TMI Blog2017 (10) TMI 1600X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is allowed. - ITA No.03/Pat/2013 - - - Dated:- 6-10-2017 - SHRI J. SUDHAKAR REDDY (AM) AND SHRI SANDEEP GOSAIN (JM) For the Department : Shri Ram Babu , DR. For the Assessee : Shri A.K.Rastogi, Adv . ORDER PER SANDEEP GOSAIN, JUDICIAL MEMBER: This is an appeal by the assessee directed against the order of the CIT (A)-1 dated-09.11.2012 and pertains to assessment year 2009-10. 2. The effective issues raised in grounds of appeal read as under: 1. For that the order of the Ld. Lower Authorities are bad in law and fcts and liable to be set aside/ modified. 2. Delhi State Industrial Development Corporation has executed a Perpetual lease Deed in respect of the property in question in favour of one Subhash Chandra Ahuja by registered document no.7652 on 22.04.2002 with the office of the Sub-Registrar to District no. VI, Delhi and the said Subhash Chandra Ahuja handed over the said document and assigned the leasehold rights to the assessee who has transferred the aforesaid leasehold right vide 2 agreements dated 12.09.2008 to Shri nSita Ram Gupta and Smt. Ruchika Gupta for a consideration of ₹ 27,50,000/- each i.e.e ₹ 55,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sole ground raised by the assessee thereby challenging the orders of the authorities below in application of Section 50C in respect of leasehold rights in the land in question, which is owned by the Govt. i.e.Narela Industrial Complex, New Delhi. 8. We have heard the counsel for both the parties and perused the material placed on record as well as the orders of the authorities below. From the records, we find that Delhi State Industrial Development Corporation had executed of perpetual lease deed in respect of the property in question in favour of one Shri Subhash Chandra Ahuja by registered document and later on the said Shri Subhash Chandra Ahuja transferred the aforesaid leasehold rights in favour of the assessee, who had further transferred the said leasehold rights through two different agreements dated 12.09.2008 to Shri Sita Ram Gupta and Smt. Ruchika Gupta, which have a total sale consideration of ₹ 27,50,000/- each. The Ld. Lower Authorities had adopted the value as of the Stamp Valuation Authority at ₹ 96 lakhs, treating the leasehold rights as land or building or both . Since, the assessee was only having leasehold rights and had transferred the same. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is on certain terms and conditions attached thereto. Therefore, it cannot be said that the assess e has absolute rights of an owner. In this context, a reference can be made to the decision of the Tribunal, Pune Bench., in Kancast Pvt. Ltd. v/ s ITO, 55 Taxman. com 171, wherein the co-ordinate bench, while considering the application of provisions of section 50C, in respect of transfer of lease hold rightsof 99 years, held that as the assessee is only having lease hold rights, the rovisions of section 50C would not apply. It will be pertinent to observe while so deciding, the coordinate bench also took note of the decision of the Tribunal, Mumbai Bench in Shavo Norgren Pvt. Ltd. (supra). The other decisions relied upon by the learned Counsel for the assessee also express similar view. Therefore, as the assessee was having only lease hold rights for a period of 60 years, he cannot be considered to be the owner of the property so as to compute capital gain by adopting the market value as per the provisions of section 50C of the Act. In the aforesaid view of the matter, we agree with the decisions of the learned Commissioner (Appeals) in deleting the additions made on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opted or assessed or assessable value by the stamp valuation authority as full value of consideration is ITA No.3051/ M/ 10 Atul G. Puranik: 18 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 sec. 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 righ was further assigned to M/ s. Pathik Construction in the year in question. It is axiomatic that the lease right in a plot of land are neither 'land or building or both' as such nor can be included within the scope of 'land or building or both'. The distinction between a capital asset being 'land or building or both' and any 'right in land or building or both' is well recognized under the 1.T. Act. Sec. 54D deals with certain cases in which capital gain on compulsory acquisition of land and building is charged. Sub-sec.(1) of sec. 54D opens with: Subject to the provisions of subsection (2), where the capital gain arises from the transfer by way of compulsory acquisition under an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peration in transfer of leasehold rights. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:- 9. We have carefully considered the rival submissions. Section 50C of the Act provides that if the consideration received or accruing is less than the value adopted or assessed or assessable by the stampvaluation authority of the State Government for such transfer then the value so adopted or assessed or assessable shall be deemed to be the full value of consideration and the capital gains will be computed, accordingly. The phraseology of section 50C of the Act clearly provides that it would apply only to a capital asset, being land or building or both . The moot question before us is as to whether such expression would cover the transfer of a capital asset being leasehold rights in land or building. There cannot be a dispute to the proposition that the expression land by itself cannot include within its fold leasehold right in land also. Of-course, leasehold right in land is also a capital asset and we find no fault with this stand of the Revenue. So however, every kind of a 'capital asset' is not covered within the scope of section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred is that even leasehold rights in land is a capital asset. However, the said inference does not justify the inclusion of a transaction involving transfer of leasehold rights in land within the purview of section 50C of the Act. Quite clearly, section 50C of the Act applies only to capital asset being land or building or both. It does not apply to leasehold rights in the land or building. The stand of the CIT(A) that it was not necessary to mention 'rights in land or building' specifically in section 50C of the Act, in our view, is quite misconceived. 12. Apart from the aforesaid discussion, we find that the Mumbai Bench of the Tribunal in the case of M/s Pradeep Steel Re-Rolling Mills Pvt. Ltd. (supra) has considered an identical controversy wherein it has been held that section50C of the Act would apply only to capital asset, being land or building or both and it would not apply in relation to leasehold rights in land or building. To the similar effect is the decision of the Jaipur Bench of the Tribunal in the case of M/s Jaipur Times Industries (supra). The Jaipur Bench of the Tribunal followed an earlier decision of the Mumbai Bench of the Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual and legal matrix of the case as discussed above from paras 5.1 to 5.3.9 of this order (supra) we do not find any justification in the orders of the authorities below in invoking the provisions of section 50C of the Act and adopting the value of property as determined by the stamp valuation authority, for the purpose of computing the capital gain on transfer of the assessee's leasehold rights in the said foreshore land at Napean Sea Road, Mumbai. In this view of the matter and following the aforesaid decisions of the various ITAT Benches cited at paras 5.3.5 to 5.3.9 of this order, we direct the AO to compute the capital gains on the transfer of the leasehold rights of the aforesaid foreshore land at Napean Sea Road, Mumbai by adopting the value of the property at n,35,00,000/- as offered by the assessee. It is accordingly ordered. Consequently the grounds at S.Nos. 1 3 and the additional grounds raised by the assessee are allowed. 11. In view of the factual and the legal matrix of the case as discussed above, we do not find any justification in the orders of the authorities below in invoking the provisions of Section 50C of the Act and adopting the value of prope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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