9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (1) TMI 372 - AT - Income TaxLong-term capital gain on transfer of leasehold rights - non consideration for transfer of building or reducing the said amount from sale consideration of rights in land - CIT (A) uphold invocation of Section 50C to the transaction of transfer of capital asset made by the appellant - assessee contested against non referring the valuation of the capital asset to the District Valuation Officer - stamp duty rate applicable on April, 2007 i.e. the date of the Memorandum of Understanding or stamp duty rate as on February 2008 - Assessee s contented that since this plot of land was a leasehold right only, it was neither a land nor a building - Revenue stated that Assessee has substantial right in the property as can be seen from the MoU entered with M/s Unnati Technology (P) Ltd as clearly mentioned in agreement that under section 20 of the urban land (Ceiling & Regulation Act) 1976 (ULC) the competent authority has granted exemption to the Assignor to hold the excess vacant land admeasuring 10536.53 sq. meters on the terms and conditions therein - Held that - A complete conclusion whether assessee had complete rights over the land and to what extent the valuation has to be determined u/s 50C is not to be arrived in the absence of complete details like the application made to ULC, the copy of the ULC order and further the agreements entered by M/s Unnati Technology Pvt. Ltd subsequent to construction of building with third parties for sale or assignment of rights therein. Nothing was brought on record either by assessee or by the Revenue to examine whether the said M/s Unnati Technology Pvt. Ltd has only constructed the building for development or has transferred further rights to some other parties - direct AO to obtain the complete information and examine of facts and also to make further inquiries to establish assessee s rights over the properties. Reduction of value of the building and adjusting in the block of assets - Held that - AO was not correct in excluding the value altogether. He has not examined the issue in its entirety. Since already observed that the building was also transferred, it is necessary for AO to examine how much property was transferred and whether the same has to be adjusted under the provisions of section 50 or under section 43(6) in the block of assets - restore the matter to the file of AO to examine this and do accordingly. The contention of cost of acquisition is also restored to the file of AO. Just because assessee has not claimed at the time of filing the return, statutory obligation of deducting the cost of acquisition cannot be brushed aside. There is information on record that assessee did pay premium at the time of acquiring property by way of lease and assessee has filed a valuation report before the AO claiming the value as on 01.04.1981 and subsequent indexation as per the provisions of law. AO is directed to examine this claim and allow the cost of acquisition as per the facts and law. The other contention about date of adopting valuation (whether date of MOU or date of Registration) has become academic as the application of Section 50C itself was restored to AO in its entirety - in favour of assessee for statistical purposes.
Issues Involved:
1. Applicability of Section 50C of the Income Tax Act to the transfer of leasehold rights. 2. Valuation of the building and its exclusion from the total consideration. 3. Cost of acquisition and its deduction in the computation of long-term capital gain. 4. Date of valuation for stamp duty purposes: Memorandum of Understanding (MoU) date vs. registration date. 5. Adherence to Section 50C(2) procedural requirements by the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Applicability of Section 50C to Leasehold Rights: The main issue was whether Section 50C, which applies to the transfer of "land or building or both," extends to leasehold rights. The assessee argued that Section 50C should not apply as they transferred only leasehold rights, not ownership of the land or building. The ITAT referenced several precedents, including Atul G. Puranik vs. ITO, which held that leasehold rights are distinct from land or building and thus Section 50C does not apply. However, the Tribunal noted that the assessee had substantial rights over the property, including development rights, suggesting the transfer might involve more than mere leasehold rights. Therefore, the Tribunal directed the AO to re-examine the nature of the rights transferred to determine the applicability of Section 50C. 2. Valuation of the Building: The assessee claimed that the value of the building (Rs.14,30,220) should be deducted from the total consideration. The AO had ignored this valuation due to the absence of a separate agreement. The Tribunal acknowledged that the building was part of the transfer and directed the AO to re-examine the valuation and adjust it appropriately in the block of assets under the relevant sections (Section 50 or Section 43(6)). 3. Cost of Acquisition: The assessee initially did not claim the cost of acquisition but later provided a valuation as of 01.04.1981, indexed to Rs.26,88,999. The AO denied this claim, treating the rights akin to tenancy rights with no cost of acquisition. The Tribunal emphasized that the cost of acquisition should be considered, given the premium paid for the leasehold rights and its inclusion in the fixed asset schedule. The AO was directed to examine and allow the cost of acquisition as per the facts and law. 4. Date of Valuation for Stamp Duty Purposes: The assessee contended that the stamp duty valuation should be based on the MoU date (09.04.2007) rather than the registration date (07.03.2008). The Tribunal noted that this issue became academic as the application of Section 50C was restored to the AO. The AO was directed to consider the relevant objections during re-examination. 5. Adherence to Section 50C(2) Procedural Requirements: The Tribunal observed that the AO had not followed the procedural requirements under Section 50C(2), which mandates giving the assessee an opportunity to make submissions. The Tribunal set aside the AO's and CIT(A)'s orders on this ground, directing the AO to comply with Section 50C(2) and provide the assessee with due opportunity to present their case. Conclusion: The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the issues of applicability of Section 50C, valuation of the building, cost of acquisition, and adherence to procedural requirements, providing the assessee with due opportunity to furnish documents and make submissions.
|
