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TMI Blog2016 (4) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... mental Valuation Officer (DVO) would not now require adjudication. - ITA No. 5136/Mum/2014 - - - Dated:- 16-3-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member For The Appellant : Shri Dharmesh Shah For The Assessee : Shri Javed Akhtar ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the order of the CIT(A)- 10, Mumbai dated 28.02.2014 for A.Y. 2010-11. 2. The facts of the case, briefly, are as under: - 2.1 The assessee filed his return of income for A.Y. 2010-11 on 21.07.2010 declaring income of ₹ 4,14,78,131/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was subsequently taken up for scrutiny. In the course of assessment proceedings it was observed that in the year under consideration the assessee had assigned leasehold right in a property situated at 16, Napean Sea Road, Mumbai to M/s. Orbit Dwelling Pvt. Ltd. for a total consideration of ₹ 90,00,000/-, whereas the market value of the said property was determined by the Stamp Valuation Authority, Mumbai at ₹ 3,41,59,500/-. On the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t submits that the learned CIT(A) has erred in not directing the Assessing Officer to make a reference to the valuation officer for determining the flit market value of the aforesaid land. b) The learned CIT(A) erred in holding that the appellant has nowhere objected to the price determined by the stamp valuation authority ignoring the flict that the appellant has raised the aforesaid objection vide his computation of total income filed during the course of assessment proceedings as well as vide submissions made during the said proceedings. 3) The appellant submits that the Assessing Officer be directed to accept the sales consideration for the said land at ₹ 1,35,00,000/- and modify the assessment accordingly as per the provisions of law. 4) Each of the above grounds of appeal are independent and without prejudice to each other. 5) The appellant craves leave to add, to alter, amend and/or modify the grounds of appeal as and when given. 4. In the course of appellate proceedings, the assessee filed the following additional grounds of appeal: - 1. The Assessing Officer as well as the learned CIT(A) had erred in law and on facts in not apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 3 the assessee alleges that the authorities below had erred in law and on facts in not appreciating that the provisions of section 50C of the Act are not applicable in respect of transfer of leasehold rights. The learned A.R. for the assessee vehemently argued that in the case on hand since the assignment of leasehold land did not involve the transfer of land and building as contemplated under section 50C of the Act, hence the provisions of section 50C of the Act would not be attracted. In this regard, the learned A.R. for the assessee referred to the provisions of section 50C of the Act to point out that it covers capital asset, being land or building or both and not the rights in land and building. The averment of the learned A.R. for the assessee is that the word land used in section 50C of the Act does not include leasehold rights in land and the said expression land is only with respect to lands which are owned by the assessee as such. It is further submitted that section 50C of the Act being a deeming provision, the fiction created therein cannot extend to any other asset than those provided for specifically. In support of this proposition, that the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, the ownership of the land belongs to the Collector Mumbai. It was also submitted that since the said land falls in the CRZ Zone, there was were many restrictions as to the purposes the same could be utilized and its transfer therefore did not fetch the price determined by the stamp duty valuation authorities. The assessee also raised an additional ground for referring the matter to the Valuation Officer. The learned CIT(A), however, was of the view that the AO was justified in applying the provisions of section 50C of the Act and consequently rejected the assessee s plea. The learned CIT(A) also did not find any justification in the assessee s contentions raised in the additional ground for getting the said property referred to Valuation Officer. In these circumstances the learned CIT(A) dismissed the assessee s appeal. 5.3.4 We find from the record that there is no dispute that the foreshore land at Napean Sea Road, Mumbai is a leasehold land for which the leasehold rights were acquired on 27.11.1953 for a period of 99 years from the Governor of Bombay and the ownership of which vests in the Collector of Mumbai. We have also examined the issue of invocation of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed. 5.3.6 In the case of Kumarpal Mohanlal Jain (ITA No. 7231/Mum/2010 dated 30.11.2015) the Coordinate Bench of this Tribunal at para 6 has held as under: - 6. We have considered the rival submissions. Admittedly, the MIDC has originally given the lease of the land in the year 1964. The Assessee had purchased the leasehold rights in the property in 1991 for a sum of ₹ 9 lakhs and after carrying out his business for 15 years had sold the same for ₹ 25 lakhs vide deed of assessment dated 29.04.05. Hence, the assessee had sold the leasehold rights for the remaining period of 55 years. A perusal of the provisions of section 50C of the Act reveals that the same are applicable for the transfer of land or building or both, however, the leasehold rights or the tenancy rights are different from the ownership of land or building itself. Reliance in this respect can be placed on the following decisions: 1. Kancast (P.) Ltd. vs. ITO 2015 68 SOT 110 (Pune Trib.) 2. M/s. Fordham Pressings (India) Pvt. Ltd. vs. DCIT [ITA No.6033/Mum/2010] decided on 25.04.2012 3. M/s. Heatex Products Pvt. Ltd. vs. ACIT [ITA No.8197/Mum/2010] decided on 24.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial undertaking .. . It is palpable from sec. 54D that `land or building is distinct from `any right in land or building . Similar position prevails under the W.T. Act, 1957 also. Section 5(1) at the material time provided for exemption in respect of certain assets. Clause (xxxii) of sec. 5(1) provided that the value, as determined in the prescribed manner, of the interest of the assessee in the assets (not being any land or building or any rights in land or building or any asset referred to in any other clauses of this sub-section) forming part of an industrial undertaking shall be exempt from tax. Here also it is worth noting that a distinction has been drawn between `land or building on one hand and `or any rights in land or building on the other. Considering the 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 capital asst, being land or building or both, it cannot be made applicable to lease rights in a land. As the assessee transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial provision for full value of consideration in certain cases . Therefore, there is a significance to the expression a capital asset, being land or building or both contained in section 50C of the Act. The significance is that only capital asset being land or building or both are covered within the scope of section 50C of the Act, and not all kinds of capital assets. 10. In-fact, the Mumbai Bench of the Tribunal in the case of Atul G. Puranik (supra) which was pressed into service by the assessee before the lower income-tax authorities, clearly brings out the aforesaid proposition. In our view, the said decision of the Tribunal has been wrongly disregarded by the CIT(A). The plea of the CIT(A) is based on the meaning of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Ahmedabad Bench of the Tribunal in the case of Shri Yasin Moosa Godil (supra) is also on similar lines. 13. In view of the aforesaid legal position and in the absence of any decision to the contrary brought out by the Revenue, we conclude by holding that section 50C of the Act does not come into operation in the present facts where what is transferred by the assessee is only the leasehold rights in land which were acquired by it from Maharashtra Industrial Development Corporation (i.e. MIDC) on a 99 years lease basis. As a consequence, we set aside the order of the CIT(A) and direct the Assessing Officer to compute the long term capital gain on transfer of leasehold land by adopting the full value of consideration of ₹ 2,35,04,000/- declared by the assessee in the computation of income and allow the appropriate relief to the assessee. Thus, on this Ground assessee succeeds. 11. Since it has been repeatedly held by different Benches of the Tribunal that provisions of section 50C of the Act cannot be invoked in respect to the transfer of leasehold rights, we find no infirmity in the order of the ld. CIT(A), who has rightly adjudicated the issue followi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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