TaxTMI 
TaxTMI 
2022 (4) TMI 232
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....017. Subsequently, notices u/s 142(1) on 11th April, 2918 and 15th May, 2018 were also issued and served on the assessee. In response to the statutory notices issued by the AO, the ld. AR of the assessee appeared from time to time. After considering the various submissions made by the assessee, the AO passed the order u/s 143(3) on 28.11.2018 determining the total income of the assessee at Rs. 45,50,550/- by making an addition of Rs. 64,386/- on account of Interest u/s 244A of the Act. 4. Subsequently, the ld. PCIT perused the assessment record and found that the assessee has claimed capital loss of Rs. 5,76,814/- on one of the properties sold in the computation of income. Further, The market value of such property was Rs. 68,50,000 - whereas the property was sold at Rs. 24,00,000/-which attracts provisions of Section 50C of the Act. The Assessing Officer has not made any disallowance u/s 50C of the Act. She further noted that the assessee got possession of land on 26.11.2015, the lease deed was registered on 21.01.2016 and sold the same on 16.02.2016. The period of holding was less than 36 months and, therefore, the Capital Gain shall be treated as Short Term Capital Gain. Howe....
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....rror as regarding order being erroneous and prejudicial in the interest of revenue, there is no justification for setting aside the assessment order passed u/s 143(3) of the Act. 1.4 That assumption of jurisdiction u/s 263 is merely based on reappraisal of same facts and on surmises and conjectures. 2.1 That on the facts and circumstances of the case, the Pr. CIT, New Delhi was not justified in treating the long term capital asset as short term capital asset in total disregard to the facts of the case and settled legal principles. 2.2 That there being no dispute regarding the date of allotment of leasehold rights in the year Financial Year 2004-05, the Pr. CIT, New Delhi was not justified in treating the long term capital asset as short term capital asset and thereby making consequential disallowance of the benefit of indexation. 2.3 That the leasehold right in the land having been acquired by the Appellant upon the date of allotment in terms of section 2(47), the period of holding of such right should be considered from the date of allotment. 2.4 That the Appellant had paid the entire cost in Financial Year 2004-05 and the rights having....
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....nsideration of Rs. 10,50,000/- * On 16/02/2016, the Appellant sold the leasehold rights to Sh. Ram Chet Singal vide Agreement to Sell for a consideration of Rs. 24,00,000/- 7. The ld. Counsel for the assessee submitted that it is not a case of lack of enquiry/verification by the Assessing officer during the course of Assessment proceedings. The AO, during the course of assessment proceedings, has thoroughly verified the details furnished by the assessee. Vide questionnaire dated 11th April, 2018, the AO had asked the assessee to furnish computation of capital gains on sale of property along with supporting documents for deductions claimed in order to arrive at the figure of capital gains copy of which is placed in the paper book. Referring to pages 24 to 25 of the paper book, he submitted that the AO, vide questionnaire dated 08.11.2018 had asked the assessee to explain the reason for sale consideration of property in ITR which is less than the value as per stamp duty. He submitted that the assessee, in response to the said notice has filed various replies dated 21st May, 2018, 4th July, 2018, 27th August, 2018, 3rd September, 2018 and 09.11.2018 wherein the sale consid....
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....king a plausible view is arbitrary and merely on the basis of presumption and surmises. For the above proposition, the ld. Counsel for the referred to the following decisions:- i. PCIT vs. Shreeji Prints (P.) Ltd. [2021] 130 taxmann.com 294 (SC); ii. CIT vs. Leisure Wear Exports Ltd. [2012] 341 ITR 166 (Delhi HC) [14-09- 2010]; iii. Commissioner of Income-tax vs. Ansal Housing & Construction Ltd. [2014] 45 taxmann.com 223 (Delhi HC); iv. Commissioner of Income-tax vs. Honda Siel Power Products Ltd. [2010] 194 Taxman 175 (Delhi HC); v. CIT vs. DLF Ltd. [2013] 31 taxmann.com 158 (Delhi HC); vi. CIT vs. Sunbeam Auto Ltd. [2011] 332 ITR167 (Delhi HC); vii. CIT vs. International Travel House Ltd. [2012] 344 ITR 554 (Delhi HC); viii. M/s. Virtusa Consulting Services Pvt. Ltd vs. DCIT (March 30 , 2021) (T.C.A. No. 997 of 2018) (Delhi HC); ix. CIT vs. Smt. Padmavathi [2020] 120 taxmann.com 187 (Madras HC) [06- 10- 2020] x. M/s SUTURES INDIA PVT. LTD vs. PCIT (ITA No. 115 OF 2010) (Dt. 02/12/2020) (Karnataka HC); xi. CIT vs. VodafoneEssar South Ltd. (ITA No.119/2012) (Delhi High Court); ....
