TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 636
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....and thereby upholding the value of consideration as derived by the assessee u/s, 45(3) of the Act, despite the fact that provisions of Section 50C, being Special Provisions override the general provisions of Section 45(3) of the Act. 2. On the facts and circumstances of the case and in law, whether the CIT(A) has erred in holding that provisions of Section 50C cannot be invoked when Section 45(3) is in force without realizing that Provisions of Section 45(3) are general provisions for determining the full value of consideration to be taken for computation as per Section 48 of the Act, whereas Provisions of Section 50C are special Provisions and needs to be imported specifically for arriving at the null value of consideration as per Section 48 of the Act. Moti Ramanand Sagar ITA No. 2049 & 1690/Mum/2017 3 3. On the facts and circumstances of the case and in law, whether the CIT(A) has erred in relying on the decision of Hon'ble Mumbai 1TAT in the case of ITO vs Chiraayu Estate Developers Pvt. Ltd. (ITA No. 263/Mum/2010) without appreciating that in that particular case the issue of application Section 50C was not even discussed since the cost at which the capital asset was b....
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....n 45(3) of the Act. However, the AO was not convinced with the said explanation of the assessee for the reason that the plain reading of section 50C makes it clear that it applies to all cases of transfer of land or building or both, wherever the full value of consideration received or accruing as a result of such transfer is less than the stamp valuation and transfer covered u/s 45(3) is not an exception to the said section. The AO thus held that in present case, first section 45(3) is to be applied to the full value of consideration as recorded in the firm's books and thereafter, such full value of consideration is to be compared with the stamp valuation as per section 50C of the Act. Relying on decision in case of Carlton Hotel (P.) Ltd. v. ACIT (2009) 122 TTJ 515 (Lucknow), the AO held that the provisions of section 50C are applicable in the present case. Thus he calculated LTCG of Rs. 5,26,67,677/- and brought the differential amount of Rs. 3,45,32,002/- [Rs.5,26,67,677/- minus Rs.1,81,35,675/-]. The assessee had already computed LTCG (before exemption u/s 54F) on transfer of the said lands at Rs. 1,81,35,675/- (Rs.93,74,480/- plus Rs.87,61,195/-). 4. In appeal, the Ld. CIT(A....
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....e was given 5 per cent shares whereas SICC and 'A' were given 90 per cent and 5 per cent shares respectively. For the purpose of computing capital gains on transfer of land to partnership firm, the Assessing Officer by invoking the provisions of section 50C and applying DM circle rates, computed the total consideration for the transfer and calculated long-term capital gains. The Assessing Officer while applying the provisions of section 50C mentioned that considering the terms and conditions of the partnership, transfer of land to the firm was only a sale, and that section 50C would be applicable even in a situation covered by section 45(3). On appeal, the Commissioner (Appeals) upheld the Assessing Officer's orders. The Tribunal held as under: "One of the relevant ingredients for invoking section 50C is that there is a payment of stamp duty in respect of transfer of capital asset being land or building or both. The event which precedes adoption of valuation done by stamp valuation authority is the registration of a sale recording transfer of capital asset for which there is a payment of stamp duty. Payment of stamp duty is required only when transfer of capital asset....
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....et value of the capital asset which was contributed to the firm. Section 45(3), section 50C and section 55A operate in different spheres and they can be invoked when conditions laid down in those sections are satisfied. Invoking of power contained in one of these sections does not come into conflict with one another. As mentioned above, provisions of section 50C can be invoked when there is a registration of transfer under the Registration Act and stamp duty is paid for the purposes of registering the sale. If the transfer by way of sale is not registered under the Registration Act and no stamp duty is paid then section 50C cannot be invoked. Section 55A, on the other hand, empowers the Assessing Officer to refer the property under transfer to a DVO if he has material on record on the basis of which he forms an opinion that value declared by the assessee as per estimate of the registered valuer is less than its fair market value or fair market value is more by certain percentage to what is declared by the assessee as sale consideration, or if there are other relevant factors which necessitate the Assessing Officer to refer the capital asset under transfer to the DVO. Section 55A ca....
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....f insertion of section 45(3) is to deal with cases of transfer between partnership firm and partners and in such cases, the Act provides for computation mechanism of capital gain and also provides for consideration to be adopted for the purpose of determination of full value of consideration. Since the Act itself is provided for deeming consideration to be adopted for the purpose of section 48 of the Act, another deeming fiction provided by way of section 50C cannot be extended to compute deemed full value of consideration as a result of transfer of capital asset. This legal proposition is further supported by the decision of Hon'ble Supreme Court in the case of CIT vs Moon Mills Ltd (supra) wherein it was observed that one deeming fiction cannot be extended by importing another deeming fiction. Therefore, we are of the considered view that the profits or gains arising from the transfer of a capital asset by a partner to a firm in which he is or becomes a partner by way of capital contribution, then for the purpose of section 48, the amount recorded in the books of account of the firm shall be deemed to be full value of consideration received or accruing as a result of transfer of ....
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....1,35,675/- u/s 54F of the Income Tax Act, 1961 may please be deleted. 2. The ACIT has erred in disallowing 15% of Conveyance, Motor Car Expenses and Office Expenses of Rs. 5,74,917/- which amounts to Rs. 8,21,238/- as ad hoc disallowances on account of personal element. The ad-hoc disallowance be confined to 10%. 10. In the computation of income the assessee has claimed the entire LTCG computed at Rs. 93,74,480/- + Rs. 87,61,195/- as exempt u/s 54F of the Act. The AO noted that in the AY 2011-12, the assessee's claim u/s 54F was disallowed observing that he had more than one house property i.e. (i) a residential house at 502, Sagar Bhavan, JVPD and (ii) undivided share in another residential house viz. Poorna Apartment. In addition a new house property was purchased at Rs. 6,82,76,081/- against which exemption claimed by the assessee was denied in AY 2011-12. In view of the above facts, the AO asked the assessee vide order sheet noting dated 05.10.2014 to explain why exemption u/s 54F should not be disallowed, since the assessee had more than one house property. In response to it, the assessee filed a reply vide letter dated 22.12.2014 stating that he had invested Rs. 6,82,76,08....