TMI Blog2021 (8) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... le value of the property as the indexed cost of acquisition for computing LTCG in the hands of the assessee, we uphold the same. The Ground of appeal No. 3 is dismissed. - ITA No.813/MUM/2020 - - - Dated:- 5-8-2021 - Shri Rajesh Kumar (Accountant Member) And Shri Ravish Sood (Judicial Member) For the Assessee : Shri Vijay Mehta, A.R For the Revenue : Shri Tharian Oommen, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-8, Mumbai dated, 29.11.2019 which in turn arises from the order passed by the A.O u/s 143(3) of the Income Tax Act, 1961 (for short Act ), dated 28.03.2014 for A.Y. 2011-12. The revenue has assailed the impugned order on the following grounds before us: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified m holding that the provisions of section 50C are not applicable in respect of transfer of reversionary rights in respect of the sale transaction with M/s Yash and Yashika Mercantile (P) ltd. 2. Whether on the fads and in the circumstances of the case, the Ld. CIT(A) urns justified in holding provision of 50C are ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y back on 06.05.1919 by Rustomji Bymmjee Jeejeebhoy Others i.e the lessors to Cursetjee Dinshaw Bolton i.e the lessee. Thereafter, the lessee i.e Cursetjee Dinshaw Bolton constructed a building, viz. New Bolton House on the leasehold land. Subsequently, one person, viz. Sethna seized and possessed the property in question and the assessee company being vested with the reversionary rights as regards the said property therein recovered rent from Sethna. On 08.05.1986, Sethna s solicitor, viz. M/s Vachha Co. sought the consent of the assessee company for assignment of the leasehold rights by their clients, viz. Sethna in favour of one Siraj alias Shiraj Mohamadali Calcutta wala. Backed by the aforesaid facts, the assessee company terminated the lease on the ground of breach of the terms and conditions of the lease and agreed to sell its reversionary rights in the aforesaid property for a lump sum price to Yash Yashika Mercantile Pvt. Ltd. Accordingly, in the backdrop of the aforesaid facts, it was the claim of the assessee that as it had only transferred its reversionary rights qua the aforesaid property in question, thus, its market value could not be considered for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the CIT(A) has carried the matter in appeal before us. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As observed by us hereinabove, the revenue is aggrieved with the observation of the CIT(A) that the provisions of Sec. 50C of the Act would not stand triggered in respect of the transaction of transfer of reversionary rights of the property in question by the assessee to M/s Yash Yashika Mercantile (P) Ltd. Briefly stated, the facts relevant for adjudication of the present issue are that the property in question was originally leased way back on 06.05.1919 by Rustomji Bymmjee Jeejeebhoy Others i.e the lessors to Cursetjee Dinshaw Bolton i.e the lessee. Thereafter, the lessee i.e Cursetjee Dinshaw Bolton constructed a building, viz. New Bolton House on the leasehold land. Subsequently, one person, viz. Sethna seized and possessed the property in question and the assessee company being vested with the reversionary rights as regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a property, at the time of buying the property, must only relate to ownership rights. In the case of tenanted property, as is the case before us, while the buyer of property pays the owner of property for ownership rights, he may also have to pay, when he wants to have possession of the property and to remove the fetters of tenancy rights on the property so purchased, the tenants towards their surrendering the tenancy rights. Merely because he pays the tenants, for their surrendering the tenancy rights, at the time of purchase of property, will not alter the character of receipt in the hands of the tenant receiving such payment. What is paid for the tenancy rights cannot, merely because of the timing of the payment, cannot be treated as receipt for ownership rights in the hands of the assessee. This distinction between the receipt for ownership rights in respect of a property and receipt for tenancy rights in respect of a property, even though both these receipts are capital receipts leading to taxable capital gains , is very important for two reasons first, that the cost of acquisition for tenancy rights, under section 55(2)(a), is, unless purchased from a previous owner wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or both , but then a leasehold right in such a capital asset cannot be equated with the capital asset per se. We are, therefore, unable to see any merits in revenue s contention that even when a leasehold right in land or building or both is transferred, the provisions of Section 50C can be invoked. We, therefore, approve the conclusion arrived at by the CIT(A) on this aspect of the matter. 3.1.14 Further, in the case of D. Anitha in ITA No. 394/Hyd/2014 373/Hyd/2014 dated. 24.12.2014, it was held that assessee was also not the owner of the property and had only limited rights over the property. It was held that the provisions of Sec. 50C are not applicable. The relevant para (para 9) of the said order is as under: 9. As regards the issue involved in the appeal of the relating to the applicability of the provisions of S.0C n the case of assessee, it is observed that the market value of the property for stamp duty purpose was determined by the concerned authority of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) to the A.O to take 70% of the sale value of the properties sold as the cost of acquisition (without subjecting the same to any indexation) for computing the LTCG on transfer of the properties under consideration. Briefly stated, the facts relevant to the issue under consideration lies in a narrow compass. As the properties sold by the assessee were claimed to have been acquired prior to 01.04.1981, therefore, the assessee had claimed that 70% of the sale consideration be considered as the cost of acquisition of the said properties It was the claim of the assessee that the status of the properties during the year under consideration i.e the year 2010 remained the same as that was in the year 1981 and the lands remained encumbered, encroached, leased and under unauthorized occupation. In support of his claim for taking the cost of acquisition of the aforesaid properties on 01.04.1981 at 70% of the sale value, the assessee had relied on the order passed by the ITAT in the case of its group company, viz. M/s Heritage Pvt. Ltd. Apart from that, it was the claim of the assessee company that it had in the preceding years also taken the cost of acquisition of the properties at 70% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 01/09/1981 could be in the range of 12% to 15% of the sale value and then if indexed, the value will come to about 70% of the sale value. Though section 55(2)(b) of the Act does not prescribe 70% as the cost of acquisition, it was derived figure based on the facts of case and based on the ratio of the decision of Mumbai ITAT in case of Heritage Estates Pvt. Ltd. (supra) Even otherwise it is established that if value as per value as taken as on 01/04/1981 and indexation provisions applied then the indexed cost will be more than what is claimed by assessee. Assessee requested that the indexed cost of acquisition be accepted at 70% of the sale value. Assesses further submitted before CIT(A) that if the relief for grounds no. 1 to 3 is allowed, then the ground of Department will become infructuous, as the sale consideration will be accepted at ₹ 5O lakhs and in the original assessment, the cost of acquisition is allowed @70%. In the result, the appeal of revenue for the A.Y.2007-08 is dismissed. As regards ground no. 10 and 11 of assessee's appeal is concerned, assesse requested that the indexed cost of acquisition be allowed @ 70% of ₹ 8,18,38,500/- being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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