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..... Therefore, on this count also the order passed u/s 263 by the PCIT being not in accordance with the law has to be quashed. For the above proposition, the ld. Counsel for the assessee referred to the following decisions:- (i) DIT vs. Jyoti Foundation [2013] 38 taxmann.com 180 (Delhi HC); (ii) Jitindar Singh Chadha vs. PCIT [2019] 102 taxmann.com 93 (Delhi - Trib.); & (iii) Delhi Airport Metro Express (P.) Ltd. vs. PCIT [2017] 88 taxmann.com 767 (Delhi - Trib.) 13. The ld. Counsel for the assessee submitted that even on merits also, the Pr. CIT without appreciating the fact that transaction of sale of leasehold rights is an impermissible sale in breach of the conditions specified in the Lease Deed; has blatantly invoked the provisions of section 50C of the Act. He submitted that as per clause 5(a) of the Lease Deed, the assessee cannot sell/sublet the land to any other person without the permission of the Lessor and further, it is stated that no such permission will be given by the Lessor before the period of ten years. Moreover, in point 5(b) of the Lease Deed it has been agreed upon by the assessee that in case of sale of such plot, the Lessor shall ....
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....f the Bench to the show cause notice dated 26.07.2018 issued to the assessee. 15. The ld. Counsel for the assessee submitted the leasehold rights acquired by the assessee are available with certain restrictions and the assessee is not free to exercise his complete authority over the land. However, the Pr. CIT without appreciating the strict restrictions imposed upon on the assessee has erred in imposing the provisions of section 50C by substituting the stamp duty value in place of sale consideration received by the assessee. He submitted that it is a well-settled legal position that a contract of sale, that is, an agreement to sell does not, by itself, confer any ownership right and thus, transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred. He submitted that an immovable property can be legally and lawfully transferred only by way of a registered deed of conveyance and as such no transfer can be made merely through an Agreement to Sell. However, in the present case, that assesse....
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....uation authority in place of consideration received or accruing as a result of transfer of only land or building and as such these provisions cannot be extended beyond the purpose for which it is enacted. For the above proposition, he relied on the following decisions:- (i) Decision of Hon'ble Patna ITAT in the case of Sangeeta Ramuka vs. ACIT (ITA No. 03/PAT/2013) (Dt. 06/10/2017); (ii) Atul G. Puranik vs. ITO [2011] 11 ITR (T) 120 (Mumb. Trib.); (iii) Noida Cyber Park (P.) Ltd. vs. ITO [2021] 123 taxmann.com 213(Delhi- Trib.); (iv) Ritz Suppliers (P.) Ltd. vs ITO [2020] 113 taxmann.com 349 (Kolkata - Trib.); (v) CIT vs Greenfield Hotels & Estates (P.) Ltd. [2017] 77 taxmann.com 308 (Bombay HC) 20. He accordingly submitted that since the deeming provisions of section 50C for assessing the stamp duty value as sale consideration are only applicable in case of transfer of land or building and as this provision cannot be invoked in respect of transfer of leasehold rights and since this legal position has been duly examined and accepted by the Assessing officer while passing the Assessment order u/s 143(3) of the Act, therefore, there....
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....as in the case of Gulshan Malik the builder had provisionally allotted the apartment to the buyer on 06.08.2004 and buyer's agreement was entered on 04.11.2004 and the rights were sold by Agreement to Sell on 02.11.2007. However, in the present case, the assessee was allotted a plot of land under a reallocation scheme by the President of India on 02.01.2004 and the leasehold rights have been sold on 16.02.2016. He submitted that the Pr. CIT without appreciating the intention of the buyers and process of acquisition of plot rights has arbitrarily applied the judgment of Gulshan Malik without even appreciating that complete payment for acquiring these rights was also made till F.Y. 2004-05. He accordingly submitted that assessee has held the leasehold rights for more than 36 months and the same being in the nature of long term capital asset, the Pr. CIT has arbitrarily rejected the contentions of the assessee and totally failed to even prima facie show that the Assessment order passed u/s 143(3) of the Act is erroneous and prejudicial to the interest of the Revenue. 24. The ld. Counsel for the assessee, in his another plank of argument, submitted that the provisions of section....
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....rd to principle laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [2000] 243 ITR 83 (SC) and as such the same is not sustainable. 26. The ld. Counsel for the assessee further submitted that the observations made by the Pr. CIT in the Order passed u/s 263 of the Act shows complete non-application of the mind. He submitted that the Pr. CIT without appreciating the facts of the case, terms & conditions specified in Lease Agreement and without even appreciating the efforts of the Assessing Officer in making detailed enquiry with respect to the issues involved has arbitrarily formed an opinion that the stamp duty value has to be substituted in place of sale consideration for computing capital gain on sale of asset. He submitted that the decision of the Hon'ble Delhi High Court in the case of CIT vs. Leisure Wear Exports Ltd. [2012] 341 ITR 166 (Delhi HC) [14-09-2010] as relied on by the PCIT is, in fact, in favour of the assessee and not in favour of the Revenue. He submitted that it has been held that if two views are possible on the same issue and the A.O. has taken one view with which the Pr. CIT does not agree, the Assessment order cannot b....
