TaxTMI 
TaxTMI 
2016 (4) TMI 1053
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....e said property was determined by the Stamp Valuation Authority, Mumbai at Rs. 3,41,59,500/-. On the basis of the view that income escaped assessment due to the difference between the value of the property determined by the Stamp Valuation Authority and the consideration as declared by the assessee, the Assessing Officer ('AO') initiated proceedings under section 147 of the Act to bring to tax income of the assessee which he had reason to believe escaped assessment. Notice under section 148 of the Act was issued to the assessee on 29.03.2012. The assessment was completed under section 143(3) of the Act vide order dated 11.03.2013 determining the assessee's income at Rs. 6,21,37,650/- wherein, inter alia, the AO invoking the provisions of section 50C of the Act computed the Long Term Capital Gain (LTCG) of the aforesaid property at Rs. 3,03,82,674/-. On appeal, the learned CIT(A)-10, Mumbai dismissed the assessee's appeal vide the impugned order dated 28.02.2014. 3. Aggrieved by the order of the CIT(A)-10, Mumbai dated 28.02.2014 for A.Y. 2010-11, the assessee has preferred this appeal raising the following grounds of appeal: - "1) a) The Learned Commissioner of Income T....
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....additional grounds of appeal: - "1. The Assessing Officer as well as the learned CIT(A) had erred in law and on facts in not appreciating that the provisions of section 50C of the Act are not applicable in respect of leasehold rights in foreshore land. 2. The appellant craves to add, amend, alter or delete any or all grounds of appeal." 4.1 The learned A.R. for the assessee prayed for admission of the additional grounds raised (supra) for consideration and adjudication in this appeal, reiterating the arguments put forward by the assessee in his prayer for admission of the same. It was submitted that the instant appeal has been filed by the assessee in respect of the learned CIT(A) confirming the addition made by the AO by applying the provisions of section 50C of the Act and in adopting the stamp duty value in respect of assignment of leasehold rights in the said land by the assessee. It is further submitted that as a matter of abundant precaution, the assessee has sought to raise a specific ground challenging the applicability of the provisions of section 50C of the Act on the transfer of leasehold rights on land. It was submitted that the additional grounds i....
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...., the fiction created therein cannot extend to any other asset than those provided for specifically. In support of this proposition, that the provisions of section 50C of the Act are not attracted in case of transfer of leasehold rights in land, the learned A.R. for the assessee placed reliance on the following judicial pronouncements of various Benches of the ITAT: - (i) ACIT vs. Nadir Nazarali Dhanani (ITA No. 100/Mum/2013 dated 09.10.2015) (ii) Kumarpal Mohanlal Jain vs. ITO (ITA No. 7231/Mum/2010 dated 30.11.2015) (iii) Atul G. Puranik vs. ITO (132 ITD 499) (iv) ITO vs. Hari Om Gupta (45 ITR (Trib) 137) (v) ITO vs. Pradeep Steel Re-Rolling Mills (P) Ltd. (155 TTJ 294) vi) Kancast P. Ltd. vs. ITO (68 SOT 110) 5.2 Per contra, the learned D.R. for Revenue strongly supported the orders of the authorities below and contended that section 50C of the Act is a special provision for computing capital gains in certain cases and would include not only land as such but also leasehold rights in land. 5.3.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronoun....
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....r a period of 99 years from the Governor of Bombay and the ownership of which vests in the Collector of Mumbai. We have also examined the issue of invocation of the provisions of section 50C of the Act in respect of leasehold rights in land. We find that this issue has been examined by various Benches of the Tribunal, wherein it has been consistently held that the provisions of section 50C of the Act cannot be invoked in transaction involving transfer of leasehold rights in land or building. Relevant portions thereof are extracted hereunder. 5.3.5 In the decision of the Coordinate Bench of this Tribunal in the case of Nadir Nazarali Dhanani (ITA No. 100/Mum/2013 dated 09.10.2015) at para 7 thereof it was held as under: - "7. We have considered the rival submissions and have perused the material available on record. It is evident from the assessment order, the Assessing Officer has computed long term capital gain on assignment of lease hold rights of the plot by taking the market value as per section 50C of the Act only for the reason that the lease hold rights are for 60 years, hence, for all practical purpose, the assessee should be held to be the owner of the property....
