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TMI Blog2020 (12) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transfer of the two flats. As matter of fact, the said consideration so agreed was taken into consideration by the assessee-company for computing the capital gain arising from the transfer which was duly declared in its return of income and as rightly contended by assessee, there was no justification on the part of the authorities below to doubt or dispute the said consideration as claimed to be mutually agreed by the assessee-company to arrive at the conclusion that the consideration received or accruing as a result of the transfer of the two flats was not ascertainable or could not be determined without even making any inquiry whatsoever with the concerned transferees. Provisions of section 50D are not applicable in this case and the impugned addition made by the Assessing Officer and confirmed by the ld. CIT(Appeals) by invoking the said provision is not sustainable. We accordingly delete the same and allow Ground No. 1 of the appeal. Disallowance u/s 14A - disallowance so made cannot be added while computing the book profit of the assessee-company under section 115JB - HELD THAT:- Since this issue is squarely covered by the various judicial pronouncements including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company that even though only terms and conditions of transfer were mentioned in the affidavits without any consideration, the flats were tranfered for a consideration of ₹ 52,85,185/- and ₹ 48,59,000/- to Shri Deepak Jain and Shri Depak Mahajan respectively. Copies of accounts of the said parties were also produced by the assessee to show the sale consideration as agreed between the parties. It was also submitted on behalf of the assesese-company that the capital gain duly computed by taking into consideration the sale consideration was declared in the return of income filed for the year under consideration. The Assessing Officer did not find merit in the submission made on behalf of the assesese-company. According to him, since the only document evidencing the transfer in the form of self-made affidavit did not indicate any consideration for transfer, the consideration received or accruing as a result of transfer of the rights of the two flats was not ascertainable and could not be determined. He accordingly invoked the provisions of section 50D and by adopting the fair market value of the said flats on the date of transfer as ascertained from the website of Magic Bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et, as sale consideration minus cost of acquisition. In some recent rulings, it has been held that where the consideration in respect of transfer of an asset is not determinable under the existing provisions of the income tax act, then as the machinery provision fails, the gains arising from the transfer of such assets is not taxable. It is, therefore, proposed that where in the case of a transfer, consideration for the transfer of a capital asset(s) is not attributable or determinable then for purpose of computing income chargeable to tax as gains, the fair market value of the asset shall be taken to be the full market value of consideration. Accordingly, it is proposed to insert a new provision (section 50D) in the Income-tax Act to provide that fair market value of the asset shall be deemed to be the full value of consideration if actual consideration is not, attributable or determinable. This amendment will take effect from 1st day of April, 2013 and will accordingly apply to assessment year 2013- 14 and subsequent assessment years, [Clause 17} From a bare reading of the provision and the memorandum of the Finance Bill, 2012, explaining the insertion of the new provision (s. 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings, it was noticed that the assessee company had applied for allotment of two flats to the Developers (ABA Builders Ltd.) in Orange County Project at GH-4, Ahinsa Khand-L, Indirapuram, Ghaziabad - 201014. By virtue of two agreements dated 25/12/2011 with the builders, two flats were allotted bearing nos. 1201 1101. Details of flat amount paid are as follows ... Whereas on Page - 3 of the assessment order he says: In the course of hearing, the assessee company was asked as to why the Fair Market Value of the two flats should not be taken for computation of capital gain by virtue of section 50D, when the right to transfer flat being an immovable property has been transferred without any agreement/registration. The assessee company filed only two copies of accounts one with Mr. Deepak Jain or sale of flat no. 1201 and the other with Mr. Deepak Mahajan for flat no. 1101 to substantiate the transfer of flat amount of consideration for transfer of flats. Affidavit would show on the terms conditions of transfer M, without any consideration. So, the transfer price can't be ascertained only by means of copies of accounts with the transferee. Thus, his adverse inference that the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sec. 50C that the transfer must be of a capital asset, being 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 the case narrated above, it is seen that the assessee has transferred booking rights and received back the booking advance. Booking advance cannot be equated with the capital asset and therefore section 50C cannot be invoked. This view was also followed by the Hon'ble Kolkata Bench of the ITA Tin M Is. Baniara Engs. Pvt. Ltd. v. lTO (ITA No. 635/Ko1/2018. Similarly, in our case as well, the assessee acquired certain rights to purchase the said flats. Before the construction of the two flats were complete, the assessee sold his rights so acquired to purchase the flats by nominating the ultimate purchasers for registration of the said two fiats and endorsing the transfer. Hence, the jurisdiction of the deeming section 50C is also ousted. In the assessment order, the Ld. A.D. has observed (Page - 2, 2nd last para) that the assessee company has transferred the right to purchase the two flats to the ultimate buyers just before the date of handing over the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gain and the capital gain so computed at ₹ 2,65,942/- was duly declared by the assesse-company in its return of income. He contended that the consideration for transfer of two flats as agreed between the assessee-company and transferees thus was ascertainable and the provisions of section 50D of the Act were not applicable. He contended that the Assessing Officer, therefore, was not justified in invoking the said provisions without even making any enquiry whatsoever with the transferees to ascertain the factual position regarding the consideration agreed for transfer of two flats as claimed by the assessee. 7. The ld. D.R., on the other hand, strongly supported the orders passed by the authorities below on this issue. He contended that the only documentary evidence filed by the assessee evidencing the transfer of two flats was in the form of self-made affidavit and since the consideration of transfer was not mentioned in the said affidavit, the authorities below were fully justified in arriving at the conclusion that the consideration received or accruing as a result of transfer of the two flats by the assessee was not ascertainable and invoking the provisions of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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