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....on received by the assessee was less than the value assessable by the stamp valuation officer. 30. In our opinion, the assumption of jurisdiction by the PCIT is not justified for more than one reason. From the various details furnished by the assessee, we find, the AO, during the course of assessment proceedings, has explicitly raised query regarding the issue of capital gain on sale of plot and consideration being less than the stamp duty value. Vide questionnaire dated 11th April, 2018, the AO has asked the assessee to give the following:- " 2. Computation of Capital gains on sale of property along with supporting documents for deductions claimed in order to arrive at the figure of capital gains." 31. Similarly, vide questionnaire dated 08.11.2018, the AO has asked the assessee the following question:- " 8. Please explain the reason for the sale consideration of property in ITR is less than the value as per Stamp Duty." 32. From the paper book filed on behalf of the assessee, we find, the assessee, vide reply dated 21.05.2018, 4th July, 2018, 27th August,2008, 3rd September, 2018 and 09.11.2018 had duly explained the sale consideration of the leasehold ....
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....O in all cases where the stamp duty valuation exceeds the fair market value. Therefore, it is our considered opinion that the order of the Assessing Officer cannot be held to be erroneous in so far as being prejudicial to the interest of the Revenue on this count. For, this proposition, we draw support from the order of the Co-ordinate Bench of ITAT Delhi Bench in the case of Jitindar S. Chadha Vs. Pr. CIT reported in 120191 200 TTT (Del) 98 wherein it had been held that the powers of the Assessing Officer u/s 55A of the Act were discretionary and that the Assessing Officer can take plausible view of the matter. Thus, in the present case also, it is our considered opinion that by not referring the issue of valuation to the DVO, the Assessing Officer had taken one of the possible views and this discretion of the Assessing Officer cannot be termed as being erroneous as has been held by the Ld. Pr. CIT." 34. Even otherwise also we find merit in the submission of the ld. Counsel for the assessee that the PCIT does not have unfettered powers to initiate revisionary proceedings u/s 263 in a case where the AO has conducted proper and reasonable enquiry on the issue involved. Since the ....
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....in the instant case has not conducted the basic minimum enquiry on the issues involved to assume jurisdiction u/s 263 of the IT Act. She has blatantly ignored the submissions filed by the assessee and has acted in a mechanical manner without conducting any enquiry/verification even to verify the reason for difference between the actual sale consideration and stamp duty value of the plot, the terms and conditions specified in the Lease Deed specifying the procedure for sale/ subletting of plot allotted to the assessee. We find, the Pr. CIT, in the instant case, without appreciating the fact that transaction of sale of leasehold rights is an impermissible sale in breach of the conditions specified in the Lease Deed, has blatantly invoked the provisions of section 50C of the IT Act which is not correct. A perusal of clause 5(a) of the Lease Deed shows that the assessee cannot sell/sublet the land to any other person without the permission of the Lessor. Further, no such permission will be given by the Lessor before the period of ten years. Similarly, in point 5(b) of the Lease Deed it has been agreed upon by the assessee that in case of sale of such plot, the Lessor shall be entitled ....
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.... details furnished by the assesseee, we find the assessee applied for purchase of plot on 30th March, 1996 and an amount of Rs. 1,20,000/- was paid on 30th March, 1996. Further payment of Rs. 94,500/- was made on 26th May, 1998 and the land was allotted to the assessee on 2nd January, 2004 but physical possession of land was given on 22.11.2015. The assessee acquired the leasehold rights by the lease deed on 4th February, 2016 and the sale of leasehold rights or agreement to sell was entered on 16th February, 2016. Therefore, these events, in our opinion, clearly show that the assessee has fully acquired the leasehold rights in the plot in the F.Y. 2003-04 and the assessee has also made complete payments for acquiring the plot rights in FY 2004-05. The assessee, after taking a conservative view computed the indexed cost of acquisition for F.Y. 2004-05, i.e., the year in which complete payments for acquiring the leasehold rights was made and the assessee having sold such rights after holding for more than 36 months, computed the long-term capital gains in terms of the provisions of section 2(29A) of the Act. We find, the Hon'ble Delhi High Court in the case of CIT vs. Frick India Li....
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.... 8, the word 'hold' means to possesss or occupy, to be in possession and would also include to keep, retain and maintain possession or authority over an asset. 12. The word 'held' thus can be interpreted to embrace the idea of actual possession of the assessee. In Budhan Singh v. Babi Bux AIR 1970 SC 1880 (at page 1884) the word 'held' was interpreted to mean "lawfully held, to possess by legal title". The term 'legal title' here not only includes ownership, but also title or right of a tenant, which will mean actual possession of the land and a right to hold the same and claim possession thereof as a tenant (we are not examining rights of a rank trespasser in the present decision and we express no opinion in that regard). 13. The Tribunal in our opinion has rightly relied upon the decision of the Punjab and Haryana High Court in CIT v. Ved Prakash & Sons (HUF) [1994] 207 ITR 148/73 Taxman 70 in which it has been held as under:- 'As is clear from a bare reading of Section 2(42A) of the Act, the word "owner" has designedly not been used by the Legislature. The word "hold", as per dictionary meaning, means to possess, be the owner, holder or tenant of (prop....