The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) has held that leasehold right in land or building or both is transferred, and provisions of Section 50C cannot be invoked.
The appellant, Bharat Bhushan Jain, disclosed sale consideration only Rs.19,00,000/- while computing the capital gain on the transfer of property, against which the Stamp Valuation Authority given a value of Rs.46,39,000/-. The AO without accepting the submissions of assessee proceeded to make addition of Rs.27,39,000/- as undisclosed income u/s 69 of the Act.
Aggrieved against the assessment order, the assessee preferred appeal before CIT(A), who sustained the addition as made by the AO instead of section 69A of the Act, confirmed the addition u/s 50C of the Act. Against which assessee filed appeal before ITAT.
Mr. , counsel for the appellant submitted that the AO invoked the provision of section 69A of the Act which is ex-facie, illegal and without authority of law. The counsel further submitted that the CIT(A) confirmed the addition u/s 50C of the Act, grossly exceeded the
jurisdiction as conferred u/s 250 of the Act. Section 50C of the Act would not be applicable under the facts and circumstances of the present case as the appellant has only transferred sold right of the property which do not fall in the ambit of the section 50C of the Act.
The Tribunal observed that the AO invoked provision of section 69A of the Act on the basis that there was a difference between sale consideration as disclosed by the assessee and the Circle rate as prevalent at that point of time. The Tribunal further observed that the property which was sold by the assessee, was a leasehold property. The leasehold right was granted by Nitishree Builders Pvt.Ltd. in favour of the mother of the assessee. The fact that the leasehold rights were transferred is not disputed by the Revenue. The Revenue has not brought any contrary material on record to rebut the contention of the assessee.
The Coram of Mr. Kul Bharat, Judicial Member, by relying the decision of the Division Bench of the Tribunal in the case of Shri Atul G. Puranik
vs ITO observed that section 50C applies only to a capital asset, being land or building or both, it cannot be made applicable to lease rights in a land.
The Tribunal held that “the authorities below have taken contrary stands about the taxability of the difference between the value declared by the assessee and value adopted by the Stamp Valuation Authority. Moreover, in the light of the binding precedents, I hereby direct the AO to delete the addition. Thus, grounds raised by the assessee are allowed in terms indicated hereinabove”.
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