Tribunal Rules on Section 50C & Cost of Acquisition for Properties

The Tribunal upheld the CIT(A)'s decisions on two issues: Section 50C does not apply to the transfer of reversionary rights, and the cost of acquisition for properties should be calculated at 70% of the sale value for computing LTCG. The revenue's appeal was dismissed as it lacked merit.

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Issues Involved:
1. Applicability of Section 50C on the transfer of reversionary rights.
2. Determination of the cost of acquisition at 70% of the sale value for computing Long Term Capital Gain (LTCG).

Issue-wise Detailed Analysis:

1. Applicability of Section 50C on the Transfer of Reversionary Rights:
The revenue's primary contention was whether the provisions of Section 50C of the Income Tax Act, 1961, apply to the transfer of reversionary rights in a property. The assessee argued that Section 50C, which pertains to the valuation of capital assets for stamp duty purposes, should not apply to the transfer of reversionary rights. The CIT(A) supported this claim by referencing previous ITAT decisions, specifically the cases of DCIT Vs. Tejinder Singh and ITO Vs. Ms. D. Anitha, which held that Section 50C is not applicable to the transfer of tenancy or reversionary rights. The Tribunal upheld the CIT(A)'s decision, agreeing that the transfer of reversionary rights does not trigger Section 50C, as these rights do not equate to the transfer of land or building per se. Thus, the revenue's grounds of appeal regarding this issue were dismissed.

2. Determination of the Cost of Acquisition at 70% of the Sale Value for Computing LTCG:
The second issue revolved around the assessee's claim that 70% of the sale consideration should be treated as the cost of acquisition for the properties sold, which were acquired before 01.04.1981. The assessee argued that the properties were encumbered, encroached, leased, and under unauthorized occupation, justifying the 70% valuation. The CIT(A) noted that this method had been accepted in the assessee's previous assessment years and was supported by the ITAT's decisions in the assessee's own cases for A.Y. 2007-08, 2008-09, and 2010-11. The Tribunal found no reason to deviate from these precedents and directed the A.O to accept 70% of the sale value as the indexed cost of acquisition. Consequently, the Tribunal upheld the CIT(A)'s decision and dismissed the revenue's appeal on this ground.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decisions on both issues. It confirmed that Section 50C does not apply to the transfer of reversionary rights and that the cost of acquisition for the properties should be calculated at 70% of the sale value for computing LTCG. The appeal filed by the revenue was devoid of merit and was accordingly dismissed.

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