TaxTMI 
TaxTMI 
2020 (1) TMI 726
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO') vide the assessment order dated 12.11.2018 under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act')." 3. Brief facts of the case as stated by the AO is that "During the FY 2015-16, the assessee company sold a property in the form of a shop at Unit No.209 on the first floor of Dreamplex Airconditioned Mall, City Centre, Durgapur, on 08.04.2015 for a consideration of Rs. 1,25,92,000/-. Verification of records revealed that the Stamp Valuation Authority had valued the said property at Rs. 1,64,89,440/-. When asked as to why the value adopted by the Stamp Valuation Authority shall not be considered as the full value consideration for the purpose of Sec.50C of the I.T. Act, the A/R of the assessee produced a calculation of capital gain and stated that in view of the fact that only the leasehold right in land has been transferred and it is not a transfer of land or building or both, the case of the assessee does not fall under the purview of Sec.50C of the I.T. Act." 4. The AO after considering the reply of the assessee analysed the facts as under: "3.3. In view of the above discussion, the following facts emerge: a) The assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld rights of the said Unit to the assessee was affected by way of a lease-cum-transfer deed dated 12.11.2010. According to ld. AR by virtue of the said deed, the assessee became entitled to leasehold rights in such unit for a period of 99 years. And for obtaining such leasehold rights an amount of Rs. 59,40,000/-, was paid by the assessee as lease premium. According to ld. AR, in addition to such premium, the assessee was also obligated to pay a lease rent of Re. 1/- per square foot of the super built-up area or as decided. According to him, all expenses in relation to the preparation, execution and registration of the deed dated 12.11.2010 were also borne by the assessee and drew my attention to the copy of the lease-cum-transfer deed dated 12.11.2010 which is found placed at Pages 1 to 29 of the paper book. 9. According to ld. AR, later when the assessee was unable to retain the leasehold rights in Unit No. 209, it obtained necessary permissions from the lessor (Govt.) to transfer such rights to a third party. Accordingly, an indenture of lease dated 08.04.2015 (tri-party agreement) was executed between the assessee, lessor (Govt.) and Sri Surya Prakash Baid whereby t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2018 adding Rs. 24,28,372/-to the total income of the assessee and disallowing the assessee's claim of long-term capital loss of Rs. 14,72,545/-. 12. On appeal, the ld. CIT(A) has confirmed the order of the AO which according to the ld. AR is erroneous for the simple reason that the assessee has transferred only leasehold rights and therefore Section 50C is not applicable in this case and therefore the AO as well as the ld. CIT(A) erred in applying the deeming provision of Section 50C to saddle the addition of Rs.24,28,372/- to the total income of the assessee. The ld. AR relied on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Greenfield Hotels and Estates Pvt. Ltd., [2016] 389 ITR 68 (Bom.) and the Tribunal's (Mumbai) order in the case of Atul G. Puranik vs. ITO, [2011] 11 ITR 120 (Mumbai) and it was brought to my notice that Hon'ble High Court has dismissed the appeal of the Revenue against the order of the Tribunal in the case of Atul G. Puranik (supra). The ld. AR also relied upon the order in the case of DCIT, Central Circle-VI vs. Tejinder Singh, [2012] 19 taxmann.com 4 (Kol.). Thereafter he relied on the following decisions: i. ACIT 19(1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dition based on Section 50C of the Act. I note that the assessee had purchased the leasehold rights in the fully constructed shop located at Unit No.209 on the 1st floor, Dreamplex Air-conditioned Mall, Durgapur, West Bengal with super built-up area admeasuring 2376 sqft. I note from a perusal of the page 1 of the paper book that the assessee had signed the indenture of lease cum transfer made on 12.11.2010 between the Governor of West Bengal (1st part) and M/s. Bengal Shristi Infrastructure Development Limited (2nd part) and M/s. Ritz Suppliers Private Limited (3rd part, the assessee). The Transferees/Lessees, and all the three parts i.e. had executed a tripartite agreement by virtue of it in pursuance to the aforesaid lease cum transfer deed, the assessee received the leasehold rights in the said unit for 99 years for a lease premium of Rs.59,40,000/- and was obliged to pay lease premium of Rs.1/- per square foot of the super built-up area. Later when the assessee could not retain the leasehold right, it took permission from the lessor (Govt.) and transferred it to Sri Surya Prakash Baid by tri-part indenture of lease dtd. 08.04.2015. And for the transfer of leasehold to Sri Sury....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actually received. From the language used in Sub-Section (1) of Section 50C of the Act, it is clear that the value of land or 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 the consideration received or accruing as a result of such a transfer. Thus two things are noticeable from this 'provision. Firstly, it is a deeming provision and secondly, it extends only to land or building or both. It is apparent that the deeming provision has been incorporated to substitute the value adopted or assessed or assessable by stamp valuation authority in place of consideration received or accruing as a result of transfer of land or building or both and in case the latter is lower than the former. It is a settled legal proposition that a deeming provision cannot be extended beyond the purpose for which it is enacted. The Hon'ble Apex Court in CIT v. Amarchand N. Shroff [1963] 48 ITR 59 has considered the scope of a deeming provision and came to hold that it cannot be extended beyond the object for which it is enacted. Similar view has been reiterated by the Hon'ble Supreme Cou....