SHAVO NORGREN (I) P . LTD, MUMBAI V. DCIT CIR 3(3), MUMBAI

ITA 8101/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9103 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Valuation report; Competent authority; Capital receipt
• Section: 143(3); 50C

Judgement Text

ITA NO.8101 OF 2011 PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.8101/MUM/2011 (ASSESSMENT YEAR: 2008-09) SHAVO NORGREN (P) LTD, 74 MITTAL CHAMBERS, NARIMAN POINT, MUMBAI 400021 PAN: AABCS 8869 H VS. DCIT, CIRCLE 3(3) ROOM NO.602A AAYAKAR BHAVAN, 6 TH FLOOR, MUMBAI 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI VIJAY MEHTA DEPARTMENT BY: SHRI GIRIJA DAYAL, CIT(DR) DATE OF HEARING: 15/11/2012 DATE OF PRONOUNCEMENT: 14/12/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN ASSESSEES APPEAL AGAINST THE ORDERS OF THE CIT (A)- 7 MUMBAI DATED 2.9.2011 ON THE ISSUE OF COMPUTATION OF LONG TERM CAPITAL GAIN. ASSESSEE HAS RAISED THE FOLLOWING GRO UNDS: 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FAC TS IN UPHOLDING THE ORDER PASSED BY THE AO UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ASSESSMENT OF A SUM OF ` 2,39,91,000/ - AS LONG-TERM CAPITAL GAIN ON TRANSFER OF LEASEHOLD RIGHTS. 3. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN N OT TREATING ` 14,30,220/ - AS CONSIDERATION FOR TRANSFER OF BUILDING. THE LEARNED CIT (A) OUGHT TO HAVE REDUCED THE SAID AMOUNT FROM SALE CONSIDERATION OF RIGHTS IN LA ND. 4. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACT S IN UPHOLDING INVOCATION OF SECTION 50C OF THE ACT TO T HE ITA NO.8101 OF 2011 PAGE 2 OF 18 TRANSACTION OF TRANSFER OF CAPITAL ASSET MADE BY TH E APPELLANT. 5. WITHOUT PREJUDICE TO THE ABOVE, EVEN IF SECTION 50C OF THE ACT IS HELD TO BE APPLICABLE, THE ASSESSING OFF ICER OUGHT TO HAVE REFERRED THE VALUATION OF THE CAPITAL ASSET TO THE DISTRICT VALUATION OFFICER. SINCE THE ASSESS ING OFFICER HAS NOT FOLLOWED THIS PROCEDURE, THE LEARNE D CIT (A) OUGHT TO HAVE HELD THE ORDER OF THE ASSESSING O FFICER TO BE ILLEGAL AND INVALID/UNSUSTAINABLE. 6. WITHOUT FURTHER PREJUDICE TO THE ABOVE, EVEN IF SECTION 50C OF THE ACT IS HELD TO BE APPLICABLE, THE STAMP DUTY RATE APPLICABLE AS ON APRIL, 2007, I.E. THE DATE OF THE MEMORANDUM OF UNDERSTANDING OUGHT TO HAVE BEEN CONSIDERED INSTEAD OF STAMP DUTY RATE AS ON FEBRUAR Y 2008. 7. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FAC TS IN SUSTAINING THE COMPUTATION OF LONG-TERM CAPITAL GAI N WITHOUT EVEN GIVING THE INDEXED COST OF ACQUISITION AS DEDUCTION. THE LEARNED CIT (A) OUGHT TO HAVE HELD T HAT COMPUTATION OF CAPITAL GAIN MADE BY THE ASSESSING OFFICER WITHOUT REDUCING COST OF ACQUISITION/INDEXE D COST OF ACQUISITION IS UNSUSTAINABLE IN LAW. 2. BRIEFLY STATED, FROM THE STATEMENT OF FAC TS SUBMITTED BEFORE THE CIT (A), ASSESSEE HAD TAKEN A PLOT OF LAND ON L EASE FROM MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION (MID C) IN THE YEAR 1967 FOR A LEASE OF 95 YEARS COMMENCING FROM 1 ST JANUARY, 1967. ASSESSEE HAD ALSO PAID PREMIUM TO MIDC AS PER THEIR RULES PREVALENT AT THAT TIME. IN THE PREVIOUS YEAR 2007-0 8 ASSESSEE ENTERED INTO A MOU FOR TRANSFER OF PART OF THE SAID LAND ON 9 TH APRIL 2007, RECEIVED AN ADVANCE OF RS.30 LACS AND APPLIED TO MIDC FOR THEIR CONSENT. MIDC GAVE THEIR CONSENT ON 25/1/2008 FOR TWO DIFFERENT PLOTS SUB DIVIDED FROM THE ORIGINAL ONE A ND ACCORDINGLY THE TRANSFER OF THE LEASE WAS AFFECTED BY AGREEMENT DAT ED 7 TH MARCH, 2008. AT THE TIME OF ENTERING INTO MOU AN ADVANCE O F RS.30 LACS WAS OBTAINED BY ASSESSEE AND SUBSEQUENTLY THE TWO P LOTS TOGETHER ITA NO.8101 OF 2011 PAGE 3 OF 18 WITH BUILDING THEREON WERE TRANSFERRED FOR A TOTAL SUM OF RS.2,01,57,606. ASSESSEE WORKED OUT CAPITAL GAIN OF RS.1,60,38,687 AFTER DEDUCTING THE VALUE OF BUILDING AT RS.14,30,2 20/- AND THE MARKET VALUE AS ON 1/4/1981 INCREASED BY INDEXATION COST TO RS.26,88,699. THE AO APPLIED SEC. 50C OF THE INCOME TAX ACT AND CONSIDERED THE MARKET VALUE OF THE PLOT OF LAND AT RS.2,39,91,000 AND CONSIDERED THIS AS LONG TERM CAPITAL GAIN FOR T HE PURPOSE OF COMPUTATION OF INCOME. WHILE TAKING THIS VIEW THE A O DID NOT ALLOW ANY COST AS DEDUCTION AND ALSO DID NOT EXCLUDE THE VALUE OF BUILDING STANDING ON THE PLOTS OF LAND WHICH WAS VALUED AT R S.14,30,220 AND ADJUSTED IN THE BLOCK OF ASSETS WHILE COMPUTING DEP RECIATION UNDER THE INCOME TAX. ASSESSEES CONTENTION WAS THAT SINC E THIS PLOT OF LAND WAS A LEASEHOLD RIGHT ONLY, IT WAS NEITHER A L AND NOR A BUILDING AND THEREFORE SECTION 50C WOULD NOT BE APPLICABLE T O SUCH TRANSACTION. 