TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 659
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....t appreciating that provisions of S. 50C are applicable only to sale of land and building and it does not apply to sale of rights in land and building. 2.The learned CIT(A) erred in confirming order of Assessing officer assessing long term capital gains of Rs. 6,66,44,262/- as against returned long term capital loss of Rs. 4,47,826/- by invoking provision of S. 50C to sale of undetermined beneficial rights in the land at Chembur without appreciating that Sale Agreement dated 28/7/2007 was not registered and hence provisions of S. 50C had no application to such sale transaction prior to 1/10/2009. 3. The learned CIT(A) failed to appreciate that if the argument of learned CIT(A) that provisions of S. 50C as existing post 1/10/2009 are applicable to the facts of the present case, then there can be no long term capital gains that could be said to have been accrued during the year especially when no possession has been given to the Assignee." 3. We have heard rival submissions and perused the materials available on record. We find that assessee is an individual and partner in M/s. Europack and M/s. Euro Kraft. The assessee has shown business income, remuneration and interest receiv....
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....he stamp duty ready reckoner rate at Rs.17,300/- per sq. mtr. as applicable for the year under consideration and arrived at the full value of consideration at Rs.7,23,24,899/- (4180.63 sq.mtrs x Rs.17,300/- per sq.mtr) and after deducting the indexed cost of acquisition, the ld. AO computed the long term capital gains at Rs.6,60,44,262/- in the assessment. 3.3. Before the ld. CIT(A), it was pleaded by the assessee that the agreement which gave the right to the assessee was not even registered and hence, the provisions of Section 50C of the Act would not come into operation at all. It was submitted by the assessee before the ld. CIT(A) that the provisions of Section 50C of the Act introduced the word "assessable" only w.e.f. 01/10/2009 and therefore, applicable only in respect of transactions of transfer carried out on or after 01/10/2009. In the instant case, the entire sale consideration was received by the assessee prior to 01/10/2009 as under:- Date Amount (Rs.) 07/08/2007 50,000/- 27/08/2007 8,44,600/- 16/08/2009 9,12,600/- 26/09/2009 5,95,800/- Total 24,03,000/- 3.4. It was submitted that the word "assessable" inserted in Section 50C of the Act is only prospectiv....
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....ute that several litigations are pending with regard to the title of the land. Assessee had entered into an unregistered agreement of sale on 28/07/2007 knowing fully well about these litigations and the aforesaid facts. We hold that assessee had only rights in acquiring the land and never had the land in his possession and never owned the land. No doubt the right to acquire the land is a capital asset. When such capital asset is transferred, the assessee is bound to offer capital gains. In the instant case, the assessee had offered capital gains in the return of income for sale of such rights even though it has been erroneously mentioned as sale of land. We find that the ld. CIT(A) also had categorically stated that the disputes with regard to the ownership of the land was pending in the Hon'ble High Courts and the same were not completed and accordingly, the assessee (assignor) had discharged his obligation in favour of the assignee as agreed in sub-clause 6 of clause xxiii of the agreement. Substance of the transaction need to be seen than its form. Hence, we have no hesitation to conclude that assessee had transferred only the right in the land subject to pending litigations in....
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....ble with effect from 1st October, 2009 and will accordingly apply in relation to transactions undertaken on or after such date." (emphasis supplied by us) 3.9. Moreover, we find that the Hon'ble Madras High Court in the case of CIT vs. R Sugantha Ravindran reported in 352 ITR 488 had held that the amendment brought in Section 50C of the Act from 01/10/2009 cannot be made applicable for transactions carried out prior to 01/10/2009. The Hon'ble Madras High Court had also placed reliance on the CBDT Circular No.5/2010 dated 03/06/2010 while holding the aforesaid view. Hence, it could be safely concluded that the amendment in Section 50C of the Act by including the expression "assessable" could be made applicable only in respect of transfer of capital assets made on or after 01/10/2009. In the instant case, the transfer according to the Revenue had been completed prior to 01/10/2009. Hence, the amended provisions of Section 50C of the Act could not be applied at all by the Revenue, as admittedly the transfer of rights in land had happened pursuant to an unregistered agreement. Prior to 01/10/2009, we hold that provisions of section 50C of the Act cannot be applied for unregistered do....