INCOME TAX OFFICER, MATIGARA vs. MATIGARA REALTORS PRIVATE LIMITED, SILIGURI

Facts in brief are that the assessee filed return of income during the assessment year on 31.12.2018 declaring total income of Rs. 2,90,730/-. The case of the assessee was selected for scrutiny to examine the investment in the properties. Accordingly, statutory notices were duly issued and served on the assessee. During the course of assessment proceedings, the AO observed that the assessee company had purchased three immovable properties located at Siliguri, West Bengal on 06.02.2018 & 28.02.2018. As per stamp valuation authority, the value of properties were Rs. 46,41,840/-, Rs. 2,31,36,000/- and Rs. 39,51,360/- respectively. The assessee submitted before the AO that these properties were simply taken on leasehold basis and were not transactions of purchase of properties and therefore did not falls within the ambit of provisions of Section 56(2)(x) of the Act. However, the AO brushed aside the contentions of the assessee and invoked the provisions of Section 56(2)(x) and made an addition of Rs. 3,03,72,500/- to the income of the assessee by taking the value of properties as per stamp valuation authority by allowing the deduction of lease premium.

In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by observing and holding that the provisions of section 56(2)(x) are not applicable to lease hold transactions.

After hearing the rival contentions and perusing the material on record, we find that undisputedly the assessee has not purchased any land or building but only taken three properties on lease for which the assessee has paid lease premium of Rs. 13,57,300/-. The AO invoked the provisions of Section 56(2)(x) of the Act by taking the value of these properties as per stamp valuation at Rs. 3,17,29,800/- and thus computed the difference at Rs. 3,03,72,500/- and added the same to income u/s 56(2)(x) of the Act.. The Ld. CIT(A) allowed the appeal of the assessee on the ground that the transfer of leasehold rights in land is not covered u/s 56(2)(x) of the Act and stamp duty valuation is not relevant in that case. We have perused the order of Ld. CIT(A) carefully and found Assessment Year: 2018-19 Matigara Realtors Pvt. Ltd. that the Ld. CIT(A) has passed a correct and reasoned order on this issue. The case of the assessee finds support from the several decisions namely (i) CIT Vs Greenfield Hotels and Estate (P) Ltd 2017(389 ITR 68 (Bom) and Britannia Industries Ltd. Vs PCIT 2024(161) taxmann.com 705(Kolkata Tri). Accordingly, we are inclined to dismiss the appeal of the revenue by upholding the order of Ld. CIT(A).

In the result, the appeal of the revenue is dismissed.