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2024 (4) TMI 740 - AT - Income TaxLTCG u/s. 50C - leasehold right on land acquired - CIT(A) deleted addition by holding that leasehold right on land are not within the purview of section 50C - Ld. Counsel submitted that section 50C applies only in case of a transfer of capital asset being land or building or both and this section does not make a specific reference to “rights in lands or building” which otherwise is included in other provisions in the Act Whether the transfer of leasehold rights in land falls within the purview of section 50C or not? - HELD THAT:- Coming to the facts of present case, where the transaction relates to transfer of a leasehold property whereby an industrial plot of land was allotted by MIDC under a lease agreement to the assessee and subsequently assessee transferred the said leasehold land to SMI for the remaining period of lease, the important point we need to consider is whether the leasehold rights which are restricted in nature are covered within the meaning of “capital assets being, land or building or both”, contained in section 50C(1). We need to understand the nature of rights accruing on a property which is freehold and the one which is leasehold. In this respect, we do find force in the submission made by the Ld. Counsel exhaustively dealing with several parameters to distinguish between the features of leasehold property and a freehold property, already tabulated above. Accordingly, the capital asset being land or building or both referred to in sec. 50C(1) do not include leasehold rights in land or building or both. Wherever legislature intended to include specific reference to “rights in land or building or part thereof” which is included in certain sections such as section 54D, section 54G, sec. 54GA, sec. 27(iiib), sec. 5(1) of Wealth Tax Act, 1957 and explanation to sec. 269UAD. Such a reference to “rights in land or building or part thereof” does not find place in sec. 50C(1) which sets it apart from the inference to be drawn that capital asset being, land or building or both would also include rights in land or building or part thereof, to cover leasehold rights which are limited in nature and cannot be equated with ownership of land or building or both. The Act has given separate treatment to land or building or both and the rights therein. Thus we are in agreement with the submissions made by assessee to hold that leasehold rights in land are not within the purview of section 50C of the Act. Accordingly, we concur with the finding arrived at by CIT(A) in deleting the addition on account of long term capital gain for transfer of leasehold industrial plot u/s. 50C of the Act. Alternate plea made by the Ld. Counsel as to application of first and second proviso to section 50C, we do find force in the same - assuming for a moment for the purpose dealing with this alternate plea that transfer of a leasehold right in land is covered by sec. 50C(1) then, on this alternative plea also, the assessee is adequately safeguarded by first and second proviso to sec. 50C whereby it had entered into agreement to sale with SMI to transfer the leasehold rights in land in the year 2011 itself for a consideration of Rs. 2 Cr. against which assessee had received Rs. 5 lacs in advance through banking channel, fact of which are undisputed and uncontroverted. Assessee had also placed on record the stamp duty value at that relevant time on record which is lesser than the actual consideration of Rs. 2 Cr. and thus, there cannot be any adverse bearing on the assessee by applying first and second proviso to sec. 50C in the instant case. Appeal of the revenue is dismissed.
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