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....Fordham Pressings (India) Pvt. Ltd. vs. DCIT [ITA No.6033/Mum/2010] decided on 25.04.2012 3. M/s. Heatex Products Pvt. Ltd. vs. ACIT [ITA No.8197/Mum/2010] decided on 24.07.2013 4. ITO vs. M/s. Pawaskar Shipping & Trading Company Pvt. Ltd. [ITA No.872/Mum/2008] decided on 29.07.2011 In view of the settled position on this issue, the section 50C is not applicable to the case in hand. Hence, the capital gains offered by the assessee by adopting the sale consideration actually received by him are to be taxed as such. We, therefore, do not find any justification on the part of the Ld. CIT(A) in adopting the value of the DVO. We accordingly direct the AO to tax the capital gains on the assessee by adopting the sale value of the property at Rs. 25 lakhs as offered by the assessee." 5.3.7 In the case of Atul G. Puranik vs. ITO (132 ITD 499) the Coordinate Bench of this Tribunal at para 11.4 has held as under: - "11.4 In view of the aforenoted judgments rendered by the Hon'ble Apex Court and that of the Hon'ble jurisdictional High Court, it is clear that a deeming provision can be applied only in respect of the situation specifically given and hence c....
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....specifically provided therein. As sec. 50C applies only to a capital asst, being land or building or both, it cannot be made applicable to lease rights in a land. As the assessee transferred lease right for sixty years in the Plot and not land itself, the provisions of sec.50C cannot be invoked." 5.3.8 In the case of Hari Om Gupta (45 ITR (Trib) 137) (Lucknow), the Tribunal at para 9 to 11 thereof have observed and held as under: - 9. From these transactions, it appears that it was a distress sale and the market value of the property cannot be assessed for computing the long term capital gain. Moreover, we have also examined the other aspects of invocation of provisions of section 50C of the Act relating to leasehold rights. The issue was examined by different Benches of the Tribunal in a number of cases referred to by the assessee, in which the Tribunal has held that the provisions of section 50C of the Act cannot be invoked in transfer of leasehold rights. 10. In the case of Kancast Pvt. Ltd. vs. Income Tax Officer, Pune (supra), the Pune Bench of the Tribunal has elaborately discussed the issue in the light of various judicial pronouncements and has categori....
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....ty' also includes any rights therein. The CIT(A) has correlated this to section 2(47) of the Act which defines the expression 'transfer' in relation to capital asset. As per the CIT(A), section 2(47) of the Act contains a reference to the meaning of the 'immovable property' contained in section 269UA(d) of the Act and therefore transfer in relation to a capital asset defined in section 2(47) of the Act would include within its purview transfer of a capital asset, being leasehold rights in land also. Upto this stage, there can be no quarrel with the stand of the CIT(A). The incongruity starts when the CIT(A) further goes to say that because of the aforesaid provisions, it was "not necessary to mention 'rights in land or building' specifically u/s 50C of the Act also". 11. In our considered opinion, the point made by the CIT(A) is quite fallacious. Firstly, it has to be understood that the meaning of the expression "immovable property" contained in section 269UA(d) of the Act has been referred to in section 2(47) of the Act only in relation to sub-clause (v) and (vi) thereof. Secondly, from the meaning of expression "immovable property" contained in section 269UA(d) of....
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....Tribunal that provisions of section 50C of the Act cannot be invoked in respect to the transfer of leasehold rights, we find no infirmity in the order of the ld. CIT(A), who has rightly adjudicated the issue following the order of the Tribunal. We accordingly confirm the same." 5.3.9 In the case of Kancast (P) Ltd. (ITA No. 1265/PN/2011 dated 19.01.2015) the ITAT Pune Bench at para 13 of its order has held as under:- "13. In view of the aforesaid legal position and in the absence of any decision to the contrary brought out by the Revenue, we conclude by holding that section 50C of the Act does not come into operation in the present facts where what is transferred by the assessee is only the leasehold rights in land which were acquired by it from Maharashtra Industrial Development Corporation (i.e. MIDC) on a 99 year lease basis. As a consequence, we set aside the order of the CIT(A) and direct the Assessing Officer to compute the long term capital gain on transfer of leasehold land by adopting the full value of consideration of Rs. 2,345,04,000/- declared by the assessee in the computation of income and allow the appropriate relief to the assessee. Thus, on this Ground ....