2015 (7) TMI 1299 - AT - Income Tax

Capital gain computed on the amount which the assessee actually received - addition on the basis of deeming provision of section 50C - Held that - The assessee sold/given development right of the same property which was owned by it. The assessee was unable to sale more than the land which was not owned by the assessee. The assessee can be taxed only on the gain which is oozing out from the sale consideration, thus, no adverse inference can be drawn while invoking the provision of section 50C of the Act. No evidence has been produced by the Revenue at any stage that the assessee actually received the value which was adopted by the stamp valuation authority. Even the development agreement clearly mention the area and the assessee is not the owner of the TDR, thus, cannot be saddled with the value adopted by the stamp duty purposes as the assessee is only the owner of 3872 sq. mts. for which he received the consideration of ₹ 2,51,00,000/-, thus, the capital gain has to be computed on the amount which the assessee actually received, consequently, we are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) that on the basis of deeming provision of section 50C, no addition can be made. We affirm the stand of the ld. Commissioner of Income Tax (Appeals), thus, appeal of the Revenue is dismissed.

Summary

Issues:
Cross appeals by assessee and Revenue against impugned order for Assessment Year 2005-06 regarding valuation of property for stamp duty purposes and application of section 50C of the Act.

Analysis:
The Revenue's appeal raised concerns about the deletion of an addition under section 50C of the Act, arguing that the property was undervalued compared to the stamp duty valuation. The crux of the argument was that the sale deed did not include the Transfer of Development Rights (TDR) separately, indicating a flaw in the development agreement. The assessee's position was supported by the fact that the Income Tax Department had previously accepted the transaction value. The Tribunal found that the assessee could only be taxed on the actual gain received, which was based on the agreed consideration for the land. As the assessee did not own the TDR and only received consideration for the land owned, no addition could be made under section 50C. The Tribunal upheld the Commissioner of Income Tax (Appeals) decision, dismissing the Revenue's appeal.

In the appeal by the assessee, the counsel argued that if the Revenue's appeal was dismissed, the assessee's appeal would be rendered moot. Since the Revenue's appeal was indeed dismissed, the Tribunal deemed the assessee's appeal as infructuous and dismissed it accordingly.

Ultimately, both the Revenue's and the assessee's appeals were dismissed by the Tribunal, concluding the matter for Assessment Year 2005-06.