2. WHILE COMPLETING THE ASSESSMENT AO RELIED MORE ON T HE TERMS OF THE AGREEMENT AND COMPLETED THE ASSESSMENT DENYI NG CLAIMS AND MAKING ADDITION. BEFORE THE CIT (A) ASSESSEE CONTES TED ALL THE ISSUES AND THE LEARNED CIT (A) IN HIS BRIEF ORDER V IDE PARA 3.3 HAS DECIDED AGAINST ASSESSEE AS UNDER: 3.3 I HAVE CONSIDERED AOS ORDER AS WELL AS APPELL ANT AUTHORIZED REPRESENTATIVES SUBMISSIONS. HAVING CONSIDERED BOTH, I FIND THAT THE APPELLANT COMPANY HAS TRANSFERRED THE PLOT OF LAND OVER WHICH THE APPELLA NT COMPANY WAS HAVING LEASEHOLD RIGHT FOR A PERIOD OF MORE THAN 12 YEARS FROM THE DATE OF ASSIGNMENT REGISTERE D. IT IS EVIDENT THAT THE APPELLANT COMPANY HAS GOT LEASE HOLD RIGHT OVER THE LAND FROM MIDC FOR A TERM OF 95 YEAR S TO BE COMPUTED FROM 1 ST JANUARY, 1967 AND THUS THE SAID RIGHT OVER THE SPECIFIED LAND WHICH WAS TRANSFERRED AS PE R THE AGREEMENT DEED DATED 07.03.2008 IN THE CASE OF THE APPELLANT COMPANY AND M/S UNNATI TECHNOLOGY PVT. LT D IS FOR TRANSFER OF LAND ALONG WITH FACTORY BUILDING . THEREFORE, IN MY CONSIDERED VIEW AO WAS COMPLETELY JUSTIFIED IN HIS ACTION WHILE APPLYING THE DEEMING ITA NO.8101 OF 2011 PAGE 4 OF 18 PROVISIONS OF SECTION 50C OF THE ACT AS THE APPELLA NT COMPANY HAD TRANSFERRED THE PLOT TO THE TRANSFEREE. THIS FACT IS CLEARLY EVIDENT FROM PARA D, G, H, I AND J OF THE TRANSFER DEED WHEREIN THE AREA OF TRANSFER HAS BEEN SPECIFIED. IN VIEW OF THE AFORE STATED FACTS OF THE APPELLANTS CASE, I AM OF THE CONSIDERED VIEW THAT AO WAS COMPLETELY JUSTIFIED IN HIS ACTION IN APPLYING THE DEEMING PROVISION OF SECTION 50C IN THE CASE OF THE APPELLANT COMPANY. ACCORDINGLY, THE ADDITION SO MAD E BY AO IS HELD TO BE JUSTIFIED AND THEREBY CONFIRMED. T HUS, APPELLANTS THIS GROUND OF APPEAL IS DISMISSED. HENCE ASSESSEE IS AGGRIEVED AND RAISED THE ABOVE GR OUNDS. 3. THE LEARNED COUNSEL REFERRED TO THE FACTS OF THE CA SE AND SUMMARIZED THE ISSUES FOR CONSIDERATION AS UNDER: A) TOTAL CONSIDERATION: ASSESSEE RECEIVED AN AMOUNT OF ` .2,01,57,606 AS PART OF THE SALE OF THE ASSET, WHER EAS INVOKING THE PROVISIONS OF SECTION 50C AO TOOK THE AMOUNT AT ` .239,91,000. B) VALUATION OF BUILDING WHICH WAS TAKEN BY ASSESSEE AT ` .14,30,220 WHICH WAS REDUCED FROM THE TOTAL CONSIDE RATION. IN THE ABSENCE OF SEPARATE AGREEMENT AO IGNORED THE APPORTIONMENT OF THE ABOVE AMOUNT TOWARDS SALE OF T HE BUILDING. C) THE COST OF THE ACQUISITION. ASSESSEE INITIALLY DI D NOT CLAIM THE COST OF ACQUISITION WHEREAS DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS IT CLAIMED VALUATION AS ON 01.04.1981 A T ` .4,87,967 VIDE LETTER DATED 04.08.2010 AND ARRIVED AT THE IND EX COST OF THE ACQUISITION AT ` .26,88,999. THIS WAS DENIED BY AO HOLDING THAT THE RIGHTS OF ASSESSEE IN LAND ARE AKIN TO THE TENA NCY RIGHT HENCE THERE IS NO COST OF ACQUISITION. 4. CONTINUING WITH THE ARGUMENTS, IT WAS THE SUBMISSIO N OF THE LEARNED COUNSEL THAT ASSESSEE HAS TRANSFERRED ONLY LEASEHOLD RIGHTS IN THE PROPERTY AND THEREFORE, PROVISIONS OF SECTIO N 50C ARE NOT APPLICABLE AS THE SAID PROVISIONS WAS APPLICABLE ON LY FOR LAND AND ITA NO.8101 OF 2011 PAGE 5 OF 18 BUILDING AND NOT FOR THE RIGHTS IN THE LAND AND BU ILDING. IN THIS REGARD HE RELIED ON THE DECISION OF COORDINATE BENC H IN THE CASE OF ATUL G. PURANIK VS. ITO (2011) 132 ITD 499/11 ITR 1 20 (TRIB.) (MUM.) TO SUBMIT THAT THE LEASEHOLD RIGHTS IN A PLO T OF LAND CANNOT BE INCLUDED WITHIN THE SCOPE OF LAND OR BUILDING OR BOTH AND THOSE IN THE CASE OF TRANSFER OF LEASEHOLD RIGHTS IN LAND , PROVISIONS OF SECTION 50C CANNOT BE INVOKED. FURTHER HE ALSO RELI ED ON THE UNREPORTED DECISION OF ITAT IN THE CASE OF INCOME TAX OFFICER VS. M/S PRADEEP STEEL RE-ROLLING MILLS PVT. LTD IN ITA NO.341/MUM/2010 ON THE SIMILAR ISSUE. HE FURTHER RE LIED ON THE DECISION OF THE ITAT D BENCH OF KOLKATA IN THE CA SE OF DCIT VS. TEJINDER SINGH IN ITA NO.1459/KOL/2011 DATED 29.02. 2012 FOR THE SAME PROPOSITION. IT WAS HIS SUBMISSION THAT THIS I SSUE IS COVERED BY THE DECISIONS OF THE COORDINATE BENCH. 5. WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS, IT WAS ALSO SUBMITTED THAT AO HAS WRONGLY TAKEN THE VALUATION U NDER SECTION 50C AS ON 07.03.2008 I.E. THE DATE OF REGISTRATION WHEREAS THE STAMP DUTY RATE SHOULD HAVE BEEN ADOPTED AS ON 09.0 4.2007 I.E. DATE OF MEMORANDUM OF UNDERSTANDING (MOU). IT WAS H IS SUBMISSION THAT EVEN THOUGH THE AGREEMENT AND THE R EGISTRATION HAPPENED IN THE SAME FINANCIAL YEAR THE RATES WERE REVISED AS PER THE CALENDAR YEAR AND HENCE ASSESSEE HAVING ENTERED AGREEMENT AS ON 09.04.2007 THE STAMP DUTY VALUATION ON THAT DATE COULD HAVE BEEN TAKEN. HE RELIED ON THE DECISION OF THE ITAT VISAKHAPATNAM BENCH IN THE CASE OF LAHIRI PROMOTERS VS. ACIT IN I TA NO.12/VIZAG/2009 DATED 22.06.2010. 