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TMI Blog2016 (1) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/LKW/2013, C.O. No.08/LKW/2015 - - - Dated:- 3-11-2015 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER For The Department : Shri. Amit Nigam, D.R. For The Assessee : Shri. Rakesh Garg, Advocate ORDER PER SUNIL KUMAR YADAV: This appeal is preferred by the Revenue against the order of the ld. CIT(A), inter alia, on the following grounds:- 1. The Ld. Commissioner of Income Tax (Appeal)-II, Kanpur has erred in law and on facts in deleting the addition of ₹ 2,03,09,196/- made by the AO on account of Long Term Capital Gain on sale of lease hold property by the assessee. 2. The Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts by holding that the assessee was not eh owner of the land but was only the holder of lease hold rights for 99 years as per lease deed dated 27.09.1984. 3. That the Ld. Commissioner of Income Tax (Appeals)-II Kanpur has erred in law and on facts by holding that the lease right had been enjoyed by the assessee till 27.10.2006 (Date of Transfer) and after that the lease right were transferred to M/s Med Sassomeccanica (I) Pvt. Ltd. for remaining period of le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the assessing authority initiated proceedings under section 147 of the Act and called upon the assessee as to why capital gains on the sale of property in question cannot be worked out as per provisions of section 50C of the Act, as there is a difference between the sale price as appearing in the sale deed dated 27.10.2006 at ₹ 45 lakhs and value of ₹ 3,43,80,320/- adopted by the Stamp Valuation Authority. The Assessing Officer accordingly completed the assessment for the impugned assessment year and worked out the capital gain at ₹ 2,03,09,196/- and the same was added to the income of the assessee. 6. Aggrieved, the assessee preferred an appeal before the ld. CIT(A) with the submission that the assessee is simply lessee of the properties in question, therefore, had only the right to transfer the leasehold rights in the prosperities. Hence no capital gain is chargeable on account of sale/transfer of the leasehold rights of the property in question because the assessee had no absolute right to sell the impugned property. He further placed reliance upon the judgment of the Hon'ble jurisdictional High Court in the case of Narendra Dhar vs. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is wish in the manner hereinafter stated at the foot of the deed, the receipt of which the transferors hereby acknowledges and as having received and now nothing remains due, the transferor doth hereby assigns conveys and alienates and transfers by way of absolute Assignment/Transfer to the Transferee M/s. Ved Sassomeccanica (I) Pvt. Ltd. free from all sorts of the Encumbrances Charges, demands assignments liens and any prior agreement etc. and also free from any injunction from any lawful court alongwith present and future right, title and interest the aforesaid Factory Plot Nos. 34E, 34b and 34Cpart alongwith the lease right of the land the said constructions etc. standing thereon fully described and detailed at the foot of this deed alongwith all fixtures and fittings etc. together with all Rights, Title, Interest, Easements and appurtenances etc. whatsoever unto and upon the said property to the transferee to have and to hold the said property hereby assigned for the remainder terms of the lease or as may be extended from time to time and transferor has delivered actual physical vacant possession over the said property to the transferee and who are now entitled to use, possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked in the present case. Section-50C 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, 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. It is established that the appellant was not owner of the land but was only the holder of lease hold rights for 99 years as per lease deed (captioned as sale deed) dated 27-09-1984 and the such rights have been enjoyed by the assessee till 27-10-2006 when the lease rights has been transferred to M/s. Ved Sassomeccanica (I) Pvt. Ltd., for remaining period of lease with the prior approval of owner of the land i.e. K.D.A. 6.10- Thus, under Section-50C it is only transfer of capital asset which is covered and not transfer of lease hold rights in capital assets (properties in question), hence the lease hold rights in such capital asset cannot be equated with a capital asset. On perusal of case laws (supra), I, find justification in the appellant's contention and accordingly addition made by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as collateral security with bank by creating equitable mortgage. As per this agreement to sell, Shri. Monu Dua has offered the assessee a sum of ₹ 45 lakhs, out of which ₹ 15 lakhs was paid at the time of execution of agreement to sell. In this agreement to sell, it was specified that the balance payment of ₹ 30 lakhs was to be paid to SBI to clear the dues. Thereafter a sale deed would be executed either in favour of Shri. Monu Dua or to some other person at his instance. It is also evident from the lease deed finally executed in favour of M/s. Ved Sassomeccanica (I) Pvt. Ltd. that a payment of ₹ 40 lakhs was made to Shri. Monu Dua, for which acknowledgement was given by the assessee. 9. From these transactions, it appears that it was a distress sale and the market value of the property cannot be assessed for computing the long term capital gain. Moreover, we have also examined the other aspects of invocation of provisions of section 50C of the Act relating to leasehold rights. The issue was examined by different Benches of the Tribunal in a number of cases referred to by the assessee, in which the Tribunal has held that the provisions of section 50C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f expression immovable property contained in Explanation below section 269UA(d)(i) of the Act. According to the CIT(A), the Explanation below section 269UA(d)(i) of the Act makes it clear that the land, building, etc. included in the phrase immovable property also includes any rights therein. The CIT(A) has correlated this to section 2(47) of the Act which defines the expression transfer in relation to capital asset. As per the CIT(A), section 2(47) of the Act contains a reference to the meaning of the immovable property contained in section 269UA(d) of the Act and therefore transfer in relation to a capital asset defined in section 2(47) of the Act would include within its purview transfer of a capital asset, being leasehold rights in land also. Upto this stage, there can be no quarrel with the stand of the CIT(A). The incongruity starts when the CIT(A) further goes to say that because of the aforesaid provisions, it was not necessary to mention rights in land or building specifically u/s 50C of the Act also . 11. In our considered opinion, the point made by the CIT(A) is quite fallacious. Firstly, it has to be understood that the meaning of the expression immova ..... X X X X Extracts X X X X X X X X Extracts X X X X
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