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2011 (7) TMI 1101 - ITAT MUMBAICapital gains on account of transfer of leasehold rights in a plot of land - Assessee's contention was section 50C would apply only to “a capital asset, being land or building or both” and that it did not apply to any leasehold rights - AO, held that the word “land” included freehold as well as leasehold land and since the assessee held leasehold rights, they were also covered by the section - Such decision was based on Section 27(iiib) - CIT(A) held that section 50C cannot be invoked because what the assessee transferred was only the leasehold rights in the land and the building and not the land or building per se HELD THAT:- We are unable to find fault with the decision of the CIT(A) that section 50C cannot be invoked to a transfer of leasehold rights. The section applies only to capital assets being land or building or both. It does not in terms include leasehold rights in the land or building within its scope. AO's decision was based on Section 27(iiib), this provision has been expressly limited in its application to sections 22 to 26, which deal with the computation of the income under the head “Income from house property”. It has not been made applicable to the computation of capital gains. Also, the rights mentioned in the provision are rights over the building and any rights over the land have not been included in the section. In any case, since the section 27(iiib) has not been extended to the computation of capital gains u/s 45 and is limited to the computation of the income under the head “Income from house property”, the conclusion of the CIT(A) that section 50C cannot be invoked where leasehold rights in land or building are transferred, seems to us, to be correct. We accordingly affirm the decision of the CIT(A) - Decision in favour of Assessee.
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