6. ON THE ISSUE OF VALUE OF TRANSFER OF BUILDING, IT W AS SUBMITTED THAT THE PLOT CONTAINED A BUILDING WHICH WAS ALSO T RANSFERRED AND AO WAS NOT CORRECT IN EXCLUDING THE VALUATION OF TH E BUILDING. ASSESSEE, IT WAS SUBMITTED, HAS ADJUSTED THE COST O F ACQUISITION IN ITA NO.8101 OF 2011 PAGE 6 OF 18 THE BLOCK OF ASSETS WHEREAS AO DID NOT TAKE COGNIZA NCE OF THE ABOVE AND DENIED THE BENEFIT OF EXCLUSION OF VALUE OF THE BUILDING IN THE COMPUTATION. 7. WITH REFERENCE TO THE COST OF ACQUISITION, THE LEAR NED COUNSEL SUBMITTED THAT AT THE TIME OF ACQUISITION AND SUBSE QUENTLY THE REGISTRATION, ASSESSEE HAD PAID THE PREMIUM FOR LEA SEHOLD RIGHT AND THIS VALUE WAS SHOWN IN THE FIXED ASSET SCHEDULE OF THE COMPANY ACCOUNT AS LEASEHOLD ASSETS. THEREFORE, ASSESSEE IS ENTITLED FOR THE CLAIM OF COST OF ACQUISITION ON THE PROPORTIONATE A MOUNT OF PREMIUM PAID, VALUED AS ON 01.04.1981. IT WAS HIS SUBMISSIO N THAT THERE IS NO REASON FOR NOT ALLOWING ASSESSEES CONTENTION ON COST OF ACQUISITION. 8. THE LEARNED DR IN REPLY, REFERRING TO THE AGREEMENT PARTICULARLY PAGE NO.56 OF THE PAPER BOOK, SUBMITTE D THAT ASSESSEE HAS CONSTRUCTED THE BUILDING AFTER THE AGREEMENT TO SUBMIT THAT ASSESSEE NOT ONLY TRANSFERRED PLOT OF LAND BUT ALSO BUILDING. THEREFORE, PROVISIONS OF SECTION 50C ARE APPLICABLE . FURTHER HE ALSO RELIED ON THE ORDER OF THE COORDINATE BENCH OF THE ITAT IN THE CASE OF ARIF AKHATAR HUSSAIN VS. INCOME TAX OFFICER IN I TA NO.541/MUM/2010 WHEREIN THE HON'BLE ITAT UPHELD INV OKING PROVISIONS OF SECTION 50C ON TRANSFER OF DEVELOPMEN T RIGHTS. HE SUPPORTED AOS ORDER AS CONFIRMED BY THE CIT (A). 9. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THE TRA NSFER OF DEVELOPMENT RIGHTS IS DIFFERENT FROM THE LEASE RIGH TS. WHEREAS THE DEVELOPMENT RIGHTS ARE TRANSFERRED BY THE OWNER FOR PERPETUITY THE LEASEHOLD RIGHTS ARE TRANSFERRED BY THE LESSEE WHO HAS LIMITED RIGHTS AND FOR LIMITED PERIOD. THEREFORE, THE DECISION OF THE COORDINATE BENCH IS NOT APPLICABLE. 10. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RECOR D AND THE RIVAL CONTENTIONS. UNDISPUTED FACTS IN THIS CAS E ARE THAT THE ITA NO.8101 OF 2011 PAGE 7 OF 18 COMPANY HAD TAKEN A PLOT OF LAND FROM MAHARASHTRA I NDUSTRIAL DEVELOPMENT CORPORATION IN THE YEAR 1967 ON LEASE F OR 95 YEARS COMMENCING FROM 01.01.1967. IT IS ALSO THE FACT THA T THE COMPANY HAS PAID PREMIUM TO MIDC AS PER THE RULES PREVALENT AT THAT TIME AND ALSO SHOWED THE SAME AS AN ASSET UNDER THE HEAD LEASEHOLD ASSETS IN THE BALANCE SHEET. ASSESSEE HAS ENTERED INTO MOU FOR TRANSFER OF PART OF THE LAND ON 09.04.2007 WITH THE CONSENT OF MIDC WHICH WAS OBTAINED ON 25.01.2008. THE MAIN ISSUE BEFORE US IS WHETHER ASSESSEE IS OWNER OF THE PLOT OF THE LAND O R ONLY HAVING LEASEHOLD RIGHTS AND WHETHER PROVISIONS OF SECTION 50C ARE ATTRACTED ON THIS TRANSFER. 11. THE COORDINATE BENCHES IN THE CASES RELIED UPON BY ASSESSEE HAS CONSIDERED THE ISSUE OF TRANSFER OF RIGHTS. IN THE CASE OF ATUL G PURANIK VS. INCOME TAX OFFICER (SUPRA), IT WAS HELD AS UNDER: FULL VALUE OF CONSIDERATION AND SECTION 50C THE ASSESSING OFFICER ADOPTED THE VALUE OF ASSET SO LD ON 25-8-2005 AT RS. 2.88 CRORES BY APPLYING THE PROVIS IONS OF SECTION 50C FOR THE PURPOSES OF COMPUTING CAPITA L GAIN. HIS VIEW WAS BASED ON THE ASSESSEE'S SUBMISSI ON THAT THE MARKET RATE PREVAILING FOR LAND DURING 1-4 -2004 TO 31-12-2004 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), I T TRANSPIRES THAT WHERE THE FULL VALUE OF CONSIDERATI ON SHOWN TO HAVE BEEN RECEIVED OR ACCRUING ON THE TRAN SFER OF AN ASSET, BEING LAND OR BUILDING OR BOTH, IS LES S THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY STAM P VALUATION AUTHORITY, THE VALUE SO ADOPTED ETC. SHAL L, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE FULL VA LUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. THIS SECTION HAS BEEN INSERTED BY THE FIN ANCE 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 ASSESSABLE BY STAMP VALUATION AUTHORITY. BUT FOR TH IS PROVISION, THERE IS NOTHING IN THE ACT, BY WHICH TH E FULL ITA NO.8101 OF 2011 PAGE 8 OF 18 VALUE OF A CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF