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Facts
The assessee challenged an addition of Rs. 27,98,544 made under Section 56(2)(vii)(b)(ii) for Assessment Year 2016-17, representing the difference between the actual purchase price and stamp duty value of a capital asset. The central issue was whether the asset, identified as "lease rights," could be considered "immovable property" for the purpose of this section.
Held
The Tribunal ruled that "lease rights" do not fall under the definition of "immovable property" as per Section 56(2)(vii) Explanation (d)(i) and similar provisions in Section 50C, citing relevant case law. Consequently, the Tribunal concluded that the impugned addition made by the lower authorities was unsustainable and deleted it.
Key Issues
Whether "lease rights" constitute "immovable property" for the purpose of attracting an addition under Section 56(2)(vii)(b)(ii) of the Income Tax Act.
Sections Cited
Section 147, Section 56(2)(vii)(b)(ii), Section 56(2)(vii) Explanation (d)(i), Section 50C
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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
O R D E R PER SATBEER SINGH GODARA, JM:
This assessee’s appeal for assessment year 2016-17 arises against National Faceless Appeal Centre (NFAC), Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1056275108(1), dated 19.09.2023, in case no. NFAC/2015-16/10132911, in proceedings u/s 147 read with section of the Income- tax Act, 1961, hereinafter referred to as the ‘Act’.
Heard both the parties at length. Case file perused.
Coming to the assessee’s sole substantive ground challenging both the lower authorities’ action making section 56(2)(vii)(b)(ii) addition of Rs. 27,98,544/- representing the difference between actual purchase price of Rs. 36,65,640/- as against stamp price of the capital asset amounting to Rs. 64,64,184/-, it emerges at the outset from a perusal of the corresponding purchase deed itself dated 27.03.2016 that the relevant capital asset was in fact “lease rights” only than an “immovable property” with title. Faced with this clinching aspect, I hereby quote Section 56(2)(vii) Explanation (d)(i) that the legislature has envisaged “property” as “immovable property, being land or building or both”. It is made clear that similar provision is there in Section 50C of the Act wherein case law CIT v. Green Field Hotel & Associates Pvt. Ltd. (2017) 389 ITR 68 (Bombay) has settled the issue in assessee’s favour and against the department that lease rights are not covered under such a statutory expression. I, accordingly, find no reason to sustain the impugned addition which is deleted in very terms.
This assessee’s appeal is allowed in above terms.
Order pronounced in open court on 29.11.2024