2011 (7) TMI 1101

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....ons made in view of section 50C and subsequent disallowance of LTCG of Rs. 39,63,195/- and STCG of Rs. 22,74,094/- without appreciating the facts of the case". 2. The brief facts giving rise to the appeal may be noted. The assessee is a private limited company. In the return of income the assessee did not declare any capital gains on account of transfer of certain leasehold rights it had in a plot of land. The rights were transferred to one Smt Radhadevi on 21.11.2002 under a compromise settlement. The Assessing Officer therefore called upon the assessee to show cause as to why capital gains on the transfer should not be computed and included in the assessment. The assessee submitted that since the cost of the leasehold rights was incapa....

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....ty authorities of Lucknow, which amounted to Rs. 62,78,195/- and proceeded to compute the capital gains accordingly. 3. The assessee appealed to the CIT(A), who examined the facts and recorded the following findings:- (1) The assessee had taken a loan from late Smt Radhadevi Vaid amounting to Rs. 1,82,501/- which was secured by a mortgage of the entire property taken on lease. (2) The assessee could not repay the loan with interest. The Hon'ble Bombay High Court awarded a decree that the assessee should pay Rs. 1,93,539/- to Smt Radhadevi in equal monthly instalments of Rs. 10,000/- from July 1984. (3) The assessee could not comply with the orders of the Hon'ble Bombay High Court. (4) In order to retrieve its leasehold rights....

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.... assessment by the stamp valuation authority for payment of stamp duty regarding the transfer. In this view of the matter he held that the Assessing Officer wrongly invoked section 50C and directed him to adopt Rs. 81,254/- as capital gains as per the entries made in the assessee's books of account. 4. The revenue is in appeal. We are unable to find fault with the decision of the CIT(A) that section 50C cannot be invoked to a transfer of leasehold rights. The section applies only to capital assets being land or building or both. It does not in terms include leasehold rights in the land or building within its scope. The Assessing Officer's conclusion to the contrary is based on section 27(iiib) of the Act, which says that a person who acq....