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Income Tax Appellate Tribunal, DELHI BENCHES “G”, DELHI
Before: Shri N.K. Saini & Shri Joginder Singh,
Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order 05/04/2011 of the Ld. First Appellate Authority, New Delhi for Assessment Year 2008-09, holding the action of the AO treating the transfer of property as ‘sale’ and further deleting the addition of Rs.47,48,750/- on account of difference in market value of land and sale value shown by the assessee.
During hearing, Shri Kaushlendra Tiwari, ld. Sr.
DR, defended the addition made by the Ld. AO, by advancing arguments, which are identical to the ground raised. On the other hand, Shri Pradeep Dinodia along with Shri R.K. Kapoor, Ld. counsel for the assessee, defended the impugned order by contending that there is no transfer of the property at all at the assessee merely provided access/rasta/passage for use and till today the assessee is owner of the property. It was also contended that it was kept as stock-in-trade by pleading that section 50C of the Income Tax Act, 1961 (hereinafter the Act) is not applicable to the decision in the case of CIT vs Thiruvengadam Investments Pvt Ltd 320 ITR 345 (Mad.) and CIT vs R. Sugantha Ravindran (2013) 352 ITR 488 (Chennai).
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is in the business of resorts, hotels, real estate, building and land developers. The assessee company sold two land properties i.e. one at Theme Park and another at Global Business City, both located at Lakkarpur, Faridabad at a cost of Rs.8,12,500/- and Rs.5 lakhs respectively. The Ld. AO raised query with respect to a huge gap in the sale rate/sale value with respect to these properties. The mutation papers from the municipal authorities were submitted. Considering the facts, the Ld. AO made addition of Rs.47,48,750/- on account of difference in sale value of the land at global business city.
2.2. On appeal before the Ld. CIT(A), the factual matrix was considered along with the affidavit-cum- land was used for commutation of general public as Aam Rasta (thorough fare) without any objection or obstruction by the assessee company. There was no objection by the assessee company, if the concerned authorities grant/sanction/permission/ approval on the basis of this thorough fare to M/s Amshul Developers Pvt. Ltd. (a sister concern of Omax Group). The assessee company also assured to hand over/transferred, the said rasta to the concerned authority if any instruction is given by the said authority for use the same as Aam rasta to the general public. The assessee received Rs.5 lakh as compensation from the adjoining land developers for providing the rasta but fact remains, till today, the ownership, remained with the assessee company and was not transferred to anybody.
The Ld. AO took the amount at Rs.52,48,750/- as deemed consideration of the land/rasta measuring 0.525 acres and made addition of Rs.47,48,750/-. Admittedly, before the Ld. AO, these necessary documents like receipt, affidavit-cum- undertaking alongwith copy of bank statement were submitted supported in the shape of circle rate notified by the land remained with the assessee itself, there is no question of transfer of land.
2.3. So far as, application of section 50C is concerned, it is a deeming provision but there is no evidence, brought on record by the Ld. AO that the assessee actually received over and above the amount received as a compensation from the adjoining developer. In the present case, the ownership of the land still remained with the assessee, therefore, there is no question of investing more and more specifically when there is no change of ownership. The amount of Rs.5 lakhs was received being compensation for allowing the piece of land to allow as Aam Rasta for the general public. Even otherwise, the compensation is at par with circle rate, therefore, there is no presumption that the assessee received more than the declared one. Even otherwise, no register sale deed took place in respect of the said piece of land, therefore, section 50C is not attracted. The decision in the case of Kumudini Venugopal (2010) 5 ITR (Trib.) 145 (Chennai) and Smt. Sandhya Ben A Purohit vs ITO 154 TTJ of the Act was amended w.e.f 01/10/2009, where the words ‘assessed’ or ‘assessable’ were inserted. Prior to this amendment section 50C was applicable only when the property has been assessed to stamp duty ie. Stamp duty has been paid and actual transfer has been taken place.
The transaction of allowing Aam Rasta took place in April, 2007 i.e. much prior to the amendment made in section 50C, therefore, section 50C is not applicable to the case of the assessee. Section 50C of the Act is attract when the land or building are both are transferred.
2.4. The Hon’ble High Court in CIT vs R. Sugantha Ravindaran 352 ITR 488 (Chennai) considered CBDT Circular No.5 of 2010 dated 03/06/2010 concluding that amendment made is prospective and not retrospective. The ratio laid down in Devendra K. Chadda vs ITO (2016)-T10C- 2098-ITAT-Mumbai and Ramesh Verma vs DCIT (ITA No.394/Ch/2015) and Smt. Devendra Ben I. Barot vs ITO (TS-258-ITAT-2016-Ahd) supports our view. Therefore, from this angle also, we find merit in the contention of the ld. discussion, we don’t find any infirmity in the conclusion drawn by the Ld. First Appellate Authority, resultantly, the appeal of the Revenue is dismissed.
Finally, the appeal of the Revenue is dismissed.
This order was pronounced in the open court in the presence of the ld. representatives from both sides at the conclusion of the hearing on 08/11/2017.