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TMI Blog2015 (10) TMI 2245X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred for obtaining credit facilities for business is erroneous, unwarranted and uncalled for and must be quashed; 4. That on the facts and in the circumstances of the case and in law, the addition of Rs. 22,900/- must be quashed as it is based on no material or evidence and is wholly extraneous, superfluous and unnecessary." 2. Brief facts of the case are that the appellant is an individual and derives income from trading and commission as kacha artia by dealing in sarson, wheat and khal etc. The appellant filed its return of income declaring total income of Rs. 1,65,377/- on 27/11/2007. The return was processed u/s 143(1) and the case was picked up for scrutiny as per CBDT action plan under clause (8) of ITR 4 of the guidelines during the financial year 2008-09. The assessment proceedings were completed by making an addition of Rs. 2,87,910/- under the following head: * Long term capital gains Rs. 3,37,540/-; * Mortgage expenses of Rs. 40,000/- * And household expenses amounting to Rs. 22,900/- 3. Aggrieved by the order passed by the ld. AO. The respondent appellant went into appeal before the ld. CIT(A). 4. The ld. CIT(A) confirmed the action of the AO and up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be transferred before a period of five years from the date of allotment of such plot. 11. The ld. AO calculated the long term capital gain as under: 1. Purchase price of plot on 22.2.2001 Rs. 6,54,500 (asstt. year 2001-02) 2. Index Cost of plot Rs. 654500 X 519 Rs. 8,36,660 406 3. Sale price of plot of 190 sq. yards By applying average sale rate @ Rs. 6180/- per sq. yards Rs. 11,74,200 Long term capital gain Rs. 3,37,540 (1174200 - 836660) 12. Aggrieved by the order of the ld.AO, the appellant preferred appeal before the ld.CIT(A). The ld. CIT(A) was also not convinced with the arguments as in his opinion the respondent -appellant is in constructed possession of the said plot. In view of the above and similarly the constructive possession has been transferred to M/s Shubham Enterprises upon receipt of the sale consideration. He held that not entering into an agreement he is of no consequence in view of the facts of the case. Therefore, the ld. CIT(A) upheld the view of the AO and treated the transfer of capital asset in terms of the provisions of section 2(47). 13. The ld. AR further submits that as there has been no conveyance deed that has been entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployed for purchasing such capital asset. Whenever such resulting capital asset is transferred leading to any profit or gain, such amount shall be charged to tax under section 45 of the Act. The sole criteria for considering whether the asset transferred is capital asset under section 2(14) or not is to consider the nature of the asset so transferred in the previous year and not the origin or the source from which such asset came to be acquired. Adverting to the facts of the instant case, once the assessee acquired rights in the Plot. 18. During the course of assessment proceedings, the appellant contended that the cost of acquisition of the plot was Rs. 3000/- per sq.yard, by applying market rate of the Plot at Rs. 3950 per sq. mtr. on the date of transfer. The Assessing Officer, on the other hand, came to the conclusion that the sale price was liable to be taken at Rs. 6,180/- per sq. yards 19. The appellant argued that the market value of the plot of land on the date of allotment should be taken as the cost of acquisition. From the factual matrix of the case, it is noted that the appellant was allotted rights in the shop Plot on 22.02.2001. 20. The Assessing Officer adopted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value adopted or assessed or assessable by the stamp valuation authority, the deeming fiction under sub-section (1) shall be activated to substitute such adopted or assessed or assessable value as full value of consideration received or accruing as a result of such transfer in the given situation. It is a settled legal proposition that a deeming provision cannot be extended beyond the purpose for which it is enacted. 22. It is thus clear that a deeming provision can be applied only in respect of the situation specifically given and hence cannot go beyond the explicit mandate of the section. Turning to section 50C, it is seen that the deeming fiction of substituting adopted or assessed or assessable value by the stamp valuation authority as full value of consideration is applicable only in respect of "land or building or both". If the capital asset under transfer cannot be described as 'land or building or both', then section 50C will cease to apply. From the facts of this case narrated above, it is seen that the assessee was allotted lease right in the Plot for a period of sixty years, which right was further assigned to 'P' in the year in question. It is axiomat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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