TMI Blog2016 (5) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... h March 2008. Subsequently, an appeal was filed before the Joint Collector by Mr. Mundla Narayana Reddy. In those proceedings, a compromising memo was undertaken wherein it is clearly stated that the respondent (assessee) has received an amount of ₹ 5 Lakhs and executed a registered sale deed bearing Document No. 8799/2008 dt. 26-07-2008 in favour of the Managing Partner of Sudha Enterprises, transferring his right of ownership. It is clear that even though the sale deed is stating that assessee had full ownership and transferred in favour of Shri Mundla Narayana Reddy, what actually transpired between the parties and the claims made before the authorities is that assessee has a title over the property but not complete ownership and possession of the property. It is alleged by the other party i.e., Mundla Narayana Reddy that the documents are fabricated. Whatever may be the contentions before the authorities, the fact is that assessee had indeed settled the issue by accepting the consideration of ₹ 5 Lakhs and parted with the claim of ownership on the said property. The record indicates that assessee is not complete owner of the property as in the Govt. records Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 50C(1) of the I.T. Act, to the property in question. 4. In the facts and circumstances of the case, learned Commissioner of Income Tax (A) has erred in confirming the addition of ₹ 44,92,475/- as long term capital gains. 5. The learned Commissioner of Income Tax (A) has erred in not considering the disputes over title of the land and the fact that the possession over the land was handed over much earlier to the actual date of sale. Additional Ground: 2. The learned First Appellate Authority failed to appreciate the fact that the vide doc No. 8799/08 dt. 26-07-2008 the appellant had only surrendered his disputed rights and hence the provisions of sec 50C are not applicable to the facts of the case . 5. Briefly stated, during the year under consideration, assessee has entered into a sale deed on 26-07-2008 in with one Mundla Narayana Reddy for a consideration of ₹ 5 Lakhs which was stated to have been received by way of cash. The said transaction was not shown in the income tax return filed and subsequently, AO having come to know of the transaction, initiated proceedings u/s. 147. It was assessee s contention that the transaction pertains to HU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer for mutation of the property in his favour. The MRO vide order No.A/631/97 dated 31/10/1997 rejected the request for mutation in the assessee's favour. g) The assesseerthereafter approached the Dy.Collector. The Dy.Collector held that the issue is a Civil litigation and that such Civil litigation can not be adjudicated upon by the revenue authority. h) The assessee, thereafter, approached the Joint Collector for getting the mutation in his favour. However, the Joint Collector also did not accept the claim of the assessee; as according to the Jt.Collector, it is only a civil litigation as held by the Dy. Collector. i) The only course left for the assessee at that stage was either to approach the appropriate court for eviction or to compromise the issue. It is felt by the assessee that it would take a longer time to fight the civil litigation. The fact that the property was in possession of Sri M.Narayana Reddy also was considered by the assessee. In the meantime, Sri M.Narayana Reddy approached the assessee and promised to pay the compensation as agreed to in the year 2000. Accordingly, the balance of amount was paid by Sri M.Narayana Reddy during the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable and the Assessing Officer did not follow the procedure as laid down, by not referring to the valuation as per provisions of Section 50C(2), in case of application of Section 50C to the facts of this case, where the matter was indicative of involvement of civil disputes. 6.3 Though there is some strength in the argument of the appellant, it is not enough to support his cause. In this case, facts are not clear, as regard to the compromise formula of handing over the possession of land to Mr. Narayana Reddy and the consideration decided for it, since no written agreements were furnished in this regard. It is also not known how Mr.Narayana Reddy, who is shown to have been in possession of the land, agreed to pay ₹ 5,00,000/- in year 2000, but ended up paying the same amount even in the year 2008. It is also not clear as to how the appellant being the first purchaser and the initial title holder indicated to be the buyer entitled for better rights over the subsequent buyer of the same land, had entered into a compromise agreement with Mr. Narayana Reddy, and agreed to receive the same price, in 2008, which was promised in year 2000. All these developments that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r land provisions of Section 50C are not applicable. He relied on the Co-ordinate Bench decision in the case of D. Anitha in ITA No. 394/Hyd/2014 / 373/Hyd/2014 dt. 24-12-2014. 9. Ld. DR however, submitted that assessee having registered the property as a transfer of agricultural land of Acr. 1.20 cents, provisions of Section 50C are correctly invoked. 10. We have considered the rival contentions and perused the documents placed on record. As far as the facts are concerned, there is no dispute that assessee had purchased the property way back in 1984 but failed to mutate the property in his favour in the Revenue records. Assessee purchased only Acr1.20 cents of land from Shri K. Joseph Reddy, however, Shri Mundla Narayana Reddy, Proprietor, Sudha Enterprises has purchased more land, about four acres, vide the registered deed dt. 26-08-1996, got his name entered in the Pahanis in 1999 itself and is in continuous possession of the land. Assessee filed a petition before Special Grade Dy. Collector for mutating the land in his favour. The Ld. Dy. Collector while recording that assessee has prior claim over the land having been registered in 1984, however, stated that there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 3,99,55,000 and accordingly the stamp duty thereon was also duly paid, while registering the relevant agreement. The value adopted for the purpose of payment of stamp duty thus was not disputed by the relevant parties, including the assessee. The learned CIT(A), however, held that the assessee was not the owner of the property and since she had only limited rights over the property, which was also encumbered, the market value of the property as taken for the purpose of payment of stamp duty could not be adopted as the sale consideration by applying the provisions of S.50C. We have already concurred with the learned CIT(A) while deciding the issue involved in the appeal of the assessee that the assessee was not the absolute owner of the property, and what the assessee held was only certain limited rights over the said property. It, therefore, follows that the capital asset held by the assessee itself was neither the land nor the building as envisaged in sub-section (1) of S.50C, and while computing the capital gains arising from transfer of such asset, the value adopted by any authority of State Government for the purpose of payment of stamp duty cannot be taken as full value of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing as a result of transfer, in case the latter is lower than the former. It is further relevant to note that the mandate of section 50C extends only to a capital asset which is land or building or both . It, therefore, follows that only if a capital asset being land or building or both is transferred and the consideration received or accruing as a result of such transfer is less than the value adopted or assessed assessable by the stamp valuation authority, the deeming fiction under sub-section (1) shall be activated to substitute such adopted or assessed or assessable value as full value of consideration received or accruing as a result of such transfer in the given situation. It is a settled legal proposition that a deeming provision cannot be extended beyond the purpose for which it is enacted. It is thus clear that a deeming provision can be applied only in respect of the situation specifically given and hence cannot go beyond the explicit mandate of the section. Turning to section 50C, it is seen that the deeming fiction of substituting adopted or assessed or assessable value by the stamp valuation authority as full value of consideration is applicable only in resp ..... 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