2018 (8) TMI 1705 - AT - Income Tax

Applicability of provisions of section 50C - Long term capital gains addition after invoking section 50C - Held that - There is no dispute that the assessee had acquired / transferred his right a unfurnished flat which was never registered in his name. It was therefore only in the nature of an allotment right what was transferred in the relevant previous year forming subject-matter in the instant lis. This tribunal s decision in case of M/s Baniaria Eng. Pvt. Ltd. Vs. ITO 2018 (8) TMI 1560 - ITAT KOLKATA holds that section 50C of the Act does not apply except in a case involving transfer of land and building forming the relevant capital asset for the purpose of determination of fair market value in the statutory reference. Learned Departmental Representative fails to pin point any exception on facts or law. We thus accept assessee s additional ground to delete the impugned long term capital gains addition - decided in favour of assessee

Summary

Issues involved:
1. Correctness of Commissioner of Income Tax (Appeals)'s order upholding long term capital gains addition under section 50C.
2. Disallowance of expenditure claimed for transfer of property.

Issue 1: Correctness of Commissioner of Income Tax (Appeals)'s order upholding long term capital gains addition under section 50C:
The appellant's appeal questioned the correctness of the Commissioner of Income Tax (Appeals)-10, Kolkata's order upholding the Assessing Officer's action of adding long term capital gains amounting to ?37,85,396 after invoking section 50C of the Income Tax Act, 1961. The appellant contended that the application of section 50C was erroneous as the property in question was neither land nor a building. The Tribunal considered the additional ground raised by the appellant challenging the application of section 50C. The Tribunal admitted the additional ground, noting that the appellant sought to argue the non-application of section 50C only in the case of the right to acquire the residential flat. The Tribunal held that section 50C does not apply unless there is a transfer of land and building forming the relevant capital asset. As the property in question was an unfurnished flat that was never registered in the appellant's name, the Tribunal accepted the appellant's additional ground and deleted the long term capital gains addition.

Issue 2: Disallowance of expenditure claimed for transfer of property:
The appellant had claimed a deduction of ?2 lakh as expenditure allegedly incurred on the transfer of the property. However, during the proceedings, the appellant's representative did not press for this deduction, citing its small amount. As a result, the Tribunal rejected the claim as not pressed. Consequently, the Tribunal partly allowed the appellant's appeal, deleting the long term capital gains addition under section 50C but rejecting the deduction claimed for the transfer of the property. The order was pronounced on 24/08/2018 by the Tribunal.