LAND OR BUILDING OR BOTH IS DEEMED T O BE ANY AMOUNT OTHER THAN THAT ACTUALLY RECEIVED. FROM THE LANGUAGE OF SUB-SECTION (1), IT IS CLEAR THAT THE V ALUE 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 CONSIDERATION RECEIVED OR ACCRUING AS A RESU LT OF SUCH A TRANSFER. TWO THINGS ARE NOTICEABLE FROM THI S PROVISION. FIRSTLY, IT IS A DEEMING PROVISION AND S ECONDLY, IT EXTENDS ONLY TO LAND OR BUILDING OR BOTH. IT IS MANIFEST THAT A DEEMING PROVISION HAS BEEN INCORPORATED TO SUBSTITUTE THE VALUE ADOPTED OR ASSESSED OR ASSESSA BLE BY STAMP VALUATION AUTHORITY IN PLACE OF CONSIDERAT ION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER, IN CA SE THE LATTER IS LOWER THAN THE FORMER. IT IS FURTHER RELE VANT TO NOTE THAT THE MANDATE OF SECTION 50C EXTENDS ONLY T O A CAPITAL ASSET WHICH IS 'LAND OR BUILDING OR BOTH'. IT, THEREFORE, FOLLOWS THAT ONLY IF A CAPITAL ASSET BEI NG LAND OR BUILDING OR BOTH IS TRANSFERRED AND THE CONSIDER ATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER I S LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY, THE DEEMING FICTION UNDE R SUB-SECTION (1) SHALL BE ACTIVATED TO SUBSTITUTE SU CH ADOPTED OR ASSESSED OR ASSESSABLE VALUE AS FULL VAL UE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER IN THE GIVEN SITUATION. IT IS A SETTLED LEGAL PROPOSITION THAT A DEEMING PR OVISION CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS ENACTED. IT IS THUS CLEAR THAT A DEEMING PROVISION CAN BE AP PLIED 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 TH E DEEMING FICTION OF SUBSTITUTING ADOPTED OR ASSESSED OR ASSESSABLE VALUE BY THE STAMP VALUATION AUTHORITY A S FULL VALUE OF CONSIDERATION IS APPLICABLE ONLY IN R ESPECT OF 'LAND OR BUILDING OR BOTH'. IF THE CAPITAL ASSET UN DER TRANSFER CANNOT BE DESCRIBED AS 'LAND OR BUILDING O R BOTH', THEN SECTION 50C WILL CEASE TO APPLY. FROM T HE FACTS OF THIS CASE NARRATED ABOVE, IT IS SEEN THAT THE ASSESSEE WAS ALLOTTED LEASE RIGHT IN THE PLOT FOR A PERIOD OF SIXTY YEARS, WHICH RIGHT WAS FURTHER ASSIGNED TO 'P' IN THE YEAR IN QUESTION. IT IS AXIOMATIC THAT THE LEAS E RIGHT IN A PLOT OF LAND ARE NEITHER 'LAND OR BUILDING OR BOT H' AS SUCH NOR CAN BE INCLUDED WITHIN THE SCOPE OF 'LAND OR ITA NO.8101 OF 2011 PAGE 9 OF 18 BUILDING OR BOTH'. THE DISTINCTION BETWEEN A CAPITA L 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 WITH CERTAIN CASES IN WHICH CAPIT AL GAIN ON COMPULSORY ACQUISITION OF LAND AND BUILDING IS CHARGED. SUB-SECTION (1) OF SECTION 54D OPENS WITH : 'SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHER E THE CAPITAL GAIN ARISES FROM THE TRANSFER BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW OF A CAPITAL A SSET, BEING LAND OR BUILDING OR ANY RIGHT IN LAND OR BUIL DING, FORMING PART OF AN INDUSTRIAL UNDERTAKING..'. IT I S PALPABLE FROM SECTION 54D THAT 'LAND OR BUILDING' I S DISTINCT FROM 'ANY RIGHT IN LAND OR BUILDING'. SIMI LAR POSITION PREVAILS UNDER THE WEALTH-TAX ACT, 1957 AL SO. SECTION 5(1) AT THE MATERIAL TIME PROVIDED FOR EXEM PTION IN RESPECT OF CERTAIN ASSETS. CLAUSE ( XXXII ) OF SECTION 5(1) PROVIDED THAT 'THE VALUE, AS DETERMINED IN THE PRES CRIBED MANNER, OF THE INTEREST OF THE ASSESSEE IN THE ASSE TS (NOT BEING ANY LAND OR BUILDING OR ANY RIGHTS IN LAND OR BUILDING OR ANY ASSET REFERRED TO IN ANY OTHER CLAU SES OF THIS SUB-SECTION) FORMING PART OF AN INDUSTRIAL UNDERTAKING' SHALL BE EXEMPT FROM TAX. HERE ALSO IT IS WORTH NOTING THAT A DISTINCTION HAS BEEN DRAWN BETW EEN 'LAND OR BUILDING' ON ONE HAND AND 'OR ANY RIGHTS I N LAND OR BUILDING' ON THE OTHER. CONSIDERING THE FACT THA T TRIBUNAL IS DEALING WITH SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES UNDER SECTION 50C, W HICH IS A DEEMING PROVISION, THE FICTION CREATED IN THIS SECTION CANNOT BE EXTENDED TO ANY ASSET OTHER THAN THOSE SPECIFICALLY PROVIDED THEREIN. AS SECTION 50C APPLI ES 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 YEAR S IN THE PLOT AND NOT LAND ITSELF, THE PROVISIONS OF SEC TION 50C CANNOT BE INVOKED. THEREFORE, THE FULL VALUE OF CONSIDERATION IN THE INSTANT CASE BE TAKEN AS RS. 2 .50 CRORES. 