9911796707
TMI Blog2020 (8) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of appeal: - "1) The learned CIT(A) erred in confirming the additions made by the then AO to the tune of Rs. 5,10,47,000/- by invoking the provisions of section 50C without appreciating the fact that the transaction under review is between member of the AOP and AOP which is governed by the special provisions u/s 45(3) and not by section 50C and hence the provisions of section 50C are not applicable to such transfer." 3. The assessee has also raised Additional grounds but pressed only ground No. 2 as raised vide additional grounds, which is as under: - "2) Without prejudice to the above, assuming that the transfer is of capital asset, the Ld. CIT(A) erred in law and in facts by holding that the provisions of section 50C of the I.T. Act, 1961 are applicable to transfer of development rights and TDR which are entirely different from land or building or both, to which such provisions are applicable." 4. Briefly stated, facts are that assessee purchased development rights in respect of 7 buildings from Jayraj Devidas and others. This development right in respect of three buildings was shown on the asset side of the Balance sheet under the head 'Investments' as on 31.03.2010 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 45(3). In our considered view, in that case, provisions of s. 45(3) would not be applicable but it is only s. 50C which can alone be invoked as there is a registration of sale deed under Registration Act. Thus, where a sale transaction is registered by paying stamp duty then it is only s. 50C which can operate. In that situation, s. 50C would override s. 45(3). Sec. 45(3) is a general provision and s. 50C is a special provision which would override s. 45(3) if the sale deed is sought to be registered by paying stamp duty. But where such registration does not takes place by paying stamp duty that case would only be covered under s. 45(3) and therefore, value recorded by the firm in its books would only be the full value of consideration for the purposes of computing capital gains. In view of this discussion, section 50C is applicable as the market value of land at TDR is Rs. 10,10,47,000/- as against Rs. 5,00,00,000 taken by the assessee. So far as the computation of capital gains in respect of the plot sold by the appellant through TDR is concerned, provisions of section 50(C) entitle the assessee to object to the valuation adopted by the Stamp Duty Authority. The appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 50C of the Act are not applicable as there is no transfer of land and building, but merely transfer of development rights which were acquired by entering into Development Agreement dated 11.12.2006 and 28.06.2007 with Jayraj Devidas and others and assessee was never the owner of the land and building and had only acquired simple development rights which was transferred by it to the AOP, M/s. Benchmark Properties. The learned counsel submitted that the assessee has righty declared the transaction in terms of Section 45(3) of the Act instead assessed by Assessing Officer and confirmed by CIT(A) under Section 50C of the Act. 8. On the other hand, the ld. Senior DR, Ms. Kavita Kaushik heavily relied on the decision of ITAT, Lucknow Bench in the case of Carlton Hotels Pvt. Ltd. (supra). She also relied on the orders of CIT(A) and Assessing Officer. 9. We have heard the rival contentions and gone through the facts and circumstances of the case.We noted that assessee had acquired development rights emanating from land bearing Serial No. 24 Hissa No. 1 and 2 situated at Mirra Road District, Thane from Mr. Jayraj Devidas and others vide development agreement dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion authority") for the purpose of payment of stap duty in respect of such transfer, the value so adopted or assessed [or assessable] 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 transfer." 11. In view of the above, the learned Counsel stated that the introduction of development rights by way of capital contribution under section 45(3) of the Act by the assessee is even though a transfer but it is not a sale because there neither any receipt nor any accrual of any consideration. For this, the learned Counsel for the assessee relied on the decision of Hon'ble Supreme Court in the case of Sunil Siddharthbhai Vs. CIT (1985) 156 ITR 509 (SC). The learned Counsel for the assessee relied on the following observations of Hon'ble Apex Court vide Para 17 as under: - "17. What is the profit or gain which can be said to accrue or arise to the assessee when he makes over his personal asset to the partnership firm as his contribution to its capital. The consideration, as we have observed, is the right of a partner during the subsistence of the partnership to get his share of profits from time to tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins arising from contribution of capital asset in the AOP by a member and second limb is an essential deeming fiction for determining the value of consideration without which the charging provision would fail. We also noted that the provisions of section 50C of the Act also deeming fiction deems only the value of consideration for the purpose of calculating capital gains in the transfer of capital asset from one person to another. In view of the above, we are of the view that the provisions of section 50C of the Act are not applicable in the instant case and provision of section 45(3) of the Act will be applied. Hence, we reverse the orders of the lower authorities and allow the appeal of the assessee on this issue. 13. Coming to the additional ground raised by assessee, the same need no adjudication as we have already adjudicated the issue of applicability of provision of section 45(3) of the Act, hence there is no question of adjudication of provision of section 50(C) of the Act because it will overlap with each other and moreover it is without prejudice to each other. 14. In the Result, the appeal of assessee is partly allowed. Order pronounced in the open court on 11.08.2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
