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TMI Blog2022 (9) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... he full value of consideration the provisions of section 50C will be applicable in defiance to the provisions contained in section 45(3). 3. BECAUSE CITIA) erred in law and on facts in not adjudicating the computation of cost of acquisition in true letter and spirit and directing AO to verify and compute the correct cost of acquisition when the cost details were already available with AO at the time of assessment proceedings and has already been verified." 3. The facts in brief are that the assessee has filed Return of Income declaring loss of Rs.4,64,69,139 on 17.10.2016. The Return of Income was subject to scrutiny assessment and notice u/s.143(2) of the Act was issued on 19.9.2017 to the assessee. During the course of assessment, the Assessing Officer noticed that the assessee had shown long term capital loss of Rs.4,64,69,139 on sale of immovable property other than the residential house and claimed cost of acquisition at Rs.9,59,69,139. Further the Assessing Officer noticed from the registered agreement that the assessee had transferred land of value of Rs.4,95,00,000 whereas the Registrar had adopted the sale consideration at Rs.9,11,10,000 for the purpose of stamp duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) dismissed the appeal of the assessee. 5. During the course of appellate proceedings, the learned counsel for the assessee referred provisions of section 45(3) of the Act and vehemently contended that since the impugned land was contributed in the form of capital in the partnership firm therefore said transaction fall under the ambit of section 45(3) of the Act. The learned counsel for the assessee also submitted that an identical issue on similar facts in the case of the assessee itself pertaining to Assessment Year 2012-13 has been adjudicated by the ITAT, Mumbai Bench in favour of the assessee vide ITA No.6050/Mum/2016 dt.29.12.2017. The assessee has also placed the copy of the aforesaid pronouncement in the Paper Book at page Nos.124 to 132. The learned counsel for the assessee also referred to page No.118 of the Paper Book pertaining to copy of Hon'ble Supreme Court decision in the case of Pr. CIT-1 Vs. Dr. D. Ramamurthy reported in 103 taxman.com 24 (SC) wherein held that for the purpose of computing capital gains u/s.45(3) of the Act, value of assets recorded in the books of firm on date of transfer would be deemed to be full value of consideration received or accr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct the Assessing Officer to follow the direction of the ld. CIT(A) to verify the sum capitalised by the assessee and considered the correct cost of acquisition as accepted by the Revenue in the preceding years and recompute the capital gains accordingly. Therefore Ground No.3 of the assessee is allowed for statistical purposes. 8. In respect of Ground Nos.1 & 2, regarding applicability of provisions of section 45(3) or provision of section 50C of the Act in the case of the assessee, we have gone through these provisions. Section 45(3) is the specific provision which states that profit or gain arising from the transport of the capital asset by a person to a firm or other association of persons or body of individual (not being a company or a co-operative society) in which he becomes a partner or member by way of capital contribution shall be chargeable to tax as his income for the previous year for which such transfer takes place. For the purpose of section 48, the amount recorded in the books of accounts of the firm as capital asset shall be deemed to be full value of consideration received or accrued as a result of the transfer of capital assets. We have also perused the judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution, then for the purpose of section 48, the amount recorded in the books of accounts of the firm shall be deemed to be full value of consideration received or accrued as a result of transfer of capital asset. The relevant part of the paragraph is reproduced as under : " 9. Having heard both the sides, we find merit in the argument of the assessee for the reason that the provisions of section 45(3) deals with special cases of transfer of capital asset where the profits or gains arising from the transfer of capital asset by way of capital contribution or otherwise shall be chargeable to tax in the previous year in which such transfer takes place and for the purpose of section 48, the amount recorded in the books of account of the firm shall be deemed to be the full value of consideration received or accruing as a result of transfer. A plain reading of provisions of section 45(3) makes it clear that it comes into operation only in special cases of transfer between partnership firm and partners and in such circumstances, a deemed full value of consideration shall be considered for the purpose of computation of capital gain as per which the amount recorded in the books of account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. Therefore, we reverse the finding of the CIT(A) and delete the addition made towards recomputation of long term capital gain on account of transfer of capital asset into partnership firm." 8.2 In the case of ITO Vs. Chiraayu Estate & Dev. Pvt. Ltd (ITA No.263/Mum/2010), ITAT Mumbai held that as per provisions of section 45(3) of the Act particulars of land recorded in the books joint venture is required to be considered as receipt of full value or consideration received or accrued as a result of transfer of capital assets. The relevant operating para is reproduced as under : " 14. A plain reading of the said provision would reveal that the profits or gains arising from the transfer of a capital asset to another entity by way of capital contribution or otherwise shall be chargeable to tax. The profit or gain 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 transfer has taken place can be charged under section 45(3). In the instant case the purchase price of land as recorded in the transferor's book and recorded in the books of the joint venture are the same. As per p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the LTCG amounting to Rs.28,09,992/- as against LTC loss computed by the assessee at Rs.(4,49,22,008)/-. 7. On similar reasoning, by substituting the value as per the provision of section 50C, the A.O. made the addition of Rs.96,31,700/- as against the long term capital gain computed by the assessee at Rs.5,94,57,338/- for A.Y. 2014-15. 8. Upon the assessee's appeal, in indicial year, the ld. CIT(A) referred to the order of the ITAT in assessee's own case and decided the issue in favour of the assessee by holding as under: 6.1.3 I have considered the submissions made by Appellant and the material available on record. The Hon'ble Mumbai Bench of the ITAT in Appellant's own case in ITA No.6050/M/2016 for assessment year 2012-13 vide Order dated 29.12.2017 has held as follow:- "Having heard both the sides, we find merit in the argument of the assessee for the reason that the provisions of section 45(3) deals with special cases of transfer of capital asset where the profits or gains arising from the transfer of capital asset by way of capital contribution or otherwise shall be chargeable to tax in the previous year in which such transfer takes place and for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made by the AO by following the decision of ITAT, Lucknow Bench in the case of ACIT vs. Carlton Hotel Pvt. Ltd (supra) where the ITAT has simply observed that the provisions of section overrides the provisions of section 45(3) but not given a categorical finding. The ITAT has given its findings under different facts considering the fact that when a document is registered under the Provisions of Registration Act 1903, the value determined by the stamp duty authority shall be replaced to determine full value of consideration, Therefore, we reverse the finding of the CIT(A) mid delete the addition made towards computation of long terms capital gain on account of transfer of capital asset into partnership firm. In the result, appeal filed by the assessee's is allowed" 6.1.4. The Hon'ble Tribunal has accordingly held that the deeming section provided in Section 50C cannot be extended to another deeming section created by the statue by Section 45(3). The Tribunal has noted that since the Act itself has provided for deeming consideration to be adopted for the purpose of Section 48 of the Act, another deeming section provided by Section 50C cannot be extended to compute deem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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