2012 (1) TMI 243 - AT - Income Tax

Summary

Issues Involved:
1. Taxability of capital gain in A.Y. 2007-08.
2. Applicability of section 50C of the Income Tax Act.

Summary:

Issue 1: Taxability of Capital Gain in A.Y. 2007-08

The revenue challenged the order of the Ld. CIT (A)-27, Mumbai, which directed the addition of Rs. 68,45,651/- as Long Term Capital Gain (LTCG) and accepted that the Tenancy Right got converted into ownership right as per the consent decree dated 28.05.1999, not in A.Y. 2007-08 when the agreement for giving ownership right was registered through a transfer deed. The revenue contended that the assessee tenant surrendered/exchanged/transferred the Tenancy Right acquired for Rs. 9 lakhs with ownership right worth Rs. 1,13,49,000/- on 22.02.2007, not on 28.05.1999 when the consent decree was passed.

The A.O. held that the Deed of confirmation registered on 22.02.2007 constituted a transfer within the meaning of section 45(1) r.w. sec. 2(47) of the I.T. Act, making the LTCG taxable in A.Y. 2007-08. The Ld. CIT (A) disagreed, stating that the ownership was acquired as per the Consent Decree dated 28.05.1999, and thus, the capital gain could not be taxed in A.Y. 2007-08. The Tribunal upheld the Ld. CIT (A)'s decision, confirming that the transfer took place on 04.11.2004 when the agreement in compliance with the Consent Decree was executed, not on 22.02.2007.

Issue 2: Applicability of Section 50C

The revenue argued that the Ld. CIT (A) erred in applying section 50C, whereas the exchange/surrender/transfer value was taken at Rs. 1,13,49,000/- by applying sections 2(47), 45, 50C, 55, and 112, not just section 50C. The Tribunal found this ground infructuous as it held that no transfer occurred in A.Y. 2007-08, rendering the applicability of section 50C irrelevant.

Conclusion:

The Tribunal dismissed the revenue's appeal, confirming that the capital gain could not be taxed in A.Y. 2007-08 and that section 50C was not applicable. The order was pronounced in the open court on 18th January 2012.