12. IN THE CASE OF INCOME TAX OFFICER VS. M/S PRADEEP S TEEL RE- ROLLING MILLS PVT. LTD IN ITA NO.341/MUM/2010 THE I TAT C BENCH VIDE ORDER DATED 15.07.2011 HAS CONSIDERED THE SIMI LAR ISSUE AS UNDER: 4. THE REVENUE IS IN APPEAL. WE ARE UNABLE TO FIND FAULT WITH THE DECISION OF THE CIT(A) THAT SECTION 50C CA NNOT ITA NO.8101 OF 2011 PAGE 10 OF 18 BE INVOKED TO A TRANSFER OF LEASEHOLD RIGHTS. THE S ECTION APPLIES ONLY TO CAPITAL ASSETS BEING LAND OR BUILDI NG OR BOTH. IT DOES NOT IN TERMS INCLUDE LEASEHOLD RIGHTS IN THE LAND OR BUILDING WITHIN ITS SCOPE. THE ASSESSING OF FICER'S CONCLUSION TO THE CONTRARY IS BASED ON SECTION 27(I IIB) OF THE ACT, WHICH SAYS THAT A PERSON WHO ACQUIRES ANY RIGHTS, EXCLUDING ANY RIGHTS BY WAY OF A LEASE FROM MONTH TO MONTH OR FOR A PERIOD NOT EXCEEDING ONE YE AR, IN OR WITH RESPECT TO ANY BUILDING OR PART THEREOF, BY VIRTUE OF ANY SUCH TRANSACTION AS IS REFERRED TO IN CLAUSE (F) OF SECTION 269UA, SHALL BE DEEMED TO BE THE OWNER OF T HAT BUILDING OR PART THEREOF. FIRSTLY, THIS PROVISION H AS BEEN EXPRESSLY LIMITED IN ITS APPLICATION TO SECTIONS 22 TO 26 OF THE ACT, WHICH DEAL WITH THE COMPUTATION OF THE INC OME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. IT HAS NOT BEEN MADE APPLICABLE TO THE COMPUTATION OF CAPITAL GAINS. SECONDLY, THE RIGHTS MENTIONED IN THE PROVIS ION ARE RIGHTS OVER THE BUILDING AND ANY RIGHTS OVER TH E LAND HAVE NOT BEEN INCLUDED IN THE SECTION. IN ANY CASE, SINCE THE SECTION 27(IIIB) HAS NOT BEEN EXTENDED TO THE COMPUTATION OF CAPITAL GAINS UNDER SECTION 45 AND I S LIMITED TO THE COMPUTATION OF THE INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', THE CONCLUSION OF THE CIT(A) THAT SECTION 50C CANNOT BE INVOKED WHERE LEASEHOLD RIGHTS IN LAND OR BUILDING ARE TRANSFERRE D, SEEMS TO US, TO BE CORRECT. WE ACCORDINGLY AFFIRM T HE DECISION OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE WITH NO ORDER AS TO COSTS. 13. SIMILAR VIEW WAS ALSO HELD BY THE ITAT KOLKATA BENC H IN THE CASE OF DCIT VS. TEJINDER SINGH IN ITA NO. 1459/KOL /2011 DATED 29.02.2012 AS UNDER: 8. A PLAIN LOOK AT THE UNDISPUTED FACTS OF THIS CA SE CLEARLY SHOWS THAT THE ASSESSEE WAS A LESSEE IN THE PROPERTY WHICH WAS SOLD BY THE KSCT; THERE IS NO DISPUTE ON THIS ASPECT OF THE MATTER. YET, THE ASSE SSING OFFICER HAS TREATED THE ASSESSEE A SELLER OF PROPER TY APPARENTLY BECAUSE THE ASSESSEE WAS A PARTY TO THE SALE DEED, AND BECAUSE, ACCORDING TO THE ASSESSING OFFIC ER, 'CONSIDERATION IS PAID ON SALE OF THE PROPERTY FOR GIVING UP RIGHT OF THE OWNER OF THE PROPERTY' AND THAT 'IN THE CASE OF LEASEHOLD PROPERTY, THE RIGHT OF OWNER IS D IVIDED BETWEEN LESSOR AND LESSEE'. WE ARE UNABLE TO SHARE THIS LINE OF REASONING. IT IS NO T NECESSARY THAT CONSID ERATION ITA NO.8101 OF 2011 PAGE 11 OF 18 PAID BY THE BUYER OF A PROPERTY, AT THE TIME OF BUY ING THE PROPERTY, MUST ONLY RELATE TO OWNERSHIP RIGHTS. IN THE CASE OF TENANTED PROPERTY, AS IS THE CASE BEFORE US , WHILE THE BUYER OF PROPERTY PAYS THE OWNER OF PROPERTY FO R OWNERSHIP RIGHTS, HE MAY ALSO HAVE TO PAY, WHEN HE WANTS TO HAVE POSSESSION OF THE PROPERTY AND TO REM OVE THE FETTERS OF TENANCY RIGHTS ON THE PROPERTY SO PURCHASED, THE TENANTS TOWARDS THEIR SURRENDERING T HE TENANCY RIGHTS. MERELY BECAUSE HE PAYS THE TENANTS, FOR THEIR SURRENDERING THE TENANCY RIGHTS, AT THE TIME OF PURCHASE OF PROPERTY, WILL NOT ALTER THE CHARACTER OF RECEIPT IN THE HANDS OF THE TENANT RECEIVING SUCH PAYMENT. WHAT IS PAID FOR THE TENANCY RIGHTS CANNOT , MERELY BECAUSE OF THE TIMING OF THE PAYMENT, CANNOT BE TREATED AS RECEIPT FOR OWNERSHIP RIGHTS IN THE HAND S OF THE ASSESSEE. THIS DISTINCTION BETWEEN THE RECEIPT FOR OWNERSHIP RIGHTS IN RESPECT OF A PROPERTY AND RECEI PT FOR TENANCY RIGHTS IN RESPECT OF A PROPERTY , EVEN THOU GH BOTH THESE RECEIPTS ARE CAPITAL RECEIPTS LEADING TO TAXA BLE CAPITAL GAINS , IS VERY IMPORTANT FOR TWO REASONS - FIRST, THAT THE COST OF ACQUISITION FOR TENANCY RIGHTS, UN DER SECTION 55(2)(A), IS, UNLESS PURCHASED FROM A PREVI OUS OWNER - WHICH IS ADMITTEDLY NOT THE CASE HERE , TRE ATED AS 'NIL'; AND, - SECOND, SINCE THE PROVISIONS OF SE CTION 50 C CAN ONLY BE APPLIED IN RESPECT OF 'TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH', THE PROVISIONS OF SECTION 50 C WILL APPLY ON RECEIPT OF CONSIDERATION ON TRANSFER OF A PROPERTY, BEING L AND OR BUILDING OR BOTH, THESE PROVISIONS WILL NOT COME IN TO PLAY IN A CASE WHERE ONLY TENANCY RIGHTS A RE TRANSFERRE D OR SURRENDERED. IT IS, THEREFORE, IMPORTANT TO EXAMINE AS TO IN WHAT CAPACITY THE ASSESSEE RECEIVED THE PAYMENT. NO DOUBT THE ASSESSEE WAS A PARTY TO THE REGISTERED TRIPARTITE DEED DATED 20 TH JULY 2007 WHEREBY THE PROPERTY WAS SOLD BY THE KSCT, BUT, AS A PERUSAL OF THE SALE DEED UNAMBIGUOUSLY SHOWS, THE ASSESSEE HAS GIVEN UP ALL THE