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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’, NEW DELHI
Before: SHRI J. SUDHAKAR REDDY
O R D E R This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals) Ghaziabad dated 07.01.2016 for the Assessment Year (A.Y.) 2007-08.
Facts in brief:- The assessee is an individual. He was allotted a plot of land at no. 263, Block Jacranda Estate, Sector-ETA-1, Greater Noida Industrial Development Authority on lease, with right to construct a residential building over the plot as per plan. The assessee transferred the leasehold rights over the plot by way of a transfer deed dated 17.01.2007. The issue that arises before me is whether section 50C of the Income Tax Act, 1961 (the Act) can be invoked by the A.O. on the transfer of leasehold rights.
The Hon’ble Delhi High Court in the case of Commissioner of Income Tax (Appeals) vs Sh. Kishan Dass in ITA 64/2014 order dated 10.02.2014 held that : “In all these, the various Benches of the Tribunal appeared to have strictly construed the letter of section 50C to say that the conveyance has to be complete in respect of all entitlements to the property. In the present case, the Tribunal has upheld the valuation of the assessee. We notice that apart from the three Benches, decisions of which have been relied upon, the Tribunal also considered the distinction made between section 50C and 54D(1) which specifically provides that capital gains from transfer by way of compulsory acquisition under any law of capital asset being land, building or any right in the land or building…?
Section 50C, on the other hand, talks of, transfer by assessee of the capital asset being land or building or both? The contrast in language, given that section 50C is a specific provision, which seeks to enact a presumption is significant. The valuation of the concerned state agency or the government that the cost of land is, in the circumstances higher, is determinative. We notice that in the present case, there has been no such valuation. That apart, the Tribunal adopted an approach which, appears to be correct, in that it took note of the proportionate transfer of leasehold rights for 54 years. If the revenue’s contention were to be conceded, then in the given facts of case, if the leasehold rights for residual period of 3 of 4 years were to be valued at par with the cost of acquisition of the full tenure of the lease of 90 years, absurd and anomalous results would ensue.”
3.1. The Hon’ble Delhi High Court upheld the decision of the Tribunal in the case of Arif Akhatar Hussain Vs. IT O in ITA no. 543/Mum/2010.
Respectfully following the propositions laid down by the Hon’ble Delhi High Court to the facts of the present case I hold as follows.
The assessee who is a pensioner and senior citizen was allotted the said plot of land by Greater Noida Development Authority on 26th of June 2006. He transferred the leasehold rights in the plot by way of transfer deed dated 17/01/2007. Transfer took place within a period of 6 to 7 months of allotment. The cost of acquisition of what was Rs. 18,07,415 and the sale consideration was Rs. 18,00,000/–. Short term capital loss of Rs.7415/–. The AO took the Circle rate of the state authorities at Rs. 33,00,000/–. When Greater Noida Development Authority allots the leasehold rights to the assessee at Rs. 18,07,415/– the contention that the market value of the Circle rate as per the sub registrar office is Rs. 33,00,000/- does not appear to be correct. It appears that this valuation is for Freehold property and not for leasehold property.
Thus on these facts and circumstances I hold that, the valuation of Rs. 33 Lacs under section 50C is factually incorrect.
In the result I delete the addition made by invoking section 50 C of the Act by the AO and allow the appeal.
In the result the appeal of the assessee is allowed.
Order pronounced in the Open Court on 23rd September, 2016.