TaxTMI 
TaxTMI 
2017 (4) TMI 759
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.... Long Term Capital loss of Rs. 4,90,018/- in respect of sale of flat for Rs. 33,75,000/- during the year under consideration. The assessee was asked to furnish registered sale deed of the flat situated at Medicity, Sector 38, Gurgaon for adopting the value of sale consideration u/s 50C of the Act. The assessee vide its letter dated 12.02.2014 submitted that the flat purchased at Medicity, Sector 38, Gurgaon, Haryana was under construction at the time of purchase and therefore, no purchase deed was executed at that time and only purchase through agreement was made. It was further submitted that at the time of sale of the above property, the property was again under construction and sale of the property was executed through agreement only and no registered sale deed was required to be executed because of under construction of the property. It was accordingly submitted that the sale value as mentioned in the sale agreement should be considered as fair market value and purchased value should be taken for the purposes of determining the index cost of acquisition. However, the AO did not agree to the assessee's contentions and worked out the sale consideration as per the DLC rate provide....
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.... right in the land or building forming part of industrial undertaking." From its reading, it is clear that 'the land or building' is distinct from ány right in land or building'. It was further submitted that the Hon'ble Supreme court in the case of CIT vs. Amar Chand N. Shroff (48 ITR 59) (SC) and CIT vs. Mother India Refrigeration Industries P. Ltd. has held that a deeming provision can not be extended beyond the purpose for which it is enacted. These judgements have been followed in the ITAT judgement in the case of Atul G. Puranik vs. Income Tax Officer (Mumbai A Bench) (141 TTJ 0069) of ITAT wherein it is held as under:- "here above it is worth noting that a distinction has been drawn between land or building on the one hand or any rights in land or building on the other hand, considering the fact that we are dealing with special provision for full value of consideration in certain cases u/s 50C which is a deeming provision, the fiction created in the sec. can not be extended to any effect other than those specifically provided there in section 50C applies only to any capital assets being land or building or both. It can not be applied on lease rights in land or buil....
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....al Health (P) Ltd. and confirms to abide by each and every term and condition as stated therein as the nominee of the First Party. 4. That the First party has assured and represented to the second party that the property to be sold under the agreement of Conveyance is free from all kinds of encumbrances such as prior sale, mortgage, loan, dispute, litigation etc. That the First party has handed over to the Second party the original Memorandum of Undertaking mentioned herein and original receipt issued by the developer M/s Global Health Pvt. Ltd., the receipt of which the Second party acknowledges at the time of signing of this Agreement." 2.7 It would now be relevant to go through the MOU dated 22.12.2004 which finds mention in the above stated conveyance agreement. The MOU dated 22.12.2004 has been entered into between M/s Global Health (P) Ltd. and M/s M & R Oriental Export (P) Ltd. The preamble of the MOU provides that M/s Global Health (P) Ltd. is the allottee of 43 acre land for setting up of Mega size Medicity in sector 38, Gurgaon vide allotment letter No. 1704 dated 29.10.2004 and possession letter issued by HUDA. It further provides that the company is in the process o....
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....per sq. ft., after deducting the un- paid amounts, latest by 31st January 2006 failing which an interest @ 21% ( Twenty One Percent) per annum compoundable quarterly shall become payable by the 'Company' to the allottee. (6) That the premises, proposed to be allotted by the company, will be constructed and completed by the 'Company' not later than 30 months of the signing of this MOU, subject, however to Force Majeure circumstances. In case the 'Company' fails to complete the premises in the time stipulated herein, it shall refund to the Allottee, at the first demand and discretion of Allottee, the amounts it has paid hereunder alongwith penalty/ damages/ compensation together equivalent to Rs. 3900.00 ( Rupees three thousand and nine hundred only) per sq.ft. within one months of its falling due, failing which an interest @ 21% ( Twenty One Percent) per annum compoundable quarterly shall be payable by the 'Company' to the 'Allottee' along with the above. (14) That the party of the Second Part shall have unrestricted and unfettered right to assign/nominate its rights under this MOU to any third party at any price it deems fit and proper subject to the terms hereof. That the part....
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....rtgage, loan, dispute litigation etc. That the First Party has handed over to the Second Party the Original memorandum of understanding mentioned herein and original receipt issued by the developer M/s Global Health Private Limited, the receipt of which the Second Party acknowledges at the time of Signing of the Agreement." 2.9 On close reading of the above documents, the existence and contents thereof have not been denied by the Revenue, it is clear that firstly what has been purchased initially by the assessee alongwith her husband is the right of allotment in the office flat measuring 2500 sq.ft. in the Medi City project which was under development at Sector 38, Gurgaon. It is also clear that from the perusal of the agreement of Conveyance dated 23.07.2010 that what has been sold is again a right of allotment of the said flat in the Medi City project. The said fact is apparent from the fact that the balance 10% consideration of Rs. 3,75,000/- which was supposed to be paid to the developer at the time of possession of the flat in terms of the original MOU dated 22.12.2004 had still not been paid and it has now been agreed that the said 10% balance consideration shall be paid dir....
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....1 On reading of sub section (1) of section 50C, it is clear that the value of land, building or both adopted or assessed or assessable by the Stamp Valuation Authority shall for the purpose of section 48, be deemed to be the full value of consideration received or accruing as a result of such transfer. It is a deeming provision and it extent only to land, building or both. It therefore follows that where a capital asset being land or building or both is transferred and the consideration received or accruing as a result of such transfer is less than the value adopted or assessed or assessable by the Stamp Valuation Authority, the deeming provisions of sub section(1) of section 50C shall be applicable. In the instant case what has been transferred is a right of allotment in office flat and not the office flat itself. It is therefore clear that a deeming provision which is limited to land, building or both cannot be extended beyond the purpose for which it is enacted and is therefore not applicable in the instant case. The Ld. AR has relied on the Coordinate Bench's decision in the case of Atul G. Puranik (supra) which squarely supports the case of the assessee. In that case, the asse....