2021 (6) TMI 1058 - AT - Income Tax

Long Term Capital Gains - addition invoking section 50C - transfer of the vendor s limited right in respect of land and building - HELD THAT - As assessee had sold / executed sale / transfer deed dated 14/2/2011 wherein the subject matter of her right is in favour of vendee as against any land or building component for issuing part therein - although the Revenue has sought to justify the impugned transfer of the assessees s right as an admission of the same being a capital asset, the fact remains that we are dealing with section 50C only wherein the twin categories of capital asset(s) is only land and building than such a right. As decided in SMT. D. ANITHA 2015 (4) TMI 723 - ITAT HYDERABAD ,SRI TUMMALA VIDYAPAL REDDY 2016 (5) TMI 628 - ITAT HYDERABAD ,TARA CHAND JAIN AND VICA-VERSA 2015 (12) TMI 45 - ITAT JAIPUR , SMT. DEVINDRABEN I. BAROT 2016 (7) TMI 275 - ITAT AHMEDABAD ad MRS. REKHA AGARWAL 2017 (4) TMI 759 - ITAT JAIPUR that such a transfer of the vendor s limited right in respect of land and building than the twin categories of assets, as the case may be, does not come within the purview of application of section.50C - thus delete the impugned Long Term Gains addition - Decided in favour of assessee.

Summary

Issues:

1. Challenge to correctness of Long Term Capital Gains addition under section 50C of the Income Tax Act, 1961 for A.Y. 2012-13.

Analysis:

The appellant's appeal against the CIT(A)-6, Hyderabad's order involved the challenge to the correctness of the Long Term Capital Gains addition of ?28,42,500 made under section 50C of the Income Tax Act, 1961. The primary contention revolved around whether the transfer of the assessee's right could be considered a capital asset falling under the purview of section 50C. The Tribunal noted that the Revenue attempted to justify the transfer as a capital asset, but the specific provision of section 50C only applies to land and building categories, not to the transfer of a limited right in respect of land and building. Citing various precedents, including Smt. D. Anitha vs. ITO and others, the Tribunal concluded that such transfers do not fall within the scope of section 50C. Consequently, the Long Term Capital Gains addition was deleted solely based on this ground.

The Tribunal found that the assessee had provided relevant case laws to support their position, emphasizing that the transfer of a limited right in land and building does not align with the categories covered under section 50C. As a result, the Tribunal allowed the appeal of the assessee, specifically overturning the addition of ?28,42,500 as Long Term Capital Gains. The decision rendered all other arguments on merits moot, as the primary issue regarding the applicability of section 50C was determinative of the case.

In the final pronouncement on 8th June 2021, the Tribunal allowed the appeal in favor of the assessee, highlighting the deletion of the Long Term Capital Gains addition amounting to ?28,42,500. The judgment clarified the specific application of section 50C to the transfer of limited rights in land and building, setting a precedent for similar cases in the future.