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TMI Blog2019 (3) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... ship firm, the Assessing Officer by invoking the provisions of section 50C and applying DM circle rates, computed the total consideration for the transfer and calculated long-term capital gains. AO while applying the provisions of section 50C mentioned that considering the terms and conditions of the partnership, transfer of land to the firm was only a sale, and that section 50C would be applicable even in a situation covered by section 45(3) In Chiraayu Estate & Dev. Pvt. Ltd. [2011 (8) TMI 1316 - ITAT MUMBAI] has held that the profits or gains would arise only when the transfer has been made at a price which is more than the cost price and the difference between the cost price and amount at which the transfer has taken place can be charged u/s 45(3). It further held that as per provisions of section 45(3), price of land recorded in the books of joint venture is required to be considered as receipt of full value of consideration received or accrued as a result of transfer of capital assets. Once the price recorded in the joint venture’s books is treated as full value of consideration, the provisions do not permit substitution of any value so as to make the addition u/s 45(3). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of consideration as per Section 48 of the Act. Moti Ramanand Sagar ITA No. 2049 1690/Mum/2017 3 3. On the facts and circumstances of the case and in law, whether the CIT(A) has erred in relying on the decision of Hon'ble Mumbai 1TAT in the case of ITO vs Chiraayu Estate Developers Pvt. Ltd. (ITA No. 263/Mum/2010) without appreciating that in that particular case the issue of application Section 50C was not even discussed since the cost at which the capital asset was brought in, was the same as that recorded in the books of the Joint Venture and as such there was no capital gain at first place which is not the issue in this case. 4. On the facts and in circumstances of the case and in law- whether the Ld. CIT(A) has erred in not following the ratio laid down in the case of Carlton Hotels (P) Ltd, Vs. ACIT (2009) (122 TTJ 515) (Lucknow), which clearly states that Provisions of section 50C being special provisions, would override provisions of Section 45(3) of the Act. 5. On the facts and circumstances of the case and in law, whether the CIT(A) has erred in not appreciating the importance of the insertion of world assessable in Section 50C, which says market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Relying on decision in case of Carlton Hotel (P.) Ltd. v. ACIT (2009) 122 TTJ 515 (Lucknow), the AO held that the provisions of section 50C are applicable in the present case. Thus he calculated LTCG of ₹ 5,26,67,677/- and brought the differential amount of ₹ 3,45,32,002/- [Rs.5,26,67,677/- minus Rs.1,81,35,675/-]. The assessee had already computed LTCG (before exemption u/s 54F) on transfer of the said lands at ₹ 1,81,35,675/- (Rs.93,74,480/- plus Rs.87,61,195/-). 4. In appeal, the Ld. CIT(A), following the order of the ITAT, Mumbai in the case of ITO v. Chirag Estate Developers Pvt. Ltd. (ITA No. 263/Mum/2010), directed the AO to adopt the value of consideration of ₹ 1,97,06,403/- as shown by the assessee. 5. Before us, the Ld. DR relies on the order of the ITAT Lucknow in the case of Carlton Hotels (P.) Ltd . (supra) and submits that the provisions of section 50C being special provisions, would over-ride provisions of section 45(3) of the Act. Thus he supports the order passed by the AO. 6. On the other hand, the Ld. counsel of the assessee files (i) a copy of the purchase agreement for purchase of a residential house at Lokhandwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 45(3). On appeal, the Commissioner (Appeals) upheld the Assessing Officer's orders. The Tribunal held as under: One of the relevant ingredients for invoking section 50C is that there is a payment of stamp duty in respect of transfer of capital asset being land or building or both. The event which precedes adoption of valuation done by stamp valuation authority is the registration of a sale recording transfer of capital asset for which there is a payment of stamp duty. Payment of stamp duty is required only when transfer of capital asset is registered under the Registration Act. If payment of stamp duty for the purposes of the transfer is not required, then there is no occasion to look into other conditions as mentioned in section 50C. Therefore, in those cases of transfer where agreement or sale deed is not registered and stamp duty is not paid, or capital gain is simply charged by deeming certain transaction as transfer as per other provisions of the Act or some transactions of transfer are not registered or are not legally required to be registered under the Registration Act, section 50C cannot be put into operation. Section 45(3) is a deeming fiction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be invoked. Section 55A, on the other hand, empowers the Assessing Officer to refer the property under transfer to a DVO if he has material on record on the basis of which he forms an opinion that value declared by the assessee as per estimate of the registered valuer is less than its fair market value or fair market value is more by certain percentage to what is declared by the assessee as sale consideration, or if there are other relevant factors which necessitate the Assessing Officer to refer the capital asset under transfer to the DVO. Section 55A can be invoked for the purpose of this chapter. Thus, where a sale transaction is registered by paying stamp duty then it is only section 50C which can operate. In that situation, section 50C will override section 45(3). Section 45(3) is a general provision and section 50C is a special provision which will override section 45(3) if the sale deed is sought to be registered by paying stamp duty. But where such registration does not take place by paying stamp duty that case would only be covered under section 45(3) and, therefore, value recorded by the firm in its books would only be the full value of consideration for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Hon ble Supreme Court in the case of CIT vs Moon Mills Ltd (supra) wherein it was observed that one deeming fiction cannot be extended by importing another deeming fiction. Therefore, we are of the considered view that the profits or gains arising from the transfer of a capital asset by a partner to a firm in which he is or becomes a partner by way of capital contribution, then for the purpose of section 48, the amount recorded in the books of account of the firm shall be deemed to be full value of consideration received or accruing as a result of transfer of a capital asset. The AO cannot import another deeming fiction created for the purpose of determination of full value of consideration as a result of transfer of a capital asset by importing the provisions of section 50C of the Act. 7.1.1 In Chiraayu Estate Dev. Pvt. Ltd . (supra), the ITAT C Bench Mumbai vide order dated 24.08.2011 has held that the profits or gains would arise only when the transfer has been made at a price which is more than the cost price and the difference between the cost price and amount at which the transfer has taken place can be charged u/s 45(3). It further held that as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving that he had more than one house property i.e. (i) a residential house at 502, Sagar Bhavan, JVPD and (ii) undivided share in another residential house viz. Poorna Apartment. In addition a new house property was purchased at ₹ 6,82,76,081/- against which exemption claimed by the assessee was denied in AY 2011-12. In view of the above facts, the AO asked the assessee vide order sheet noting dated 05.10.2014 to explain why exemption u/s 54F should not be disallowed, since the assessee had more than one house property. In response to it, the assessee filed a reply vide letter dated 22.12.2014 stating that he had invested ₹ 6,82,76,081/- within the stipulated period in the new residential house and claimed exemption u/s 54F of the Act. It was stated that on the date of transfer of land, the assessee had one residential house in the individual capacity viz. flat No. 502, Sagar Bhavan, JVPD. Besides the above house, he also had undivided share in another residential house viz. Poorna Apartment, which is jointly held with his daughter Ms. Meenakshi Sagar. It was the contention of the assessee that he should not be denied the benefits of section 54F just because he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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