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TMI Blog2012 (2) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... ernative ground that Section 50 C is not applicable when full value of the consideration is invested under section 54F as far as meaning of full value of consideration under section 54F is concerned. 3. The grievances, which have been raised in the appeal and the cross objections, are interconnected and centre around treatment of capital gains on sale of a property in which the assessee had tenancy rights. We will, therefore, take up all the grievances together. 4. Learned representatives submit that whatever is decided in the case of co lessee Tejinder Singh, which was heard alongwith this set of appeal and cross objection, will apply mutatis mutandis here as well. Vide our order of even date, we have dismissed Assessing Officer s appeal in the said case as also the cross objection filed by the assessee. While doing so, we have observed as follows: 4. The material facts are not in dispute. The assessee, alongwith one Amardeep Singh, had acquired, vide registered lease deeds dated 19th November 1992 with Shree Khubchand Sethia Charitable Trust (KSCT, in short) , lease hold rights for 99 years in a house property situated at 5/1, Ripon Street, Kolkat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g term capital gain was computed at ₹ 1,84,17,692. The Assessing Officer then noted that since while the gross sales consideration under section 50 C in the hands of the assessee is ₹ 2,12,97,390, the assessee had made an investment of ₹ 1,96,03,685 in qualifying investments under section 54 F, and, accordingly, assessee is entitled to 54F deduction only to the proportionate extent. The deduction under section 54 F was thus computed at ₹ 1,69,53,000, and the balance capital gain of ₹ 14,64,692 was brought to tax in the hands of the assessee. While doing so, and almost as a postscript to the assessment order, the Assessing Officer also noted as follows: The authorised representative of the assessee argued that no capital gain is chargeable on account of sale of leasehold property at 5/1 Ripon Street Kolkata because the assessee had no absolute right to the sell the property. The assessee is simply a lessee of the said property and he has only the right to transfer the said lease right of the property. The contention of the assessee is not acceptable. Consideration is paid on sale of the property for giving up right of the owner of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e light of the facts of the case. 8. A plain look at the undisputed facts of this case clearly shows that the assessee was a lessee in the property which was sold by the KSCT; there is no dispute on this aspect of the matter. Yet, the Assessing Officer has treated the assessee a seller of property apparently because the assessee was a party to the sale deed, and because, according to the Assessing Officer, consideration is paid on sale of the property for giving up right of the owner of the property and that in the case of leasehold property, the right of owner is divided between lessor and lessee . We are unable to share this line of reasoning. It is not necessary that consideration paid by the buyer of a property, at the time of buying the property, must only relate to ownership rights. In the case of tenanted property, as is the case before us, while the buyer of property pays the owner of property for ownership rights, he may also have to pay, when he wants to have possession of the property and to remove the fetters of tenancy rights on the property so purchased, the tenants towards their surrendering the tenancy rights. Merely because he pays the tenants, for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the provisions of Section 50 C also apply to the transfer of leasehold rights is devoid of legally sustainable merits and is not supported by the plain words of the statute. Section 50 C 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, (emphasis supplied by us by underlining) 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 . Clearly, therefore, it is sine qua non for application of Section 50 C that the transfer must be of a capital asset, being land or building or both , but then a leasehold right in such a capital asset cannot be equated with the capital asset per se. We are, therefore, unable to see any merits in revenue s contention that even when a leasehold right in land or building or both is transferred, the provisions of Section 50C can be invoked. We, therefore, approve the conclusion arrived at by the CIT(A) on this aspect of the matter. 9. Having held so, we may also point out that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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