Leasehold rights fall outside stamp-value substitution, and a booking advance was not deemed dividend on these facts.

Leasehold plot transfers were held outside the scope of the stamp-value substitution rule because the provision applies to land or building or both, not to leasehold rights; the addition based on section 50C(1) was deleted. A separate receipt of money for booking a plot was treated as a commercial advance linked to a proposed business transaction, not a loan or advance in the nature of deemed dividend; the addition under section 2(22)(e) was also deleted. The assessee therefore obtained relief on both issues.

---

---

Issues: (i) Whether section 50C(1) of the Income-tax Act, 1961 applied to the transfer of leasehold plots so as to substitute the declared sale consideration with stamp valuation. (ii) Whether the amount of Rs. 10 lakhs received from the company was assessable as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961.

Issue (i): Whether section 50C(1) of the Income-tax Act, 1961 applied to the transfer of leasehold plots so as to substitute the declared sale consideration with stamp valuation.

Analysis: The leasehold plots were transferred under a regime where transfer of lease was exempted from duty under section 55 of the Stamp (Amendment) Act, 2011. The provision invoked for deeming stamp value as full consideration applies to land or building or both, and the leasehold rights in the present case were held to fall outside that ambit. The order also relied on the view that section 50C is not applicable to transfer of leasehold rights in land and buildings.

Conclusion: Section 50C(1) was held to be inapplicable, and the addition made on that basis was deleted in favour of the assessee.

Issue (ii): Whether the amount of Rs. 10 lakhs received from the company was assessable as deemed dividend under section 2(22)(e) of the Income-tax Act, 1961.

Analysis: The amount was received for booking a plot through the company, the transaction did not mature, and the earnest money was returned to the company. The payment was treated as a commercial advance connected with a business transaction rather than a loan or advance made in the nature contemplated by section 2(22)(e). In these circumstances, the amount did not represent dividend out of accumulated profits.

Conclusion: The amount was held not taxable as deemed dividend, and the addition was deleted in favour of the assessee.

Final Conclusion: The additions under both sections 50C and 2(22)(e) were set aside, and the assessee obtained complete relief in the appeal.

---