TMI Blog2019 (3) TMI 1455X X X X Extracts X X X X X X X X Extracts X X X X ..... e could not be said to be the absolute marketable title of the said property. At the same time, it is also true that the said documentary evidence read with the MOI entered into by the assessee with M/s. Essa Associate that the assessee was still holding certain rights in the property and the same constituting capital asset. Moreover, the MOI was duly approved by Hon’ble Bombay High Court in its order dated 01.10.2004. The value adopted for the purpose of payment of stamp duty is not disputed by the assessee. The assessing officer has not brought on record that the property under sale was not was under various encumbrances and the assessee was having the absolute marketable title of the said property. No material is brought on record by assessing officer that the assessee has received much more consideration than shown in the MOI. AO treated the stamp valuation rate as the value of consideration, dispite the facts that the assessee throughout the proceedings contended that the assessee was neither having possessing of the impugned piece of land nor having marketable title. The assessee offered the said piece of land on the basis ‘as is where is’. These vital facts were ignored b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out appreciating that the price at which the capital asset was sold was the fair market value as per the highest bid received in response to public advertisement in July 2003 and was approved by the Honorable Bombay high court on 1-10-2004 considering the same to be in interest of the beneficiaries of Appellant trust. In the circumstances the Assessment order passed by the Learned Assessing Officer is liable to be set aside. 2. The Commissioner of Income Tax (Appeals) erred in confirming the addition U/s 50C on the basis of ova report obtained determining fair market value as at date of registration of agreement i.e. 10-8-2010 without appreciating that the Memorandum of intent (Mal) to sale the property was already entered into 18-12-2003 when the transaction price was finalised and for which separate ova report was also obtained to determine fair market value on the date of Mal and therefore addition if any had to be based on the fair market value determined on the date of Mal. 3. The Commissioner of Income Tax '(Appeals) erred in confirming the addition U/s 50C on the basis of ova report obtained determining fair market value as at date of registration of agreement i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laiming adjustment of LTCL on mutual fund of ₹ 13,65,877/-. The assessee was asked to substantiate as to why the piece of land of 17,300 Sq Meter was sold at ₹ 27,93,285/-, whereas the stamp value of the said land is or ₹ 11.76 Crore. The assessee was also show caused as to why the provisions of section 50 C be not invoked. The assessee filed its reply dated 31.03.2013. in the reply the assessee contended that the stamp valuation authority has value the land at the current rate, however, the property was conveyed at the price agreed in 2003 and the consideration under the sale agreement was approved by Hon ble Bombay High Court. The assessee trust was set up vide Wakf deed dated 19.04.1929. And as per clause 14 of the Trust deed the properties owned by the assessee cannot be transferred without the consent of Bombay High Court. The assessee owned several properties in and around Mumbai. The assessee trust entered in Memorandum of Intend for sale of piece of land at Village Tungwa, Kurla which was encroached by slum devellers with M/s Essa Associate on 18.12.2003. As per clause 14 in the Trust deed the assessee filed petition before Bombay High Court for approval o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on both the additions were upheld. Thus, further aggrieved by the order of ld CIT(A), the assessee has filed the present appeal before us. 4. We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. Ground No.1 to 3 relates to invoking the provision of section 50C of the Act. The ld. AR of the assessee submits that the assessee is a Private Family Discretionary Trust settled by Sir Mohammed Yusuf in 1929. The Trust is registered as per the provision of Mohammedan Law. The certain provision of trust was amended in pursuance Hon ble Bombay High Court order and decree dated 19.02.1952 passed by in Suit No. 1286 of 1951. During the assessment proceeding, the assessee submitted the computation of LTCG earned on sale of land and declared LTCG. The assessee-trust was in possession of certain right in the land which was in the name of assessee. However, the assessee was not in possession. The land was encroached by unauthorized occupant/hutments. There were other certain part of land in which even as per land record, the name of assessee was not appeared. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2004 and the order passed by Hon ble High Court dated 01.10.2004 is also placed on record. Therefore, after sanction/approval of the Hon ble Bombay High Court, the assessee executed the registered agreement with M/s Essa Associates on 10.08.2010 for sale of rights in land of 4 Acre and 11 Gunta as stated above. 6. The ld. AR of the assessee further submits that the provision of section 50C have no application as the assessee has transferred only right in the land which would not be equated to land or building or both as per the language of section 50C of the Act. The ld. AR of the assessee submits that the reference of section 50C is not absolute but subject to certain condition, which is mentioned in sub-section (2) of section 50C. The land under reference was not having clear title and many claims were there. The ld. AR of the assessee submits that the right in the said land cannot be described as capital asset which can be described as land building or both then section 50C would seize to apply. The Fair Market Value of the right was ascertained by the assessee on the basis of highest bidder of the participants received by assessee, which was duly approved by Hon ble Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o settle the litigation and technical formalities. The assessing officer adopted the stamp value of the consideration of the piece land as cost of consideration and computed LTCG. The ld CIT(A) confirmed the action of assessing officer on similar lines. 10. We have gone through the various documentary evidences filed by the assessee. From the documentary evidences we have seen that the assessee issued a Public notice for sale of the piece of land (page 145 of PB). In the said notice the assessee clearly mentioned that the land under offer for sale is encroached wrongfully. It was also published that the title of the land is also not perfect. In response to the notice the assessee received bid from M/s Essa Associate. The bid of Essa Associate was accepted by the trusty of the assessee and executed MOI date 18.12.2003. The perusal of the MOI dated 18.12.2003 reveals M/s Essa Associate agreed to acquire the piece of land from assessee on as is where is basis. It is clearly mentioned in clause D at page 3 of the said MOI that it is impossible to define and determine the exact area of non- acquired land at that stage until the purchaser actually succeeded in clearing and perfec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated case of K.P. Varghese Vs ITO (supra) held that literal interpretation of section 52(2) leads to manifestly unreasonable and absurd consequences, the same should be construed having regard to the object and purpose for which it has been enacted and the setting in which it occurs. A fair and reasonable construction of section 52(2) would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. Accordingly, if the revenue seeks to bring a case within section 52(2), it must show not only that the fair market value of the capital asset as on the date of the transfer exceeds the full value of the consideration declared by the assessee by not less than 15 per cent of the value so declared, but also that the consideration has been understated and the assessee has actually received more than what is declared by him. There ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty, while computing capital gain arising from transfer of such a property, market value of property as taken for purpose of payment of stamp duty could not be adopted as sale consideration by applying provisions of section 50C. 15. Considering the above discussed legal position as held by superior courts in K. P. Varghese (supra) by Hon ble Apex Court, Hon ble Delhi High Court in CIT Vs Khoobsurat Resort (supra) and the coordinate bench of the Tribunal in Smt D. Anita (supra) and the undisputed fact that when the land under sale was having encumbrances the adoption of stamp valuation as a sale consideration by applying the provisions of section 50C was not justified by assessing officer, in absence of any evidence that the sale consideration was more than the value shown in the MOI. Therefore, we direct the assessing officer to work out the capital gain on the basis of consideration shown by the assessee. In the result the grounds No. 1 to 3 of the appeal are allowed. No contrary decision is brought to our notice. The contention of the ld. DR for the revenue has no force that the assessee has raised new grounds of appeal before this Tribunal. The sum and substance of the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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