9911796707
TMI Blog2013 (12) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... artment has filed this appeal for assessment year 2007- 08 against the order of Ld. CIT(A) dated 6th February, 2012. 2. The only issue involved is as to whether the property under consideration is capital assets and to which section 50C of the Act is applicable. 3. The relevant facts giving rise to this appeal are that during the assessment year under consideration the assessee has sold property for ₹ 12,85,000/- to M/s Jajodia and Patel Properties and the market value as per stamp duty valuation of the said property is ₹ 4,99,50,000/-. The AO asked to the assessee as to why capital gains should not be calculated as per provisions of section 50C of the Income-tax Act. The assessee submitted vide letter dated 22nd December, 2009, inter alia as under: (a) that the assessee along with other family members purchased the property situated at Village Poiser, Talukar Borivali in year 1992 and 1993; (b) that there are total 7 parts of the said property, out of the 7 parts, the assessee had purchased 2 parts, as under: Name of Vendor Lilawati Krishnarao Raut Mankbai Pandharinath Date of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following reasons: (a) that on verification of trial balance of Financial Year 2005-06, it is seen that the said property is not reflected. Had the case not been selected through CASS, it would have been impossible to know that the assessee has sold the property. Therefore, the contention of the assessee that he has considered the right in the property as stock in trade and not capital asset is not acceptable since the assessee has not shown any business income/loss during the assessment year under consideration in the computation of income nor in the earlier years; (b) that the contention of the assessee that property is in litigation and till date the litigation is pending and the assessee has not received any possession of the property is not acceptable because it is seen that from letter dated 28th March, 2002 written by Mr. Lilani Shah, Advocate of the assessee to Shri M.R. Patel, Advocate stating that the assessee was in possession of the said property. The AO has reproduced the said letter at pages 3 4 of the assessment order, but we do not consider it necessary to reproduce the same. It is suffice to state that the AO has stated that the assessee jointly with oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 4,99,50,000/-. Since the assessee s share is 2/7th , the AO has taken the sale consideration at ₹ 1,42,71,429/- in the hand of the assessee and the same has been considered as long term capital gain. Being aggrieved, the assessee filed an appeal before the first appellate authority. 6. The Ld. CIT(A) after considering submissions of the assessee has held that the rights in the impugned property held by the assessee is stock in trade and not a capital asset as stated. The Ld. CIT(A) has stated that the development rights acquired by the assessee vide agreements dated 6th June, 1992 and 10th April, 1993 were held as stock in trade and not as capital assets and hence, provisions of section 50C are not applicable. The Ld. CIT(A) finds that the assessee is possessing several properties like land, development rights etc., which are treated as part of his stock in trade. That the fact that several lands and development rights are acquired by the assessee over a period itself shows the intention of the assessee that he wanted to act as a builder and developer. The Ld. CIT(A) has stated that these properties have been shown and reflected as stock in trade over several years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were acquired with the clear intention of developing the property and making profits out of the same. The Ld. CIT(A) has also stated that his predecessor had referred the matter to the file of the AO for referring the same to the DVO and to ascertain the fair market value of the said property. The matter was referred to the DVO and the valuation report was obtained. The Ld. CIT(A) has stated that the report of the DVO dated 1st December, 2010 determined the value of the property at ₹ 1,30,91,000/- as against stamp duty valued at ₹ 4,99,50,000/- adopted by the AO. The Ld. CIT(A) has further stated that, as per valuation report dated 1st December, 2010, a note has been taken of several litigations on the property and while determining the valuation, observed that the property is under multiple litigation not having any access, affected by the high tension line and other encumbrances like temple, abutting slums, rickshaw parking, car servicing, etc. Since number of persons claimed the rights in respect of the impugned property, the assessee was unable to develop the property and hence decided to get rid of the property itself comes out of the litigation. The Ld. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of ₹ 21,70,100/-. He has stated that the assessee cannot be considered to be the owner of the impugned property and therefore the provisions of section 50C cannot be applied on the nature of assets held by the assessee. 6.5 Being aggrieved, the department is in appeal before the Tribunal. 7. During the course of hearing, the Ld. DR supported the order of the AO and made her submissions on the lines of reasoning given by the AO in the assessment order, which, we have stated hereinabove in detail. On the other hand, the Ld. AR made his submissions on the line of submissions made before the authorities below and submitted that the order of the Ld. CIT(A) may be confirmed. 8. We have carefully considered the orders of the authorities below and submissions of learned representative of the parties. We have also gone through relevant pages of the paper books, which comprises of 270 pages and contents of relevant agreements entered into by the assessee dated 6th June, 1992 and 10th April, 1993, development agreement entered into between assessee and others with M/s Jajodia and Patel Properties as well as copies of the trial balance, copy of the order of the City Civil C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts being land or building or both. For ready reference, we reproduce section 50C(1) of the Act, which is as under: 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, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer . On perusal of above section 50C, shows that the provisions are applicable only in respect of capital asset, being land or building or both and there is no reference that the said provisions is applicable to stock in trade. 11. In view of the above fact and considering the material on record, we hold that there is no infirmity in the order of the Ld. CIT(A) to hold that the provisions of section 50C are not applicable to the property under consideration. The department has also not brought any material on record that the sale value as per agreement for sale of development ..... X X X X Extracts X X X X X X X X Extracts X X X X
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