TMI Blog2014 (2) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the AO in applying the provisions of Section 50C of the I.T. Act,1961 and adopting the sale consideration at ₹ 58,98,653/- against the actual sale consideration of ₹ 42.25 lacs. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by taking the sale consideration at ₹ 42.25 lacs only as declared by the assessee. 2. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in refusing the refer the matter to the Valuation Officer. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by referring the matter to Valuation Officer. 2.1 During the course of hearing, the ld. AR of the assessee has not pressed the Ground No.1. 2. Hence, the same is dismissed being not pressed. 3.1 The facts apropos to Ground No. 1.1 are that the assessee has declared the capital gains from transfer of industrial property to the tune of ₹ 26,25,762/. On examination of the sale deed, it was observed by the AO that the DLC value of the property has been taken at ₹ 58,98,653/-. Accordingly, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the indexed cost of acquisition / Improvement at ₹ 15,99,238/-. The Ld. AO applied Sec. 50C of the Income tax Act and considered the market value of the plot of land at ₹ 58,98,653/- and considered this as long term capital gain of ₹ 42,99,415/-. The AR 's contention was that since this plot of land was a leasehold right only, it was neither a land nor a building and therefore Section 50C would not be applicable to such transaction. 3. The learned C1T (A) in his brief order vide Para 8 has decided against assessee as under: 8.1 The AO observed in his order that the assessee had declared capital gains from transfer of industrial property of ₹ 26,25,762/-. On examination of the sale deed, it was found that the DLC value of the property had been determined at ₹ 58,98,653/- and capital gains were commensurately calculated. 8.2 The AR of the assessee submitted that the value adopted by the stamp valuation authority exceeded the fair market value of the property as on the date of transfer and requested to refer the matter to the valuation officer. 8.3 I have carefully perused the order of the AO and the submission of the AR and reject the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of ninety nine years, which right was further assigned to 'Rochees Malls Pvt. Ltd (RMPL).' . It is axiomatic that the lease right in: a plot of land are neither 'land or building or both' as such nor can be included within the scope of 'land or building or both. 7. Your honour, the distinction between a capital asset being 'land or building or both' and any 'right in land or building or both' is well-recognized under the I.T. Act. Section 54D deals with certain cases in which capital gain on compulsory acquisition of land and building is charged. Sub-section (i) of section 54D opens with:. Subject to the provisions of sub-section (2), where the capital gain arises from the transfer by way of compulsory acquisition under any law of a capital asset, being land or building or any right in land or building, forming part of an industrial undertaking . It can be seen from section 54D that 'land or building' is distinct from 'any right in land or building'. Similar position prevails under the Wealth-tax Act, 1957 also. Section 5(1) at the material time provided for exemption in respect of certain assets. Clause (xxxii) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset, being land or building or both , on receipt of consideration on transfer of a property, these provisions will not come in a case where only tenancy rights are transferred or surrendered. 9. Your honour, as a perusal of the sale deed unambiguously shows, the assessee has given up al the rights and interest in the said leasehold land, which he had acquired by the virtue of these agreements with owner and which were, therefore, in the nature of lessee s rights; these rights are not ownership rights. The monies received by the assessee under the said agreement, were thus clearly in the nature of receipts transfer of tenancy rights and thus Section 50C could not have been invoked on the facts of this case. Therefore, it is sine qua non for application of Section 50C 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. Therefore, when a leasehold right in land or building or both is transferred, the provision of Section 50C cannot be invoked. 10. Your honour kindly see page no. 4 of paper book, paragraph 1 which reveals that assessee transfer on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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