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TMI Blog2022 (12) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... he following two issues:- (a) Addition made u/s.50C of the Act in respect of transfer of leasehold rights in land and building (b) Addition to long term capital gain by adopting sale consideration under NAV method as against DCF method adopted by the assessee. 2. The facts relating to the case are stated in brief. The assessee company is engaged in the business of manufacturing and trading of animal healthcare products. 3. The first issue relates to addition made by AO u/s. 50C of the Act. The AO noticed that the assessee had purchased leasehold rights in a property located in Plot No. B-37 and B-38, SIPCOT Industrial Park at Irungattukottai, Tamil Nadu having an extent of 2.00 acres from M/s. Alved Pharma & Food Pvt. Ltd. on 31/03/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court. Accordingly, the AO was not justified in invoking provisions of Section 50C for determining capital gain arising on transfer of lease hold rights in land and building. Accordingly, we do not find any reason to interfere with the decision of Ld CIT(A) rendered on this issue. 5. The next issue relates to determination of capital gain by substituting the value of sale consideration by adopting NAV method. The facts relating to the same are stated in brief. M/s. RFCL Ltd is a company incorporated under the Companies Act and it had a Vetnex division which dealt in animal healthcare products. The said division was demerged and transferred to the assessee. On account of the same, the various assets were obtained by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is not colourable device and it is carried out on commercial considerations. He further held that it is not permissible for the AO to change the method of valuation without having any material on record to prove that the method is faulty. He further observed that the sale consideration has been approved by RBI and hence it is imperative for the AO to accept the same. He also observed that there is no material brought on record by the AO to show that the assessee has received more than the stated amount of sale consideration. Accordingly, the Ld CIT(A) held that the valuation adopted by the assessee cannot be discarded on conjectures and surmises. The Ld CIT(A) noticed that the AO has computed value of shares under NAV method by adopting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely: (emphasis supplied) 3.14.2 It is submitted that the expression "full value of consideration" has to be construed as the actual consideration received or accruing as a result of the transfer of the capital asset. In the present case, the AO has not disputed the amount of sale consideration received by the appellant. There is no allegation whatsoever that the appellant had received or had accrued more than the stated amount of sales consideration. Further, the Reserve Bank of India has approved the said transaction after taking into consideration the relevant transactional documents, including the impugned va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the fair market value. In fact, section 5OCA of the Act, which deals with substitution of the actual consideration on sale of unquoted shares with the fair market value of such share, was inserted vide the Finance Act, 2017 and was specifically made applicable with effect from April 2018 for the assessment year 2018-19 and onwards. 3.14.6 In this regard, attention is invited to the Memorandum to the Finance Act, 2017, which also acknowledges that prior to the insertion of section 50CA, capital gain was computed by taking into account the amount of full value of consideration received or accrued on transfer of a capital asset Relevant extract from the Memorandum is reproduced hereunder:- "Fair Market Value to be full value of considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above said legal contentions. When there is no provision in the Act to substitute Full value of consideration for computing Capital gain during the relevant point of time, then there is no scope for the AO to modify the full value of consideration without bringing any material on record which would compel such modification. Hence, we are of the opinion that the view taken by Ld CIT(A) on this issue does not require interference for the reasons mentioned by him and also on the legal propositions discussed above. Accordingly, we uphold the order of Ld CIT(A) on this issue also.
11. In the result, the appeal filed by the revenue is dismissed.
Order pronounced on 28/12/2022 by way of proper mentioning in the notice board. X X X X Extracts X X X X X X X X Extracts X X X X
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