2012 (3) TMI 47
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....s erred in deleting addition of Rs 14,64,692 on account of long term capital gain. 2. That, in doing so, learned CIT(A) erred in holding that Section 50C has no application on transfer of leasehold right in building. 2. In the related cross objection filed by the assessee, following grievance has been raised: For that the learned CIT(A) is not justified in not considering the alternative ground that Section 50 C is not applicable when full value of the consideration is invested under section 54F as far as meaning of full value of consideration under section 54F is concerned. 3. The grievances, which have been raised in the appeal and the cross objections, are interconnected and centre around treatment of capital gains on sale of a prope....
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....(ii) Rs 1,59,50,000 for Tejinder Singh, i.e. the assessee before us in this appeal; and (iii) Rs 1,59,50,000 for Amardeep Singh, i.e. co lessee. 5. In the course of assessment proceedings, however, the Assessing Officer noted that the stamp duty valuation of the property, which was sold by KSCT, was Rs 5,59,57,375, whereas the stated sales consideration of the property was only Rs 4,19,00,000. He was of the view that, in terms of the provisions of Section 50 C, the sales consideration, for the purpose of computing the capital gains, is to be taken at the stamp duty valuation adopted by the stamp valuation authority. He thus adopted the amount of Rs 5,59,57,375 as sales consideration, and proceeded to notionally divide the said amoun....
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.... of the property. The contention of the assessee is not acceptable. Consideration is paid on sale of the property for giving up right of the owner of the property. In the case of leasehold property, the right of owner is divided between lessor and lessee. That does not give either to the lessee or the lesser immunity for not being charged under section 45 of the Act. 6. Aggrieved by the stand so taken by the Assessing Officer and by an amount of Rs 14,64,692 being brought to tax in the hands of the assessee as capital gain, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) held that the assessee was a tenant in the property sold by the owner and, therefore, so far as the assessee is concerned, the receipt is in the na....
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....on the alternative ground of appeal as well. That's how the Assessing Officer is in appeal before us, and the assessee has also filed a cross objection before us. 7. We have heard the rival contentions, perused the material on record and duly considered applicable legal position in the light of the facts of the case. 8. A plain look at the undisputed facts of this case clearly shows that the assessee was a lessee in the property which was sold by the KSCT; there is no dispute on this aspect of the matter. Yet, the Assessing Officer has treated the assessee a seller of property apparently because the assessee was a party to the sale deed, and because, according to the Assessing Officer, "consideration is paid on sale of the property for gi....
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....il'; and, - second, since the provisions of Section 50 C can only be applied in respect of "transfer by an assessee of a capital asset, being land or building or both", the provisions of Section 50 C will apply on receipt of consideration on transfer of a property, being land or building or both, these provisions will not come into play in a case where only tenancy rights are transferred or surrendered. It is, therefore, important to examine as to in what capacity the assessee received the payment. No doubt the assessee was a party to the registered tripartite deed dated 20th July 2007 whereby the property was sold by the KSCT, but, as a perusal of the sale deed unambiguously shows, the assessee has given up all the rights and interests in ....
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....non for application of Section 50 C that the transfer must be of a "capital asset, being land or building or both", but then a leasehold right in such a capital asset cannot be equated with the capital asset per se. We are, therefore, unable to see any merits in revenue's contention that even when a leasehold right in "land or building or both" is transferred, the provisions of Section 50C can be invoked. We, therefore, approve the conclusion arrived at by the CIT(A) on this aspect of the matter. 9. Having held so, we may also point out that the Assessing Officer has adopted cost of acquisition of the asset as lease rent paid for the same and even granted indexation benefits thereon. In the impugned order, CIT(A) has directed that consider....