Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

COMMISSIONER OF INCOME TAX, JAIPUR-II, JAIPUR Versus Shri Sher Singh Sunda, Anand Nagar, Sikar.

Contentions of the assessee:

The assessee executed an agreement in favour of M/s. Rising Build Estate Ltd. and transferred all the right acquired under the power of attorney on consideration of ₹ 70.00 lacs. This Registration was presented for registration before the Stamp Duty authority.

The assessee has not transferred any immovable property but has transferred the right of purchase of immovable property. The assessee neither received the possession of property nor has any control been acquired on the property.

No value is adopted or accepted by Stamp Duty Authority.

In response to contentions of the revenue, assessee submitted that:

".....the argument put forward by the department is misconceived, inasmuch as the transaction which is taken place was through power of attorney holder. The property was never transferred. Even before initiating proceeding under Section 50(C), the assessee has already paid the short term capital gain to the tune of ₹ 10 lacs and therefore the assessment which was made on complete consideration is without jurisdiction..."

Assessee also relied upon the Circular No.5/2010/(F.No.142/13/2010-SO(TPL)) ssued by the Board

While rejecting the revenue appeal, High Court observed that:

Before proceeding with the matter, it will not be out of place to mention here that those transactions which are shown as transaction under Section 50C [Explanation-2], even if taken into consideration, the transaction which take place as short term capital gain in total consideration of the payment after sale agreement was determined as ₹ 1.35 crores and it cannot be assessed.

Neither the stamp authority has assessed the complete charges because transaction has not taken place, and in our considered opinion, the valuation which was determined by the AO is nothing but harassment to the honest tax payers of a transaction which has been rightly reversed by the CIT(A) and confirmed by the Tribunal.