TMI Blog2017 (4) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in the property by way of right of allotment which has been assigned by the assessee in favour of the buyer and not the property itself. On reading of sub section (1) of section 50C, it is clear that the value of land, building or both adopted or assessed or assessable by the Stamp Valuation Authority shall for the purpose of section 48, be deemed to be the full value of consideration received or accruing as a result of such transfer. It is a deeming provision and it extent only to land, building or both. It therefore follows that where 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 or assessable by the Stamp Valuation Authority, the deeming provisions of sub section(1) of section 50C shall be applicable. In the instant case what has been transferred is a right of allotment in office flat and not the office flat itself. It is therefore clear that a deeming provision which is limited to land, building or both cannot be extended beyond the purpose for which it is enacted and is therefore not applicable in the instant case. Thus what has been tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the assessee s contentions and worked out the sale consideration as per the DLC rate provided by the Sub-Registrar, Gurgaon and the amount of ₹ 32,50,000/- being of the total sale consideration of the property of ₹ 65,00,000/- was brought to tax in the hands of the assessee u/s 50C of the Act. 2.2 Being aggrieved, the assesseee carried the matter in appeal before the ld. CIT(A) and submitted that provisions of section 50C are not applicable in the case of right to acquire a property as in this case the asset under consideration is right to acquire a property and not the property itself. In support, the assessee placed reliance on the Coordinate Bench decision in the case of Atul G. Puranik vs. ITO (132 ITD 499). As per ld. CIT(A), on perusal of the copies of the agreement on the basis of which the sale and purchase took place, both the agreements referred to a flat in the complex. Thus what was being sold and purchased was a flat and not a right. Accordingly, the provisions of section 50C were held to be correctly applied by the AO. 2.3 During the course of hearing, the ld. AR, Shri H.M. Singhvi submitted that Section 50C refers to land or building or both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital assets being land or building or both. It can not be applied on lease rights in land or building or both. It is therefore, prayed that the addition made by the AO and confirmed by CIT(A) may kindly be deleted. 2.4 The ld. DR is heard who has relied on the findings of the AO. 2.5 In order to appreciate factual matrix it would be relevant to go through the agreement of conveyance dated 06.04.2007 by virtue of which the subject property was acquired by the assessee and the the agreement of conveyance dated 29.07.2010 by virtue of the subject property was sold by the assessee. 2.6 The agreement of conveyance dated 06.04.2007 has been entered into between M/s M R Oriental Export (P) Ltd. and Mr. Rajesh Kumar Agarwal husband of the assessee and Mrs. Rekha Agarwal the assessee herself. The salient feature of the agreement are reproduced as under: WHEREAS the First Party is the legal allottee of 2500 sq. ft in project known as Medicity, Sector 38, Gurgaon, Haryana (herein after referred to as the Demised Premises ) vide MOU dated December, 22nd 2004 executed between the First Party and M/s Global Health Private Limited through its Director Dr. Naresh Trehan and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lotment letter No. 1704 dated 29.10.2004 and possession letter issued by HUDA. It further provides that the company is in the process of obtaining building plan approvals and related approvals to develop on the said land with multi storied cum multi structured Medi City. It further provides that the allottee has shown interest in the complex and has approached the company for allotment of office space measuring 2500 sq.ft. super area in the complex which is presently being put under development and has specifically opted for investment return payment plan. Thereafter, it contains salient terms and conditions as mutually agreed which interalia includes the following: (1) That the Company agrees to allot to the Allottee , a premises, measuring 2500 Sq. ft. ( 232.26 sq. mtrs) super area in the Complex known as Medicity , along with the right to use 3 car parks in lower/ upper basement, being constructed @ ₹ 1500/- per sq. ft. i.e. Rupees Sixteen Thousand one hundred and forty five and paise seventy only per square meter. The car parking, as aforesaid, shall be identified and allocated at the time of possession of the premises to the Allottee . The total agreed consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estricted and unfettered right to assign/nominate its rights under this MOU to any third party at any price it deems fit and proper subject to the terms hereof. That the party of the first part or its agents/ representatives shall not charge any amounts towards transfer/assignment/ nomination charges and shall afform to Third Party as the Allottee on the same terms and conditions as agreed to herein. Any assignment shall be on the conditions that the Assignee accepts in writing all the terms and conditions hereof. 2.8 We now refer to the agreement of Conveyance (sale agreement) dated 23.07.2010 which has been entered into by Mr. Rajesh Agarwal and Mrs. Rekha Agarwal with S.A.S. Servizio (P) Ltd. , A-10/6 Vasant Vihar, New Delhi wherein it is provided that the assessee is the legal allottee of 2500 sq.ft. in project known as Medi City, Sector 38, Gurgaon by virtue of transfer/endorsement done in its favour on April 6, 2007, vide MOU dated 22.12.2004 executed between the original allottee and M/s Global Health (P) Ltd. which is the developer of this project. It further provides as under:- 1. AND WHEREAS the First Party has now agreed to alienate /transfer/ assign the same to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developer at the time of possession of the flat in terms of the original MOU dated 22.12.2004 had still not been paid and it has now been agreed that the said 10% balance consideration shall be paid directly by the purchaser namely S.A.S. Servizio (P) Ltd., A-10/6 Vasant Vihar, New Delhi. Further, it has been agreed that the purchaser has gone through the MOU dated 22.12.2004 and shall agree with the contents thereof. Further, what has been physically handed over to the buyer of the property is the original MOU as well as the original payment receipt issued by the developer M/s Global Heal (P) Ltd. On a combined reading of all these clauses which are mutually agreed upon between both the parties, it is clear that what has been transferred is a right of allotment in the property which was under construction and possession thereof was not taken by the assessee and hence, there is no question of transfer of the possession of the said property. Further, other than these agreements and MOU, there is nothing in terms of any positive tangible evidence which has been brought on record by the Revenue to support its position that it is the flat which has been transferred by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore not applicable in the instant case. The Ld. AR has relied on the Coordinate Bench s decision in the case of Atul G. Puranik (supra) which squarely supports the case of the assessee. In that case, the assessee was allotted lease right in a plot for a period of sixty years. The relevant finding of the Coordinate Bench contain at para 11.4 of its order is reproduced as under: In view of the aforenoted judgements rendered by the Hon ble Apex Court and that of the Hon ble Jurisdictional High Court, it is 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 S. 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 respect of land or building or both . If the capital asset under transfer cannot be described as land or building or both , then s. 50C will cease to apply. From the facts of this case narrated above, it is seen that the assessee was allotted lease right in the plot for a period of sixty years, which right was further assi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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