Section 50C of not apply to transfer of leasehold right in plot of land – ITAT allowed appeal following High Court order
ABCAUS Case Law Citation
ABCAUS 3429 (2020) (12)
Important case law relied upon by the parties:
CIT vs. Greenfield Hotels and Estates Pvt. Ltd 89 ITR 68
Noida Cyber Park Pvt. Ltd
Ritz Suppliers Pvt. Ltd vs. ITO 182 ITD 227 (Kol)
Pyaribai K Jain vs. CIT 175 ITD 177 (Mum)
Kencast Pvt. Ltd vs. ITO 68 SOT 110 (Pune)
In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the applicability of deeming fiction under section 50C of the Income Tax Act, 1961 (the Act) on transfer of lease hold land.
The case of the assessee was selected for limited scrutiny for the reason that sale consideration of property shown in income tax return was less than the value as per stamp authority.
The Assessing Officer (AO) found that the assessee was allotted leasehold right of a plot of land which was transferred by the assessee as per registered agreement to sale. The circle rate of plot as per stamp duty rate was far more but the assessee opted for showing the capital gain by adopting the sale consideration as per sale deed and supported it by a market value certification from registered valuer.
In reply to the query from the AO, the assessee claimed that provisions of section 50C applies only to the transfer of land and Building or both but it does not extend to the transfer of leasehold right. According to the assessee leasehold rights transferred were neither land or building or both.
The AO substituted the sale consideration by the stamp duty valuation u/s 50C of the property and accordingly made an addition to the declared income while passing the assessment order u/s 143(3) of the Act.
The Tribunal noted that the Hon’ble High Court had upheld the order of the coordinate bench holding that provisions of section 50C will not be applicable while computing the capital gain on transfer of leasehold rights in land and plot.
The Tribunal also observed that the issue was also covered in favour of the assessee by number of decision of the coordinate bench.
Accordingly, in view of the binding precedents, the Tribunal allowed the ground of the appeal challenging that provision of section 50C of the Act do not apply on transfer of leasehold right in plot of land and directed the AO to delete the impugned addition and the appeal was allowed in favour of the assessee.
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