Section 50C cannot apply to bona fide tenancy rights where no transfer of title in immovable property is shown.

A registered tenancy arrangement, where the assessee as co-owner merely let out the premises and no transfer of title or transferable rights in the flats was shown, did not amount to a transfer of land or building giving rise to capital gains. Section 50C, being a deeming provision confined to transfers of land or building or both, could not be extended to tenancy rights or a bona fide rent arrangement governed by the Maharashtra Rent Control Act, 1999. The stamp duty value substitution under section 50C was therefore unsustainable and the addition was deleted.

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Issues: Whether the registered tenancy agreement amounted to a transfer of property giving rise to capital gains, and whether section 50C could be invoked to substitute stamp duty value for the actual consideration.

Analysis: The agreement on record showed that the assessee, as one of the co-owners, had given the premises on rent and had not transferred title in the property. There was no material to show that ownership or transferable rights in the flats had passed to the occupants, and no evidence of any consideration beyond the tenancy arrangement was established. Section 50C is a deeming provision confined to transfer of land or building or both, and its legal fiction cannot be extended to tenancy rights or other rights in immovable property. On the facts, the transaction remained a tenancy/rent arrangement governed by the Maharashtra Rent Control Act, 1999, and not a sale or transfer liable to capital gains on stamp duty value.

Conclusion: The addition under section 50C was not sustainable and was deleted; the issue was decided in favour of the assessee.

Ratio Decidendi: Section 50C cannot be applied to a bona fide tenancy arrangement where no transfer of title in land or building is shown and the asset transferred, if any, is merely tenancy rights.

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