RIGHTS AN D INTERESTS IN THE SAID PROPERTY, WHICH HE HAD ACQUIRED BY THE VIRTUE OF LEASE AGREEM ENTS WITH OWNER AND WHICH WERE, THEREFORE, IN THE NATURE OF LESSEE'S RIGHTS; THESE RIGHTS COULD NOT HAVE BEEN , BY ANY STRETCH OF LOGIC, COULD BE TREATED AS OWNERSHIP RIG HTS . IT HAS BEEN SPECIFICALLY STATED IN THE SALE DEED THAT THE LESSEE, WHICH INCLUDED THIS ASSESSEE BEFORE US, HAD PROCEEDED TO, INTER ALIA, 'GRANT, CONVEY, TRANSFER AND ASSIGN THEIR LEASEHOLD RIGHTS, TITLE AND INTEREST I N THE SAID PREMISES '. THERE IS NOTHING ON THE RECORD TO EVEN ITA NO.8101 OF 2011 PAGE 12 OF 18 REMOTELY SUGGEST THAT THE ASSESSEE WAS OWNER OF THE PROPERTY IN QUESTION. THE MONIES RECEIVED BY THE ASSESSEE, UNDER THE SAID AGREEMENT, WERE THUS CLEAR LY IN THE NATURE OF RECEIPTS FOR TRANSFER OF TENANCY R IGHTS, AND, ACCORDINGLY, AS THE LEARNED CIT(A) RIGHTLY HOL DS, SECTION 50 C COULD NOT HAVE BEEN INVOKED ON THE FAC TS OF THIS CASE. REVENUE'S CONTENTION THAT THE PROVISIONS OF SECT ION 50 C ALSO APPLY TO THE TRANSFER OF LEASEHO LD RIGHTS IS DEVOID OF LEGALLY SUSTAINABLE MERITS AND IS NOT SUPPORTED BY THE PLAIN WORDS OF THE STATUTE. SECTIO N 50 C CAN COME INTO PLAY ONLY IN A SITUATION ' WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, (EMPHASIS SUPPLIED BY US BY UNDERLINING) IS LESS THAN THE VALUE ADOPTED OR ASSE SSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMEN T ...... FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER '. CLEARLY, THEREFORE, IT IS SINE QUA NON FOR APPLICATION OF SECTION 50 C THAT THE TRANSFER M UST BE OF A 'CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH ' , BUT THEN A LEASEHOLD RIGHT IN SUCH A CAPITAL ASSET CANN OT BE EQUATED WITH THE CAPITAL ASSET PER SE. WE ARE, THER EFORE, UNABLE TO SEE ANY MERITS IN REVENUE'S CONTENTION TH AT EVEN WHEN A LEASEHOLD RIGHT IN 'LAND OR BUILDING OR BOTH' IS TRANSFERRED, THE PROVISIONS OF SECTION 50C CAN B E INVOKED. WE, THEREFORE, APPROVE THE CONCLUSION ARRI VED AT BY THE CIT(A) ON THIS ASPECT OF THE MATTER. 14. THUS THERE ARE COORDINATE BENCH DECISIONS WHICH STA TES THAT THE TRANSFER OF LEASEHOLD RIGHTS DOES NOT ATTRACT A PPLICATION OF PROVISIONS OF SECTION 50C. 15. ON THE OTHER HAND, PRIMA FACIE EXAMINATION OF DOCUM ENTS PLACED ON RECORD INDICATES THAT AO AND CIT (A) HAVE JUSTIFIED THEIR ACTION IN INVOKING PROVISIONS OF SECTION 50C. AS SE EN FROM THE ALLOTMENT OF PLOT ORIGINALLY IN 1967 ASSESSEE HAS P AID PREMIUM FOR THE LEASEHOLD LAND SUBJECT TO FULFILLMENT OF CONDIT IONS STATED THEREIN. HOWEVER, THE MIDC HAS CONFIRMED AND REGISTERED THE SAID PLOT IN THE NAME OF ASSESSEE VIDE THE LEASE DEED DATED 01.0 4.1974. EVEN THOUGH THE DEED IS HELD AS LEASE AGREEMENT, THE PER USAL OF THE TERMS INDICATES THAT SUBSTANTIAL RIGHTS WERE TRANSFERRED TO ASSESSEE ITA NO.8101 OF 2011 PAGE 13 OF 18 INCLUDING THE RIGHTS TO CONSTRUCT BUILDING. IN FACT , VIDE PARA 2Q OF THE AGREEMENT ASSESSEE WAS ASSIGNED LIMITED POWERS OF ASSIGNMENT OF THE DEMISED PREMISES OR ANY PART THEREOF OR ANY INTEREST THEREOF WITH THE PREVIOUS WRITTEN CONSENT OF THE CHIEF EXEC UTIVE OFFICER OF MIDC. 16. FURTHER AS SEEN FROM THE DEED OF ASSIGNMENT BETWEEN ASSESSEE AND M/S. UNNATI TECHNOLOGY (P) LTD ASSESSE E AGREED TO ALIENATE A PART OF THE LAND SUBJECT TO SUB PLOTTING AND CONSENT BY MIDC. THE REGISTERED DEED DATED 17.03.2008 INDEED M ENTIONS THAT VIDE ORDER DATED 25.01.2008 THE MIDC I.E. LESSEE HA S INTER ALIA HAS FURTHER DIVIDED THE LARGER PROPERTY INTO THREE SEPA RATE PLOTS NAMELY 14/1 ADMEASURING 4115.34 SQ MTRS, PLOT NO.14/1A ADM EASURING 1515.45 SQ.MTRS AND PLOT NO.14/B ADMEASURING 1122.2 1 SQ MTRS AND FURTHER THE LESSER INTER ALIA HAS GRANTED PERMISSION TO ASSIGN AND TRANSFER THE LAND AT PLOT NO.14/1B IN FAVOUR OF THE TRANSFEREE. LIKEWISE PLOT NO.14/A SUB PLOT WAS ASSIGNED TO THE SAID COMPANY. THERE ARE TWO DEEDS FOR TRANSFER OF RESPECTIVE PROP ERTIES. ASSESSEE HAS SUBSTANTIAL RIGHT IN THE PROPERTY AS CAN BE SEE N FROM THE MOU ENTERED WITH M/S UNNATI TECHNOLOGY (P) LTD VIDE AGR EEMENT DATED 09.04.2007 WHEREIN IT WAS SPECIFICALLY STATED AS UN DER: G. THE ASSIGNOR HAS REPRESENTED TO THE ASSIGNEE TH AT: (I) THE SAID INDENTURE OF LEASE IS VALID AND SUBSISTING AND IS IN FULL FORCE AND IS NOT IN ANY WAY CANCELLED, TERMINATED OR WITHDRAWN BY THE LESSOR; (II) THE ASSIGNOR HAS COMPLIED WITH ALL THE TERMS OF THE SAID INDENTURE OF LEASE TILL DATE AND THE LESSOR HAS NOT SERVED ANY NOTICE OF ANY KIND FOR CONTRAVENTION OF ANY TERMS AND CONDITION