TMI Blog2020 (1) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... d any 'right in land or building or both' is well recognized under the Act itself. Attention was drawn to Section 54D of the Act, which deals with certain cases in which capital gain on compulsory acquisition of land and building is charged. It is palpable from Section 54D of the Act that 'land or building' is distinct from 'any right in land or building'. Attention was drawn to the Wealth Tax Act, 1957 also. Section 5(1) of the Wealth Tax Act at the material time provided for exemption in respect of certain assets. Clause (xxxii) of Section 5(1) of the Wealth Tax Act provided that the value, as determined in the prescribed manner, of the interest of the assessee in the assets (not being any land or building or any rights in land or building or any asset referred to in any other clauses of this sub-section) forming part of an industrial undertaking shall be exempt from tax. Thus it is noted that Parliament was aware of the distinction and has used differently between 'land or building' on one hand and 'or any rights in land or building' on the other. Here it is apt to apply the legal maxim Expressio Unius Est Exclusio Alterius meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rief facts of the case as stated by the AO is that During the FY 2015-16, the assessee company sold a property in the form of a shop at Unit No.209 on the first floor of Dreamplex Airconditioned Mall, City Centre, Durgapur, on 08.04.2015 for a consideration of ₹ 1,25,92,000/-. Verification of records revealed that the Stamp Valuation Authority had valued the said property at ₹ 1,64,89,440/-. When asked as to why the value adopted by the Stamp Valuation Authority shall not be considered as the full value consideration for the purpose of Sec.50C of the I.T. Act, the A/R of the assessee produced a calculation of capital gain and stated that in view of the fact that only the leasehold right in land has been transferred and it is not a transfer of land or building or both, the case of the assessee does not fall under the purview of Sec.50C of the I.T. Act. 4. The AO after considering the reply of the assessee analysed the facts as under: 3.3. In view of the above discussion, the following facts emerge: a) The assessee leased out an immovable property. b) The property is in the form of a shop. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the transfer of leasehold rights of the said Unit to the assessee was affected by way of a lease-cum-transfer deed dated 12.11.2010. According to ld. AR by virtue of the said deed, the assessee became entitled to leasehold rights in such unit for a period of 99 years. And for obtaining such leasehold rights an amount of ₹ 59,40,000/-, was paid by the assessee as lease premium. According to ld. AR, in addition to such premium, the assessee was also obligated to pay a lease rent of Re. 1/- per square foot of the super built-up area or as decided. According to him, all expenses in relation to the preparation, execution and registration of the deed dated 12.11.2010 were also borne by the assessee and drew my attention to the copy of the lease-cum-transfer deed dated 12.11.2010 which is found placed at Pages 1 to 29 of the paper book. 9. According to ld. AR, later when the assessee was unable to retain the leasehold rights in Unit No. 209, it obtained necessary permissions from the lessor (Govt.) to transfer such rights to a third party. Accordingly, an indenture of lease dated 08.04.2015 (tri-party agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he actual consideration received by the assessee i.e. ₹ 1,25,92,000/-. Accordingly, the AO framed the Assessment Order dated 12.11.2018 adding ₹ 24,28,372/-to the total income of the assessee and disallowing the assessee s claim of long-term capital loss of ₹ 14,72,545/-. 12. On appeal, the ld. CIT(A) has confirmed the order of the AO which according to the ld. AR is erroneous for the simple reason that the assessee has transferred only leasehold rights and therefore Section 50C is not applicable in this case and therefore the AO as well as the ld. CIT(A) erred in applying the deeming provision of Section 50C to saddle the addition of ₹24,28,372/- to the total income of the assessee. The ld. AR relied on the decision of the Hon ble Bombay High Court in the case of CIT vs. Greenfield Hotels and Estates Pvt. Ltd., [2016] 389 ITR 68 (Bom.) and the Tribunal s (Mumbai) order in the case of Atul G. Puranik vs. ITO, [2011] 11 ITR 120 (Mumbai) and it was brought to my notice that Hon ble High Court has dismissed the appeal of the Revenue against the order of the Tribunal in the case of Atul G. Puranik (supra). The ld. AR also relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the balance sheet as an immovable property in the form of a shop . Though the ld. AR of the assessee contended before the AO that there was a presentation error in the balance sheet and it should have been shown only as leasehold right , the AO did not agree, which resulted in the addition based on Section 50C of the Act. I note that the assessee had purchased the leasehold rights in the fully constructed shop located at Unit No.209 on the 1st floor, Dreamplex Air-conditioned Mall, Durgapur, West Bengal with super built-up area admeasuring 2376 sqft. I note from a perusal of the page 1 of the paper book that the assessee had signed the indenture of lease cum transfer made on 12.11.2010 between the Governor of West Bengal (1st part) and M/s. Bengal Shristi Infrastructure Development Limited (2nd part) and M/s. Ritz Suppliers Private Limited (3rd part, the assessee). The Transferees/Lessees, and all the three parts i.e. had executed a tripartite agreement by virtue of it in pursuance to the aforesaid lease cum transfer deed, the assessee received the leasehold rights in the said unit for 99 years for a lease premium of ₹59,40,000/- and was obliged to pay lease premium of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred by the assessee with the value adopted or assessed or assessable by Stamp Valuation Authority. It has to be kept in mind that for this provision, there is nothing in the Act, by which the full value of a consideration received or accruing as a result of transfer of land or building or both is deemed to be any amount other than that actually received. From the language used in Sub-Section (1) of Section 50C of the Act, it is clear that the value of land or 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 the consideration received or accruing as a result of such a transfer. Thus two things are noticeable from this 'provision. Firstly, it is a deeming provision and secondly, it extends only to land or building or both. It is apparent that the deeming provision has been incorporated to substitute the value adopted or assessed or assessable by stamp valuation authority in place of consideration received or accruing as a result of transfer of land or building or both and in case the latter is lower than the former. It is a settled legal proposition that a deeming provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-sec.(l) of sec. 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 . (emphasis given by me). It is palpable from Section 54D of the Act that 'land or building' is distinct from 'any right in land or building'. My attention was drawn to the Wealth Tax Act, 1957 also. Section 5(1) of the Wealth Tax Act at the material time provided for exemption in respect of certain assets. Clause (xxxii) of Section 5(1) of the Wealth Tax Act provided that the value, as determined in the prescribed manner, of the interest of the assessee in the assets (not being any land or building or any rights in land or building or any asset referred to in any other clauses of this sub-section) forming part of an industrial undertaking shall be exempt from tax. Thus it is noted that Parliament was aware of the distinction and has used differently between 'land or building' on one hand and 'or any rights in land or building' on the other. He ..... X X X X Extracts X X X X X X X X Extracts X X X X
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