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2020 (11) TMI 1037 - ITAT INDOREAddition for Short Term Capital Gain - capital gain u/s 45 - relinquishment of rights in property as in the nature of gift - whether in case of transfer of property by way of gift, the provision of section 50C can be invoked? - HELD THAT:- AO while examining this transaction was of the view that this is a valid transfer as per provision of section 2(47)(i) of the Act and provision of section 50C of the Act are applicable as the consideration received is less than the value adopted by the Stamp Valuation Authorities. On the other hand, it has been contended by for the assessee that section 47(iii) clearly provides that “nothing contained in section 45 shall apply to transfer of a capital asset under a gift or will or an irrecoverable trust”. Therefore, the provisions to section 50C of the Act are not applicable. We have given our thoughtful consideration and observe that relinquishment of rights are referred to as the surrender of ownership rights and claims in a property in favour of another person. Through a relinquishment deed one person releases or transfers his legal right in the property to the other person, while a gift deed is a deed by which one person gifts his legal right in a property to any person. Relinquishment may or may not be for consideration but a gift does not require any consideration. In the instant case also all 4 co-owners have relinquished their rights in the said property without receiving any consideration. The said relinquishment of rights in the said property are in the nature of gift only as no consideration have been received and genuineness of the relinquishment deed has not been disputed by the authorities below. Section 47 provides for the transactions which are not regarded as transfer. If the case of a person does not fall u/s 47 of the Act then only all the remaining provisions of section 45 to 55A come into operation, which also includes substantial provision for full consideration in certain cases i.e. section 50C of the Act. As far as, the case in hand is concerned as we have held above that the alleged transaction is in the nature of gift/relinquishment of rights. There is no doubt that there is a transfer of the immovable property as provided in section 2(47)(i) of the Act but this being a definition of ‘transfer’ is applicable to whole of the income tax wherever the word ‘transfer’ is mentioned. However for the purpose of computing capital gain the hurdle of section 47 needs to be cleared before computing capital gain. Section 47(iii) states that nothing contained in section 45 shall apply to any transfer of a capital asset under a gift or will or an irrevocable trust. Assessee’s case is covered in section 47(iii) of the Act as the transfer/relinquishment of rights/gift is out of the purview of the provisions of section 45 of the Act. It is also judicially settled that section 50C of the Act is part of the chapter (IV)(E) of the Act and can be applied only if the case of assessee primarily falls u/s 45 of the Act. Since in the case of assessee transaction is not falling in section 45 of the Act, there is no room available for the revenue authorities to invoke the provisions of section 50C of the Act which in itself requires that firstly consideration should be received and secondly consideration so received is less than valuation adopted or assessed or assessable by the Stamp Valuation Authority but in case of assessee NIL consideration is received. We the relinquishment of rights in the said property made by the assessee is in the nature of gift along with other co-owners for which no consideration was received and since this transaction of gift, it is out of the purview of section 45 and also provisions of section 50C are not applicable on the transaction referred in the instant appeal. - Decided in favour of assessee.
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