OF THE SAID INDENTURE OF LEASE OR OTHERWISE TO THE ASSIGNOR; (III) LEASEHOLD TITLE OF THE ASSIGNOR TO THE SAID LARGER PROPERTY IS CLEAR AND FREE FROM ALL ENCUMBRANCES; (IV) THERE IS NO DECREE, ORDER, ATTACHMENT OR RESTRAINT ORDER PASSED BY ANY COURT OR AUTHORITY OR ANY ITA NO.8101 OF 2011 PAGE 14 OF 18 STATUTORY BODY HAVING JURISDICTION IN INDIA, WHICH RESTRAINS THE ASSIGNOR FROM DEALING WITH OR DISPOSING OFF THE SAID LARGER PROPERTY OR ANY PART THEREOF INCLUDING FOR ANY STATUTORY DUES OR OTHERWISE; (V) NEITHER THE SAID LARGER PROPERTY NOR ANY PART/S THEREOF IS THE SUBJECT MATTER OF ANY PENDING LITIGATION AND/OR ANY ORDER OR DECREE OF ANY COURT, TRIBUNAL OR QUASI-JUDICIAL BODY OR AUTHORITY WHEREBY OR BY REASON WHEREOF THE ASSIGNOR IS PREVENTED OR RESTRAINED FROM DEALING WITH OR DISPOSING OF THE SAME, AND THE ASSIGNORS RIGHT, TITLE AND INTEREST THEREIN HAVE NOT BEEN ATTACHED EITHER BEFORE OR AFTER JUDGMENT OR BY OR AT THE INSTANCE OF ANY TAX OR OTHER AUTHORITIES. (VI) THE ASSIGNOR IS EXCLUSIVE QUIET, VACANT AND PEACEFUL POSSESSION OF THE SAID LARGER PROPERTY AND THERE ARE NO TENANTS, SUB-TENANTS, LESSEES, LICENSEES OR OCCUPANTS IN POSSESSION OF THE SAID LARGER PROPERTY OR ANY PART THEREOF; (VII) THERE IS NO AGREEMENT, ARRANGEMENT, CONTRACT OR COMMITMENT EITHER FOR SALE OR LEASE OR LICENSE TO DEVELOP OR TO ENTER INTO ANY JOINT VENTURE FOR DEVELOPMENT OR TO INTRODUCE THE SAID LARGER PROPERTY IN ANY PARTNERSHIP OR OTHERWISE TO ALIENATE THE SAID LARGER PROPERTY AND THE ASSIGNOR IS FULLY ENTITLED TO DEVELOP- SELL AND/OR TRANSFER THE SAID LARGER PROPERTY OR ANY PART THEREOF; (VI) THAT THERE IS NO ORDER OF ATTACHMENT BY THE INCOME TAX, SALES TAX, CENTRAL AND STATE EXCISE DEPARTMENT, PROVIDENT FUND OR BY ANY OTHER AUTHORITY, FINANCIAL INSTITUTION NOR ANY NOTICE OF ACQUISITION/REQUISITION HAS BEEN RECEIVED IN RESPECT OF THE SAID LARGER PROPERTY TILL DATE; H. THE ASSIGNOR IS DESIROUS OF DEVELOPING A PORTION OF THE SAID LARGER PROPERTY ADMEASURING 2475 SQ. MTRS OR THEREABOUT, WHICH PORTION IS MORE PARTICULARLY DESCRIBED IN THE FOURTH SCHEDULE HEREUNDER WRITTEN AND SHOWN IN BLUE COLOUR WASH ON THE PLAN THEREOF HERET O ANNEXED AS ANNEXURE-3 (HEREINAFTER REFERRED TO AS T HE SAID PROPERTY) . 17. IN THE RECITALS, IT IS ALSO CLEARLY MENTIONED THAT VIDE ORDER DATED 22/01/1982 UNDER SECTION 20 OF THE URBAN LAND (CEILING & ITA NO.8101 OF 2011 PAGE 15 OF 18 REGULATION ACT) 1976 (ULC) THE COMPETENT AUTHORITY HAS GRANTED EXEMPTION TO THE ASSIGNOR TO HOLD THE EXCESS VACANT LAND ADMEASURING 10536.53 SQ. METERS ON THE TERMS AND CO NDITIONS THEREIN. FURTHER MIDC IS NOT EVEN A CONFIRMING PART Y IN THE TRANSACTION OF ASSIGNMENT. THIS INDICATE THAT ASSES SEE HAS SUBSTANTIAL AND ABSOLUTE POWERS AS FAR AS THE PROPE RTY IN QUESTION IS CONCERNED AND THE FACT THAT THE PROPERTY HAS GOT EXEMPTION FROM ULC AND WAS SUB DIVIDED AS PER THE REQUEST OF ASSES SEE DO INDICATE THAT THE MIDC HAS ONLY LIMITED POWERS WHEREAS ASSES SEE HAS ABSOLUTE POWERS OVER THE PROPERTY. MOREOVER AS SEEN FROM THE RECITALS FROM THE MOU, ASSESSEE ALSO HAS DEVELOPMEN TAL RIGHTS WHICH IT HAD INTENDED TO UTILIZE. THIS ALSO INDICAT E THAT THE DEVELOPMENT RIGHTS WHICH ARE ATTACHED TO THE PROPER TY ARE WITH ASSESSEE. 18. NOT ONLY THE ABOVE, AS SEEN FROM DEEDS OF ASSIGNMEN T, ASSESSEE TRANSFERRED THE RIGHTS IN THE PLOTS AS WEL L AS RIGHTS IN THE BUILDING, SINCE THERE IS BUILDING INVOLVED IN THIS ASSIGNMENT, WE ARE OF THE OPINION THAT THE TRANSFER OF PROPERTY IN QUE STION DO ATTRACT PROVISIONS OF SECTION 50C AND THEREFORE, ASSESSEES CONTENTION ON THIS CANNOT BE ACCEPTED. AS SEEN FROM THE MARKING GIVEN IN THE SCHEDULED PROPERTY IN THE DEED OF TRANSFER SUBSTA NTIAL PORTION WAS COVERED BY THE BUILDING THEREON AND AS SEEN FROM TH E MOU, ASSESSEE SEEMS TO BE DEVELOPING THE PROPERTY BY UTILIZING TH E DEVELOPMENT RIGHTS. IN VIEW OF THIS, SINCE BOTH LAND AND BUILDI NG WERE ASSIGNED BY THESE DEEDS, WE ARE OF THE OPINION THAT PROVISIO NS OF SECTION 50C ARE ATTRACTED IN THIS CASE. AS SEEN FROM THE REPORT OF THE VALUATION PLACED ON RECORD FROM PAGE NOS.95 TO 99 THE VALUATI ON REPORT ALSO INDICATE THAT THE VALUATION WAS UNDERTAKEN AS PLOT OF LAND AND NOT AS LEASEHOLD RIGHTS. THIS ALSO SUPPORTS OUR OPIN ION THAT ASSESSEE HAS MORE THAN LEASEHOLD RIGHTS ON THE PLOT OF LAND. ITA NO.8101 OF 2011 PAGE 16 OF 18 19. LEGAL PROPOSITION ON THE TRANSFER OF LEASEHOLD RIGH TS HAS ALREADY BEEN DISCUSSED ABOVE WITH WHICH WE ARE IN A GREEMENT. HOWEVER, WE