TaxTMI 
TaxTMI 
2017 (1) TMI 731
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.... consideration, assessee let out one of its properties on rent for a monthly consideration of Rs. 3080/- and monthly maintenance charges of Rs. 1765/- to Shri Lalit Kumar Jain. However, AO applied provisions of Section 50C by taking the stamp duty value adopted for registration of tenancy deed as full value of consideration and made an addition on account of short term capital gains amounting to Rs. 82,31,000/- 4. By the impugned order CIT(A) deleted the addition after observing as under:- 2.2. I have considered the facts of the case, assessment order passed by the AO and the submission filed by the appellant. The issue is adjudicated as under :- There are basically two substantial issues involved in the impugned appeal i.e. (a) wh....
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....he impugned property and the tenant is only entitled for the commercial exploitation of the same, in lieu of the monthly rent paid by him. Further, it has also been clarified in the tenancy agreement that the tenant is not entitled in any way to alienate the said property in any manner either by way of letting it out or by sub letting it out or by creating any kind of assignment or transfer. Even the right of use of the property is limited to the tenant only. In fact, by way of abundant caution, the land lord has also kept with himself the right of redevelopment of the property and the tenant would give irrevocable consent for the same as mentioned in clause no. 25 of the tenancy agreement. On the perusal of the entire tenancy agreement it ....
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.... adjudicated. It has been submitted by the appellant that no consideration has been received by them and in this regard copies of bank statements and bank accounts have been submitted by them. The AO has also not disputed this fact hat no consideration other than the monthly rent has been received by the appellant. However, the AO has invoked section 50C and the value adopted by the stamp duty authorities of Rs. 82,31,000/- has been taken as the full value of consideration received for computing the taxable capital gains in this case. Now it has to be examined whether the assessing officer was right in adopting the value as per stamp duty authorities for computing the capital gains in case of transfer of tenancy rights. Let us peruse the pr....
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....d or assessed value by the stamp valuation authority as full value consideration is applicable only in respect of "land or building or both." If the capital asset under transfer cannot be described as "land or building", then section 5OC will cease to apply. On a similar issue regarding applicability of Section 50C in cases of transfer of tenancy rights the Hon'ble Mumbai Tribunal in the case of Munsons Textiles ITA No.6320/M/2010 have held that as under: "There is no dispute that the transfer of tenancy rights is a capita! asset and income is assessable as capital gain. The dispute is only about sale value. Appellant had shown value of Rs. 55 lacs in respect of transfer of tenancy rights relating to about 1800 sq*ft* area of [actor] g....
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....appellant had understated the sale consideration. We, therefore, see no infirmity in the order of the CIT(A) and the same is, therefore upheld." It is therefore seen that now it is a well settled principle that section 50 C, being a legal fiction, cannot be invoked for the purposes of valuation of transfer of tenancy rights. To sum up the findings are as follows: 1. There is no transfer or alienation of asset by the appellant and, therefore, the provision of capital gains is not applicable in this case. 2. No Consideration has been received by the appellant other than rent and maintenance. Further, there is no evidence of receipt of any consideration by the appellant which has been on records by AO. 3. Section 5OC is not applica....
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.... tenancy agreement, the tenant is not entitled in any way to alienate the said property in any manner either by way of letting it out or by sub letting it out or by creating any kind of assignment or transfer. It was also observed that even the right of use of the property is limited to the tenant only. The CIT(A) has also recorded a finding that assessee-landlord has also kept with himself the right of redevelopment of the property and the tenant would give irrevocable consent for the same as per clause no. 25 of the tenancy agreement. After considering entire terms and conditions of the tenancy agreement the CIT(A) observed that tenant has been given very limited right of occupation of the property for his commercial purposes, other than ....