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2021 (9) TMI 184 - AT - Income TaxComputation of long term capital gains u/s 50C - Fair Market value of the property fixed by the SRO for the purpose of Stamp Duty - assessee had sold / executed sale /transfer deed wherein the subject matter of her right is in favour of vendee as against any land or building component for issuing part therein - HELD THAT - As decided in RAJITHA DUBBAKA 2021 (6) TMI 1058 - ITAT HYDERABAD 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 - we direct the AO to delete the addition by invoking the provisions of section 50C. - Decided in favour of assessee. Penalty u/s 271(1)(b) - Assessee not complying with notice issued u.s 142(1) - HELD THAT - As penalty has been imposed by the AO u/s 271(1)(b) for not complying with the notices issued dated 19/01/2015 by the AO u/s 142(1) of the Act. We find from the order of the AO that assessment was completed u/s 143(3) of the Act on 30/03/2015 and in the assessment order, the AO has not recorded any satisfaction for imposing penalty u/s 271(1)(b) - similar issue has been decided in the case of Globus Infocom Ltd 2016 (6) TMI 1304 - ITAT DELHI wherein held that if the assessment order has been passed u/s 143(3) of the Act, penalty cannot be imposed u/s 271(1)(b) - Decided in favour of assessee.
Issues:
1. Computation of long term capital gains under section 50C of the Income Tax Act, 1961. 2. Imposition of penalty under section 271(1)(b) for non-compliance with notice u/s 142(1) of the Act. Issue 1: Computation of Long Term Capital Gains under Section 50C: - The assessee claimed long term capital gains of ?12,60,561, but the Assessing Officer calculated it at ?41,04,732 under section 50C of the Act. - The dispute arose from the variance between the sale consideration reported by the assessee and the Fair Market Value (FMV) determined by the Stamp Valuation Authority. - The assessee argued that the FMV was a deemed consideration under section 50C and was influenced by litigations attached to the property. - The ITAT referred to a similar case where it was held that the provisions of section 50C do not apply to the transfer of limited rights in land or building. - Consequently, the ITAT directed the AO to delete the addition of ?41,04,732 under section 50C, following the precedent set in the referenced case. Issue 2: Imposition of Penalty under Section 271(1)(b): - The AO imposed a penalty of ?10,000 under section 271(1)(b) for non-compliance with the notice u/s 142(1) of the Act, which was upheld by the CIT(A). - The assessee contended that the penalty was arbitrary and that there were valid reasons for non-compliance with the notice. - The ITAT noted that the assessment was completed under section 143(3) without recording any satisfaction for imposing the penalty. - Citing a relevant decision, the ITAT held that if the assessment order is passed under section 143(3), the penalty under section 271(1)(b) cannot be imposed. - Consequently, the ITAT directed the AO to delete the penalty of ?10,000 imposed under section 271(1)(b) in accordance with the legal precedent. In conclusion, the ITAT allowed both appeals of the assessee, directing the AO to delete the addition made under section 50C and the penalty imposed under section 271(1)(b). The judgments were pronounced on 30th August 2021 by the ITAT Hyderabad.
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