAPITAL RIGHTS ATTACHED TO THE LAND OR BUILDING OR BOTH AND HOWE VER, THEY ARE NOT COVERED BY THE DEFINITION OF LAND OR BUILDING OR BOTH SPECIFIED IN THE PROVISIONS OF SECTION 50C OF THE ACT, WHICH IS MARKED AS DEEMED PROVISIONS. THE DEEM ED PROVISIONS ARE NOT TO BE EXTENDED TO ITEMS OF CAPITAL ASSETS WHICH ARE NOT MENTIONED IN SECTION 50C OF THE ACT AND IT IS THE SETTLED LEGAL POSITION. THEREFORE , CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE THE PROVISIONS OF SECTION 50C O F THE ACT, WHICH IS THE DEEMING FICTION OF SUBSTITUTING THE VALUE ADOPTED OR ASSESS ED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ONLY IN RESPECT OF LAND OR BUIL DING OR BOTH CANNOT BE EXTENDED OR EXTRAPOLATED TO THE TRANSACTION OF TRANSFER OF THE TENANCY RIGHTS. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED AND DECIDED IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2013. SD/- SD/- (DINESH KUMAR AGARWAL) (D. KARUNAKARA R AO) JUDICIAL MEMBER A CCOUNTANT MEMBER DATE : 15.2.2013 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4 4. THE CIT CONCERNED. 5. THE DR A, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI