2022 (6) TMI 1483 - AT - Income Tax

Adoption of stamp duty valuation u/s 50C for the purpose of computing the capital gains - Transfer of Leasehold Rights - HELD THAT - We find no merit in the Revenue s argument in principle that section 50C gets attracted even in case of transfer of leasehold rights which does not come within the nature and ambit of specified asset(s) of land or building or both in the statutory provision. We thus conclude that the learned CIT(A) has rightly adopted stricter construction whilst accepting the assessee s arguments. We also deem it proper to quote hon ble apex court s recent landmark decision in Commissioner of Customs Vs. Dileep Kumar Co 2018 (7) TMI 1826 - SUPREME COURT settling the law that taxing provisions in a fiscal statute have to be strictly construed only. The fact also remains that the assessee appears to have transferred its building as well as it is evident from its submissions dated 15.03.2016 filed before the AO. That being the case we are of the view that section 50C is very much applicable regarding the assessee s building as it indeed cover within the specified category of asset u/s 50C(1) of the Act. We therefore partly reverse the CIT(A) s lower appellate findings granting full relief to the assessee and restore this latter issue of transfer of assessee s building back to the AO for his fresh adjudication on merits as per law within three effective opportunities of hearing. Revenue s appeal is partly allowed for statistical purposes.

Summary

Issues Involved:
The judgment involves the interpretation of the provisions of section 50C of the Income Tax Act, 1961 in the context of the transfer of leasehold rights and building by the assessee, and the applicability of stamp duty valuation for computing capital gains.

Interpretation of Section 50C - Transfer of Leasehold Rights:
The issue revolved around the applicability of section 50C to the transfer of leasehold rights, specifically whether such transfers fall within the scope of "land or building or both" as mentioned in the provision. The appellant argued that leasehold rights do not constitute the full ownership of land and thus should not be covered by section 50C. The Pune ITAT's decision in a similar case was cited to support this argument. The ITAT held that section 50C does not apply to the transfer of leasehold rights, as it only covers capital assets being land or building or both. Consequently, the addition made under section 50C was deleted based on this interpretation.

Applicability of Section 50C to Building Transfer:
The judgment also addressed the issue of the transfer of the assessee's building, in addition to leasehold rights. The Revenue argued that section 50C is applicable to the building transfer as it falls under the specified asset category mentioned in the provision. The ITAT found merit in this argument and decided to reverse the CIT(A)'s findings regarding the building transfer. The issue was remanded back to the Assessing Officer for fresh adjudication on merits within three effective opportunities of hearing.

Conclusion:
In conclusion, the ITAT Pune held that section 50C does not apply to the transfer of leasehold rights but is applicable to the transfer of buildings. The judgment emphasized the strict construction of taxing provisions in fiscal statutes and cited a landmark decision by the apex court in support. The Revenue's appeal was partly allowed for statistical purposes, with specific directions given for the reassessment of the building transfer issue.