DHARAMPAL BROTHERS PVT. LTD.,MUMBAI vs. DY. CIT 9(3)(1), MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

2. The Ld. CIT(A) has failed to consider the decision of the Bombay High Court in the case of CIT vs Greenfield Hotels and Estates (P) Ltd. 389 ITR 68 (Bombay) wherein the Hon’ble Bombay High Court held that section 50C does not apply to leasehold land.

3. The Ld. CIT(A) has erred in law and on the facts of the case in sustaining the addition of an amount of Rs.40,87,381/- as short term capital gain and Rs.1,65,91,485/- as long term capital gains.”

3. The brief facts of the case are that the assessee filed its return of income at loss to the tune of Rs.43,49,504/- on 27.09.2015 for the A.Y.2015-16. The return was processed u/s 143(1) of the I. T. Act, 1961. The case was selected for scrutiny. A.Y. 2015-16 Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee was engaged in the business of trading in fabrics. On verification, it was found that the assessee by virtue of agreement dated 10.12.2014 has sold leasehold land and building situated at Plot No. B-1, Mahad Industrial Area, Maharashtra to one M/s. Laxmi Organic Industrial Limited. The assessee had shown the sale consideration of the said property to the tune of Rs.1,17,82,000/- as against the market value of Rs.2,41,87,000/- taken by the Stamp Valuation Authorities. The assessee worked out the Short Term Capital Gain (STCG) on sale of building at Rs.25,60,259/- and Long Term Capital Gain (LTCG) on leasehold land at Rs.2,48,640/- respectively. The statement of Short Term Capital Gain on Depreciation Assets as under.:- Name of Date of sale Sales WDV at Addition Transfer Capital Gain assets consideration beginning of during the expenses the year year 23 10.12.2014 67,82,000 26,94,619 15,26,922 0 25,60,459 Total 67,82,000 26,94,619 15,26,922 0 25,60,459 Statement of Long Term Capital Gain Particular Sales Indexed Transfer Indexed cost Exempt Capital Gain Price/Year cost/year expenses of improvement Land 50,00,000 47,51,360 0 0 0 2,48,640 10.12.2014 (03.07.1984) Total 50,00,000 47,51,360 0 0 0 2,48,640 The assessee also explained that the land failed to fetch the price to the tune of Rs.2,41,87,000/- (Stamp Valuation Authority) on account of prolonged litigations in Civil Court, Mahad and Hon’ble Bombay High Court. It was also explained that the Section 50C would not apply to the leasehold land. The contention of the assessee was declined and Short Term Capital Gain was assessed to the tune of Rs.67,82,000/- - 26,94,619/- = Rs.40,87,381/- Long Term Capital Gain was assessed to the tune of Rs.1,74,05,000/- - 2,23,240/- * 1024/281= 1,74,05,000/- - 8,13,515/- = Rs.1,65,91,485/-. The total loss was assessed to the tune of Rs.1,35,20,260/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us. A.Y. 2015-16 ISSUE NOs. 1 to 3 4. All the issues are inter-connected, therefore, are being taken up together for adjudication. In brief, the contention of the assessee is that the provisions of Section 50C will not apply to the leasehold land and in support of this contention, the Ld. Representative of the assessee has placed reliance upon the decision of the Hon’ble High Court of Bombay in the case of CIT, Central-II, Mumbai Vs. Greenfield Hotels & Estate (P) Ltd. (2017) 77 taxmann.com 308 (Bom) & ITAT Pune Bench „A‟ in the case of Kancast (P) Ltd. ITO (2015) 55 taxmann.com 171 (Pune-Trib). However, on the other hand, the Ld. Representative of the Department has refuted the said contention. Undisputedly facts are that the appellant was not the owner of the leasehold land and building M/s. Laxmi Organic Industrial Limited which was lease out in sum of Rs.1,17,82,000/-. The market value in accordance with the Stamp Valuation Authorities was in sum of Rs.2,41,87,000/-. However, the assessee explained that the same was on account of litigation in the Lower Courts as well as in the Hon’ble Bombay High Court. Anyhow, it is to be seen whether the provisions u/s 50C is applicable on the transfer of the leasehold rights or not. The issue has been settled by the Hon’ble High Court of Bombay in the case of Greenfield Hotels & Estate (P) Ltd. (supra). The relevant finding is hereby reproduced as under.:- “3. The impugned order oldie 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 could he applicable to transfer of leasehold rights in land and buildings. The impugned order of the Tribunal followed its decision in Atul G. Puranik v. ITO (2011) 132 ITD 499/11 taxmann.com 92 (Mum.) which held that Section 50C is not applicable while computing capital gains on transfer of leasehold rights in land and buildings.

4. Mr. Kotangale. learned Counsel for the Revenue, states that the Revenue has not preferred any appeal against the decision of the Tribunal in the case of Atul G. Puranik (supra). Thus, it could be inferred that it has been accepted. Our Court in DIT v. Credit A.Y. 2015-16 Agricole Indosuez (2015) 377 ITR 102/(2016) 69 taxmann.com 285 (Bom) (dealing with Tribunal order) and the Apex Court in UOI v. Swish P. Shah (2001) 249 ITR 221/117 Taxman 373 (SC) (dealing with High Court order) has laid down the salutary principle that where the Revenue has accepted the decision of the Court/Tribunal on an issue of law and not challenged it in appeal, then a subsequent decision following the earlier decision cannot be challenged. Further, it is not the Revenue's case before us that there are any distinguishing features either in facts or in law in the present appeal from that arising in the case of Atul G. Puranik (supra).

5. The legal position is quite clear in the above mentioned authority. The issue has duly been covered by the decision of High Court of Bombay as well as ITAT Pune Bench in the case of Greenfield Hotels & Estate (P) Ltd. (supra) & in the case of Kancast (P) Ltd. (supra), therefore, we are of the view that the finding of the CIT(A) is not justifiable, hence, we set aside the finding of the CIT(A) on this issue and allowed the claim of the assessee. Accordingly, we decide these issues in favour of the assessee against the revenue.