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Tax Publishers Application of Section 50C in a case where Section 45(3) is applied *Facts:* Assessee a partner in a firm transferred a portion of his property into a firm called "Pooja Buildcon" at a book value of Rs. 1.47 crores as capital contribution in the firm. The stamp value of the said property was Rs. 1.74 crores as per Section 50C. AO invoked Section 50C and taxed the difference as per Section 45(3) in the hands of the assessee (partner) for Rs. 27 lakhs. Assessee plea was - a) Where Section 45(3) applied which is a deeming provision with no actual transfer Section 50C cannot apply. b) Section 45(3) is a special provision vis a vis Section 50C an omnibus provision - "generalia specialibus non derogant" maxim to apply. Thus invocation of Section 50C is incorrect. CIT(A) confirmed the orders of AO. On higher appeal - Held in favour of assessee that the application of Section 50C in the case of the assessee where Section 45(3) would apply is incorrect/unwarranted. *Applied:* Hotel (P) Ltd. v. ACIT (2009) Tax Pub (DT)1039 (Luck-Trib) DLF Universal Ltd v. DCIT reported in (2010) 36 SOT 1 (Del-Trib) : 2010 TaxPub(DT) 1260 (Del-Trib) *Dissented:* CIT v. Carlton Hotel Pvt. Ltd. reported in (2017) 88 taxmann.com 257 (Allahabad HC) : 2017 TaxPub(DT) 4806 (All-HC) - SLP by assessee was dismissed on this vide SLP (C) No (S) 28637/2017, 2017-TIOL-417-SC-IT *Ed. Note:* It has been commented by the ITAT that the decision of Carlton hotels was one where the transaction of property being transferred into the partnership was held to be a sham, dubious tax planning adopted to evade taxes and hence the same need not be applied here on facts. Dismissal of a SLP by the Supreme Court without a speaking order is not a good precedent as per law. All the SC has done in such cases is felt that the case was not fit for their sitting/hearing. Reference be also made to the enclosed article titled - "Interplay between sec. 45(3) and sec. 50C" by the editorial author published in Tax Publishers on the same topic - (please add the citation accordingly here). *Case:* Nareshbhai Ishwardas Patel v. ITO 2023 TaxPub(DT) 5213 (Ahd-Trib)

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Application of Section 50C in a case where Section 45(3) is applied

Facts:

Assessee a partner in a firm transferred a portion of his property into a firm called "Pooja Buildcon" at a book value of Rs. 1.47 crores as capital contribution in the firm. The stamp value of the said property was Rs. 1.74 crores as per Section 50C. AO invoked Section 50C and taxed the difference as per Section 45(3) in the hands of the assessee (partner) for Rs. 27 lakhs. Assessee plea was -

a) Where Section 45(3) applied which is a deeming provision with no actual transfer Section 50C cannot apply.

b) Section 45(3) is a special provision vis a vis Section 50C an omnibus provision - "generalia specialibus non derogant" maxim to apply. Thus invocation of Section 50C is incorrect.

CIT(A) confirmed the orders of AO. On higher appeal -

Held in favour of assessee that the application of Section 50C in the case of the assessee where Section 45(3) would apply is incorrect/unwarranted.

Applied:

Hotel (P) Ltd. v. ACIT (2009) Tax Pub (DT)1039 (Luck-Trib)

DLF Universal Ltd v. DCIT reported in (2010) 36 SOT 1 (Del-Trib) : 2010 TaxPub(DT) 1260 (Del-Trib)

Dissented:

CIT v. Carlton Hotel Pvt. Ltd. reported in (2017) 88 taxmann.com 257 (Allahabad HC) : 2017 TaxPub(DT) 4806 (All-HC) - SLP by assessee was dismissed on this vide SLP (C) No (S) 28637/2017, 2017-TIOL-417-SC-IT

Ed. Note: It has been commented by the ITAT that the decision of Carlton hotels was one where the transaction of property being transferred into the partnership was held to be a sham, dubious tax planning adopted to evade taxes and hence the same need not be applied here on facts.

Dismissal of a SLP by the Supreme Court without a speaking order is not a good precedent as per law. All the SC has done in such cases is felt that the case was not fit for their sitting/hearing.

Reference be also made to the enclosed article titled - "Interplay between sec. 45(3) and sec. 50C" by the editorial author published in Tax Publishers on the same topic - (please add the citation accordingly here).

Case: Nareshbhai Ishwardas Patel v. ITO 2023 TaxPub(DT) 5213 (Ahd-Trib)