2018 (5) TMI 354

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....40,000/- under Section 50C of the Income-tax Act, 1961 [hereafter 'the Act' for short]. The assessee had for the relevant assessment year (AY) filed its return declaring an income of Rs.9,35,010/- including long term capital gain of Rs.7,57,435/-. Later, a notice under Section 148 of the Act was issued to the assessee on 21.03.2016. During assessment proceedings, the assessee was asked to explain as to why Section 50C of the Act be not invoked with respect to the consideration received on sale of agricultural land as assessed by the authorities for the purpose of stamp duty. The assessee sold its rights in the agricultural land measuring 0.64 hectares in Village-Tulera, Tehsil & Distt. Alwar, Rajasthan on 31.03.2009 for Rs.30 lakhs. Accordi....

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....er failed to appreciate that the lease deed was a perpetual lease deed. It is relevant to refer to the submission made by the assessee before the CIT (A) on 29.05.2017 wherein it was stated as under: "Agricultural land in Rajasthan is owned by the Government and is under the cultivation of different subjects of the State. Subjects occupy the land as tillers, cultivators, Kashtkars, Dakhaikars, Khatedars and Kabzadars. Occupants are the perpetual lessees. Subjects sell their limited rights in the land and the ownership always remains with the State Govt. Circle rates declare by the Govt., for the purpose of levy of stamp duty are applicable to transfer of such rights in land. Stamp duty rates as applicable in Rajasthan are envisaged in s....

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....s also shows that the assessee is transferring the land as an owner. 11. The judgment of this Tribunal in the case of Shri Krishan Dass Vs. Department of Income Tax dealt with a case where lease was for a period of 90 years and the rights were transferred for the remaining period of 54 years. Similarly, in the case of Atul G. Puranik Vs. ITO dated 13.05.2011, the lease period was for 60 years. In the present case, the facts are different in as much as the lessor has entered into a perpetual lease with the lessee/assessee. Though the revenue records show the State of Rajasthan as the owner but since the lease is perpetual, the same would have no effect on taxability. The argument of the assessee that the State of Rajasthan has been shown a....

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.... 99 years a portion of a Zamindari acquired by it. The lease related to the surface right together with nine mica mines located in that area. The consideration for the lease was the payment of a 'salami' and a reserve rent per year. The Income-tax Officer determined the cost to the assessee of the mineral rights and after deducting this amount from the salami, he assessed the balance to tax as capital gains under Section 12-B of the said Act. It was held by the Patna High Court that the gains arising from the said transaction were rightly taxed. This decision has been cited without comment by Kanga and Palkhivala in their commentary on the Law of Income-tax (7th Edition) at page 550 and no contrary case has been cited in the said te....