CANNOT COMPLETELY COME TO A CONCLUSION WHETHER ASSESSEE HAD COMPLETE RIGHTS OVER THE LAND AND TO W HAT EXTENT THE VALUATION HAS TO BE DETERMINED U/S 50C, IN THE ABSE NCE OF COMPLETE DETAILS LIKE THE APPLICATION MADE TO ULC, THE COPY OF THE ULC ORDER AND FURTHER THE AGREEMENTS ENTERED BY M/S UNNATI TE CHNOLOGY PVT. LTD SUBSEQUENT TO CONSTRUCTION OF BUILDING WITH THI RD PARTIES IF ANY, FOR SALE OR ASSIGNMENT OF RIGHTS THEREIN. NOTHING W AS BROUGHT ON RECORD EITHER BY ASSESSEE OR BY THE REVENUE TO EXAM INE WHETHER THE SAID M/S UNNATI TECHNOLOGY PVT. LTD HAS ONLY CONSTR UCTED THE BUILDING FOR DEVELOPMENT OR HAS TRANSFERRED FURTHER RIGHTS TO SOME OTHER PARTIES. AS POINTED OUT BY THE LEARNED DR EVE N AFTER ENTERING INTO MOU, ASSESSEE HAS FURTHER DEVELOPED THE BUILDI NG AND THEREFORE TO WHAT EXTENT THE RIGHTS IN THE BUILDINGS WERE TRA NSFERRED AND WHETHER THE COST ATTRIBUTED BY ASSESSEE IS CORRECT OR NOT CAN NOT EXAMINED. THEREFORE, WITHOUT COMING TO A CONCLUSION ON THE ABOVE ISSUE, WE DIRECT AO TO OBTAIN THE COMPLETE INFORMAT ION AND EXAMINE WHETHER ASSESSEE HAS ONLY LEASEHOLD RIGHT OR COMPLE TE RIGHTS OVER THE PROPERTY SO THAT PROVISIONS OF SECTION 50C ARE ATTRACTED. AFTER EXAMINING THE RELEVANT DOCUMENTS AND ESTABLISHING T HE RIGHTS OVER THE PLOT, AO IS FREE TO DETERMINE WHETHER ASSESSEE HAS TRANSFERRED THE PLOT OF LAND OR ONLY LEASEHOLD RIGHTS. SINCE AS SESSEE HAD ALSO TRANSFERRED THE BUILDING, PROVISIONS OF SECTION 50C MAY ATTRACT TO THAT EXTENT. SINCE THIS REQUIRE EXAMINATION OF FACT S AND ALSO TO MAKE FURTHER INQUIRIES TO ESTABLISH ASSESSEES RIGH TS OVER THE PROPERTIES, WE, IN THE INTEREST OF JUSTICE, RESTORE THE MATTER TO THE FILE OF AO FOR FRESH EXAMINATION OF THE ISSUES WITH REFE RENCE TO APPLICATION OF PROVISIONS OF SECTION 50C. 20. COMING TO THE OTHER ISSUE OF REDUCTION OF VALUE OF THE BUILDING AND ADJUSTING IN THE BLOCK OF ASSETS, AO WAS NOT CO RRECT IN ITA NO.8101 OF 2011 PAGE 17 OF 18 EXCLUDING THE VALUE ALTOGETHER. IN OUR VIEW, HE HAS NOT EXAMINED THE ISSUE IN ITS ENTIRETY. SINCE WE HAVE ALREADY OBSERV ED THAT THE BUILDING WAS ALSO TRANSFERRED, IT IS NECESSARY FOR AO TO EXAMINE HOW MUCH PROPERTY WAS TRANSFERRED AND WHETHER THE SAME HAS TO BE ADJUSTED UNDER THE PROVISIONS OF SECTION 50 OR UNDE R SECTION 43(6) IN THE BLOCK OF ASSETS. AS POINTED OUT BY DR THERE SEEMS TO BE CONSTRUCTION AFTER THE AGREEMENT, THE DETAILS OF WH ICH ARE NOT ON RECORD. SINCE THIS ASPECT OF VALUATION OF BUILDING WAS NOT EXAMINED BY AO, WE IN THE INTEREST OF JUSTICE RESTORE THE MA TTER TO THE FILE OF AO TO EXAMINE THIS AND DO ACCORDINGLY. 21. AS SEEN FROM THE RECORD, AO HAS NOT TAKEN IN TO CON SIDERATION THE OBJECTIONS OF ASSESSEE, WHILE INVOKING THE PROV ISIONS OF SECTION 50C. UNDER SECTION 50C(2), AO HAS TO GIVE AN OPPORT UNITY TO ASSESSEE TO MAKE SUBMISSIONS. THIS EXERCISE HAS NOT BEEN DONE BY AO. AO HAS TO FOLLOW THE PROVISIONS OF 50C(2) WHEN THE PROVISIONS OF SECTION 50C ARE MADE APPLICABLE. IN ORDER TO FULFIL L THIS LEGAL REQUIREMENT ALSO, WE HAVE SET ASIDE THE ORDER OF AO AND THE CIT (A) ON THIS ISSUE. 22. THE CONTENTION OF COST OF ACQUISITION IS ALSO RESTO RED TO THE FILE OF AO. JUST BECAUSE ASSESSEE HAS NOT CLAIMED AT THE TIME OF FILING THE RETURN, STATUTORY OBLIGATION OF DEDUCTING THE C OST OF ACQUISITION CANNOT BE BRUSHED ASIDE. THERE IS INFORMATION ON RE CORD THAT ASSESSEE DID PAY PREMIUM AT THE TIME OF ACQUIRING P ROPERTY BY WAY OF LEASE AND ASSESSEE HAS FILED A VALUATION REPORT BEFORE THE AO CLAIMING THE VALUE AS ON 01.04.1981 AND SUBSEQUENT INDEXATION AS PER THE PROVISIONS OF LAW. AO IS DIRECTED TO EXAMIN E THIS CLAIM AND ALLOW THE COST OF ACQUISITION AS PER THE FACTS AND LAW. THE OTHER CONTENTION ABOUT DATE OF ADOPTING VALUATION (WHETHE R DATE OF MOU OR DATE OF REGISTRATION) HAS BECOME ACADEMIC AS THE APPLICATION OF SECTION 50C ITSELF WAS RESTORED TO AO IN ITS ENTIRE TY. ASSESSEE IS FREE ITA NO.8101 OF 2011 PAGE 18 OF 18 TO RAISE RELEVANT OBJECTIONS BEFORE AO. WITH THESE DIRECTIONS, THE MATTERS ARE RESTORED TO THE FILE OF AO FOR FRESH AD JUDICATION ON COMPUTATION OF LONG TERM CAPITAL GAIN. ASSESSEE SHO ULD BE GIVEN DUE OPPORTUNITY IN THE PROCEEDINGS TO FURNISH THE DOCUM ENTS AND MAKE SUBMISSIONS. ACCORDINGLY, THE GROUNDS ARE CONSIDERE D ALLOWED FOR STATISTICAL PURPOSES. 23. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DECEMBER, 2012. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 14 TH DECEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI