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TMI Blog2022 (6) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... n Bench of the Tribunal in the case of Shri Atul G. Puranik [ 2011 (5) TMI 576 - ITAT, MUMBAI] ruled that As section 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 lease right for sixty years in the plot and not land itself, the provisions of section 50C cannot be invoked. We, therefore, hold that the full value of consideration in the instant case be taken as Rs. 2.50 crores. Further, the assessee has placed on record the report of the registered valuer who has valued the fair market value of the property of Rs. 20,21,000/-. Therefore, where the authorities below have taken contrary stands about the taxability of the difference between the value declared by the assessee and value adopted by the Stamp Valuation Authority. Moreover, in the light of the binding precedents, we hereby direct the AO to delete the addition - Appeal of assessee allowed. - ITA No. 316/Del/2020 - - - Dated:- 27-5-2022 - SHRI KUL BHARAT, JUDICIAL MEMBER For the Appellant : Pushkar Jain, Adv For the Respondents : Om Prakash, Sr. DR ORDER Per Kul Bharat, JM This appeal filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selected for limited scrutiny. The reason for taking up for limited scrutiny was regarding the value of the property as per Stamp Valuation Authority was Rs. 46,39,000/- whereas the assessee had disclosed sale consideration only Rs. 19,00,000/- while computing the capital gain on the transfer of property. The AO issued statutory notices to the assessee. In response thereto, the assessee made submissions. However, the submissions of the assessee was not found acceptable to the assessing authority and he proceeded to make addition of Rs. 27,39,000/- as undisclosed income u/s. 69 of the Act. 4. Aggrieved against this, the assessee preferred appeal before Ld. CIT(A), who sustained the addition as made by the AO instead of section 69A of the Act. Ld. CIT(A) confirmed the addition u/s. 50C of the Act. 5. Aggrieved against the order of Ld. CIT(A), the assessee preferred appeal before the Tribunal. 6. Ld. Counsel for the assessee vehemently argued that the action of the authorities below is contrary to the mandate of law. He contended that firstly, the AO invoked the provision of section 69A of the Act which is ex-facie, illegal and without authority of law. He further contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the property which was sold by the assessee, was a lease hold property. The lease hold right was granted by Nitishree Builders Pvt. Ltd. in favour of the mother of the assessee. The fact that the lease hold rights were transferred is not disputed by the Revenue. The Revenue has not brought any contrary material on record to rebut the contention of the assessee. I find that there are series of decisions on this issue by the Division Bench of the Tribunal, confirmed by the Hon'ble Bombay High Court in the case of the CIT versus Greenfield Hotels Estate (P) Ltd. ITA No. 735 of 2014 dated 24/10/2016 (Bombay High Court) wherein the Hon'ble High Court has observed as under:- 3. The impugned order of the Tribunal has dismissed the Revenue's appeal from the order dated 15 June 2012 passed by the Commissioner of Income Tax (Appeals). The issue before the Tribunal was whether Section 50C of the Act would be applicable to transfer of leasehold rights in land and buildings. The impugned order of the Tribunal followed its decision in Atul G. Puranik vs. ITO (ITA No. 3051/Mum/2010) decided on 13 May 2011 which held that Section 50C is not applicable while computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer of property pays the owner of property for ownership rights, he may also have to pay, when CO No. 62/Kol/2011 and I.T.A. No. : 1459/Kol./2011 Assessment year : 2008 - 09 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 their surrendering the tenancy rights, at the time of purchase of property, will not alter the character of receipt in the hands of the tenant receiving such payment. What is paid for the tenancy rights cannot, merely because of the timing of the payment, cannot be treated as receipt for ownership rights in the hands of the assessee. This distinction between the receipt for ownership rights in respect of a property and receipt for tenancy rights in respect of a property, even though both these receipts are capital receipts leading to taxable capital gains, is very important for two reasons - first, that the cost of acquisition for tenancy rights, under section 55(2)(a), is, unless purchased from a previous owner - which is admittedly not the case here, treated as 'nil'; and, - second, si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 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. 10. Further, the Division Bench of the Tribunal in the case of Shri Atul G. Puranik vs ITO in ITA No. 3051/Mum/2010 [Assessment Year 2006-07] order dated 13.05.2011 ruled that As section 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 lease right for sixty years in the plot and not land itself, the provisions of section 50C cannot be invoked. We, therefore, hold that the full value of consideration in the instant case be taken as Rs. 2.50 crores. Further, the assessee has placed on record the report of the registered valuer who has valued the fair market value of the property of Rs. 20,21,000/-. Therefore, looking to the facts of the present case where the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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