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TMI Blog2012 (12) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... ment dated 5-11-1974 between MIDC and the assessee and the agreement dated 16-10-2006 between the appellant and Karamtara Engineering (P) Ltd. and also the valuation adopted by the Stamp valuation authority, it can be fairly concluded that it is a transfer of leasehold rights therefore, the finding given by the CIT(A) for non applicability of Sec 50C are confirmed - appeal filed by the department dismissed. - ITA No.4923 /Mum/2011 - - - Dated:- 8-6-2012 - SHRI P.M.JAGTAP, SHRI AMIT SHUKLA, JJ. Appellant by: Rupinder Brar Respondent by: Mrs. Uma Mahadeokar O R D E R PER AMIT SHUKLA (J.M.) : The present appeal has been filed by the revenue against the order dated 23-3-2011, passed by the CIT(A)-19, Mumbai for the quantum of assessment passed under Section 143(3) for the assessment year 2007-2008 on the following grounds of appeal :- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that Section 50C of the I.T. Act, 1961 is not applicable in the case of transfer of leasehold land and premises acquired for 95 years after a payment of premium of Rs. 2,09,900/- and a yearly rent of Rs. 1. 2. On the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et - Rs.3,17,40,000/- Gain from the sale of asset - Rs.3,12,54,308/- Less: Transfer Charges paid to MIDC - Rs. 29,17,500/- Short Term Capital Gain - Rs. 2,83,36,808/- 4. Before the CIT(A), it was contended by the assessee that the transfer of the asset was a transaction of assignment of lease rights in land and not sale of the land and this was very evident from the deed of assignment entered into by the assessee and the Karamtara Engineering (P) Ltd.. The relevant submissions of the assessee for appreciation of his contention are reproduced herein below :- 1. The transfer document is described as DEED OF ASSIGNMENT and not as sale deed. 2. The rights transferred vide the said deed are the right title and interest in the leasehold land and not the land itself (page1, page 5 of the said deed) 3. Even the original rights acquired by your appellant were only tenancy rights in the said MIDC property for a period of 95 years only. Hence, your appellant cannot transfer larger rights than what he actually owned and therefore, the present transfer is also transfer of TENANCY rights only. 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the bifurcation done by the registration authorities and thereafter he applied the same percentage on the total consideration received on the leasehold rights in land and factory building at Rs.1,10,00,000/-. The working as adopted by the CIT(A) is given hereunder :- Leasehold rights in land Rs. 2,93,84,600/- 92.58% Factory building Rs. 23,54,948/- 7.42% Total Rs. 3,17,40,000/- 100.00% Hence, the total consideration for the lease hold rights in land and factory building Rs. 1.10 crores may be bifurcated for computing taxability of income arising out of the said transaction as under : Leasehold rights in land Rs. 1,01,83,800/- 92.58% Factory building Rs. 8,16,200/- 7.42% Total Rs. 1,10,00,000/- 100.00% 5.1 Accordingly, the income arising out of two assets was completed by him as under :- Leasehold rights in the plot B-8/2 in MIDC The jurisdictional ITAT has vide its order in the case of Kishore Gaitonde ITA No.1561/M/09 dated 27 November, 2009, has held that section 50C of the I.T.Act 1961 is not attracted in case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applicable on the transfer of leasehold rights in the land. From the plain reading of the language of Section 50C (1), it is clear that value of land or building or both adopted or assessed or assessable by the Stamp Valuation Authority shall, for the purpose of Section 48, deemed to be full value of consideration accruing as a result of such a transfer. Section 50C(1) is of a deeming provision and it extends only to land or building or both. Such a deeming provision has been incorporated to substitute the value adopted by the Stamp Valuation Authority in place of consideration received or accruing as a result of transfer. The deeming provisions as contemplated in Section 50C however does not extend to lease rights in a land. This aspect of the matter does not need any detail or further elaboration as the same has been subject matter of scrutiny and analysis by various counts as have been relied upon by the learned AR, which are elaborated herein below. (i) Atul G. Puranik(supra) : In this case, the Hon ble Members have analysed the similar situation and the applicability of Section 50C on the lease hold lands and held that :- 11.4 In view of the aforenoted judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that we are dealing with special provision for full value of consideration in certain cases u/s.50C, which is a deeming provision, the fiction created in this section cannot be extended to any asset other than those specifically provided therein. As sec. 50C applies only to a ITA No.3051/M/10 Atul G. Puranik capital asst, being land or building or both, it cannot be made applicable to lease rights in a land. As the assessee transferred lease right for sixty years in the Plot and not land itself, the provisions of sec.50C cannot be invoked. (ii) DCIT Vs. Tejinder Singh (Supra) : In this case also the ITAT independently analysed the provision of Section 50C vis- -vis its applicability on transfer of lease holds rights and held that :- 8. A plain look at the undisputed facts of this case clearly shows that the assessee was lessee in the property which was sold by the KSCT; there is no dispute on this aspect of the matter. Yet, the Assessing Officer has treated the assessee a seller of property apparently because the assessee was a party to the sale deed, and because, according to the Assessing Officer, consideration is paid on sale of the property for giving up rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been, by any stretch of logic, could be treated as ownership rights. It has been specifically stated in the sale deed that the lessee, which included this assessee before us, had proceeded to, inter alia, grant, convey, transfer and assign their leasehold rights, title and interest in the said premises . There is nothing on the record to even remotely suggest that the assessee was owner of the property in question. The monies received by the assessee, under the said agreement, were thus clearly in the nature of receipts for transfer of tenancy rights, and, accordingly, as the learned CIT(A) rightly holds, Section 50 C could not have been invoked on the facts of this case. Revenue s contention that the provisions of Section 50 C also apply to the transfer of leasehold rights is devoid of legally sustainable merits and is not supported by the plain words of the statute. Section 50 C can come into play only in a situation where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, (emphasis supplied by us by underlining) is less than the value adopted or assessed or assessable by any author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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