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Issues: Whether section 50C of the Income-tax Act, 1961 could be invoked where the assessee assigned only a life interest and undivided share in trust property, and whether the addition sustained on that basis was liable to be deleted.
Analysis: The transfer deed described the subject matter as the assessee's life interest and not the corpus of the land or building. The ownership of the immovable property continued to vest in the trust, while the assessee held only a limited, determinable and beneficial interest. A life interest is non-permanent, extinguishes on death, and is legally distinct from leasehold or ownership rights. Section 50C is a deeming provision and must be confined to transfers of land or building or both, and cannot be extended beyond its clear language to a transfer of a limited right or interest. The record, including the valuation material, also supported the conclusion that the assessee had not transferred an independently marketable estate in land or building.
Conclusion: Section 50C was not applicable to the transfer of the assessee's life interest and undivided share, and the addition sustained on that basis was directed to be deleted.
Ratio Decidendi: A transfer of a limited life interest in trust property is not a transfer of land or building or both for the purposes of section 50C of the Income-tax Act, 1961, and the deeming fiction cannot be enlarged beyond its express terms.
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