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TMI Blog2022 (12) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... ld rights in land and building. Accordingly, we do not find any reason to interfere with the decision of Ld CIT(A) rendered on this issue. Determination of capital gain - Addition to long term capital gain by adopting sale consideration under NAV method as against DCF method adopted by the assessee - HELD THAT:- n the present case, the AO has not disputed the amount of sale consideration received by the appellant. There is no allegation whatsoever that the appellant had received or had accrued more than the stated amount of sales consideration. Further, the Reserve Bank of India has approved the said transaction after taking into consideration the relevant transactional documents, including the impugned valuation report dated 22/07/2009 issued by Deloitte Huskins Sells. Still, the L AO has substituted the actual consideration with notional consideration calculated purportedly on the basis of the NAV method, which is in violation of the provisions of section 48 of the Act and therefore, the action of the Ld. AO is bad in law. Also it is a well settled position in law that the AO cannot subject to tax any notional income unless there are specific provisions in relation ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termined for stamp duty purposes for the above said leasehold rights was shown as Rs.60 lakhs in the lease deed. He accordingly, assessed difference of Rs.27.36 lakhs as capital gain by invoking the provisions of Section 50C of the Act. The ld. CIT(A) deleted the same and hence, the Revenue has filed this appeal. 4. We notice that the AO has invoked the provisions of sec.50C for taking the sale consideration at Rs.60.00 lakhs. The asset that has been transferred by the assessee is leasehold right in land and building. The Hon‟ble Jurisdictional Bombay High Court in the case of CIT vs. Greenfield Hotels and Estates Pvt. Ltd. (2016) 389 ITR 68 has held that the provisions of Section 50C will not be applicable while computing capital gains on transfer of leasehold rights in land and building. In the instant case, the capital gain of Rs.27.36 lakhs has arisen only on account of adopting of stamp duty value in terms of Section 50C of the Act. Since, Section 50C of the Act is held to be not applicable on transfer of leasehold rights, the decision renderd by ld. CIT(A) gets support from the binding decision rendered by Hon‟ble Bombay High Court. Accordingly, the AO was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial on record to prove that the method is faulty. He further observed that the sale consideration has been approved by RBI and hence it is imperative for the AO to accept the same. He also observed that there is no material brought on record by the AO to show that the assessee has received more than the stated amount of sale consideration. Accordingly, the Ld CIT(A) held that the valuation adopted by the assessee cannot be discarded on conjectures and surmises. The Ld CIT(A) noticed that the AO has computed value of shares under NAV method by adopting book value of assets on standalone basis. He took the view that the share value has to be computed on consolidated basis and accordingly computed the value of shares, which worked out to Rs.8.49 crores. Accordingly, the Ld CIT(A) held that on merits also, there is no requirement to disbelieve the sale consideration disclosed by the assessee. 9. We heard the parties on this issue and perused the record. We notice that the assessee has raised certain legal contentions before Ld CIT(A) and also before us. The said legal contentions as given in the written submissions are extracted below:- 3.14. Without prejudice to the above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute a notional amount of sale consideration instead of the actual consideration while computing capital gains. For instance, section 50C of the Act provides for adoption of stamp duty value of the capital asset being land or building or both in place of the actual sales consideration, if the stamp duty value is higher than the actual consideration. Similarly, section 45(2), 45(3), 45(4) of the Act provides for adopting fair market value instead of the actual consideration in certain specified scenarios, for the purpose of computing capital gains. 3.14.5 However, at the relevant point of time, there was no provision in the Act to substitute the full value of consideration on sale of shares with any notional consideration or the fair market value. In fact, section 5OCA of the Act, which deals with substitution of the actual consideration on sale of unquoted shares with the fair market value of such share, was inserted vide the Finance Act, 2017 and was specifically made applicable with effect from April 2018 for the assessment year 2018-19 and onwards. 3.14.6 In this regard, attention is invited to the Memorandum to the Finance Act, 2017, which also acknowledges that prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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