SH SHARVAN KUMAR SHARMA vs. INCOME TAX OFFICER

ITA/49/2018HC RajasthanRJHC02036949201803 July 2018Author: KALPESH SATYENDRA JHAVERI,VIJAY KUMAR VYAS9 pages
AI SummaryDismissed

What were the facts?

The appellant, Sh. Sharvan Kumar Sharma, is challenging an order of the Income Tax Appellate Tribunal (ITAT). The dispute pertains to the assessment year(s) not explicitly stated but implied to be related to a sale deed executed on February 2, 2008. The Assessing Officer and CIT (Appeals) applied Section 50C of the Income Tax Act, 1961, to the transaction, treating the sale of a 'right in land' as a sale of land. The appellant argues that possession and ownership of the land vested with RIICO/Government, and the sale deed included provisions for pending litigation and the buyer's right to claim compensation from the government. The ITAT had previously allowed the appeal of the assessee for statistical purposes only. The High Court is considering whether a substantial question of law arises.

What did the High Court hold?

The High Court held that no substantial question of law arises from the ITAT's order. The dispute was found to be based on facts, which is not a ground for admitting an appeal. The Court noted that the ITAT's finding that Section 50C applies only to the transfer of land or building, and not to 'rights in land', was made without proper scrutiny of facts, specifically how the land was disclosed in the assessee's balance sheet as a capital asset. The Court also found that the ITAT's reliance on certain previous orders, including one from the ITAT Ahmedabad and another from the ITAT Jaipur Bench, was not appropriate due to a lack of elaborate findings and proper consideration of facts. Regarding the Bombay High Court's judgment on leasehold rights, the Court stated that Section 50C of the Act does not differentiate between leasehold or freehold property and that the Court cannot rewrite the provision. Therefore, the appeal was dismissed.

What were the issues?

1. Whether, in the facts and circumstances, the ITAT erred in upholding the orders of the CIT and Income Tax Officer in treating the sale of a right in land/contingent right as a sale of land and applying Section 50C of the Income Tax Act, 1961, considering that possession and ownership vested with RIICO/Government, the sale deed had special provisions regarding pending litigation and buyer's claim against the government, and the transfer was of a limited right due to pending litigation and acquisition by RIICO. 2. Whether the ITAT and Income Tax Officer were justified in applying Section 50C of the Act, 1961, to a transaction pertaining to a contingent right/right to sue. 3. Whether the ITAT and Income Tax Officer were justified in overlooking the findings of the Supreme Court in the case of 'RSIDIC vs. Subhash Sindhi Cooperative Housing Society Ltd. Jaipur & ors.', concerning the acquisition of the subject land by RIICO prior to the agreement to sell. Assessee's contentions: The transaction was a sale of rights, not a capital asset (land), and thus Section 50C was not applicable. Reliance was placed on the fact that possession was with RIICO, the sale deed's specific clauses, and the pendency of litigation. The appellant also referred to pronouncements of the Supreme Court and the Bombay High Court in 'Commissioner of Income Tax Central II, Mumbai Vs. M/s. Greenfield Hotels & Estates Pvt. Ltd.' regarding leasehold rights. Revenue's contentions: The judgment records that the Assessing Authority made an addition of Rs.41,80,805/- under the head of capital gain by invoking Section 50C. The CIT (Appeals) and the Tribunal upheld this addition.

Which sections of the Income-tax Act were involved?

Section 50C,Section 48,Section 53A,Section 52,Section 16A,Section 23A,Section 24,Section 34AA

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 49/2018 Sh. Sharvan Kumar Sharma S/o Late Sh. Suji Lal , R/o Plot No.50, Malviya Nagar, Ramjipura, Jaipur 302017 ----Appellant Versus Income Tax Officer , Ward No.61 Jaipur ----Respondent For Appellant(s) : Mr. Udai Singh Sidhu HON'BLE MR. JUSTICE KALPESH SATYENDRA JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS

Judgment 03/07/2018

1.

By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby tribunal has allowed

the appeal of the assessee for statistical purposes only.

2.

Counsel for the appellant has framed following substantial questions of law:- A) Whether in facts and circumstances of the present case, the Hon’ble Income Tax Appellate Tribunal erred in upholding the order dt. 17.3.2017 passed by Commissioner of Income Tax and action of Income Tax Officer vide order dt. 29.2.2016 in upholding the sale of right in land/contingent right as sale of land and applying Section 50C of the Income Tax Act, 1961 without appreciating the fact of the case that:” a. The Possession and ownership of the land vest with the RIICO/Government.” b. The transfer documents i.e.

The order continues below.

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