Deputy Commissioner of Incometax v. Tejinder Singh

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The Tax Publishers2012 TaxPub(DT) 1985 (Kol-Trib) : (2012) 047 (II) ITCL 0510 : (2012) 147 TTJ 0087 : (2012) 050 SOT 0391 : (2012) 072 DTR 0160 : (2012) 016 ITR (Trib) 0045 INCOME TAX ACT, 1961 --Capital gains--Applicability of section 50CTransfer of tenancy rights--Assessee was a lessee on the property which was sold by owner. Assessee gave up all its rights and interests in the said property and proceeded to grant or convey, transfer and assign its leasehold right, title and interest in the said property for a part in total consideration. Assessee invoked section 50C and calculated the higher capital gain by taking value adopted by stamp value authority. Assessee contended that he was a tenant in the property sold by the owner therefore, so far as assessee was concerned, the receipt was in the nature of receipt on surrendering tenancy rights. Section 50C could not be applicable where only tenancy rights were transferred or surrendered. Commissioner (Appeals) held that the provisions of section 50C will apply on receipt of consideration on transfer of a property, being land or building or both. These provisions will not come into play in a case where only tenancy rights are transferred or surrendered. Held: The monies received by assessee, under the said agreement, were clearly in the nature of receipts for transfer of tenancy rights since there was nothing on record to show that assessee was owner of the property and, accordingly, as the Commissioner (Appeals) rightly holds, section 50C could not have been invoked on the facts of the case. Income Tax Act, 1961 section 50C IN THE ITAT KOLKATA BENCH 'B' PRAMOD KUMAR, A.M. & MAHAVIR SINGH, J.M. Dy. CIT v. Tejinder Singh ITA No. 1459 (Kol) of 2011 C.O. No. 62 (Kol) of 2011 A.Y. 2008-09 29 February, 2012 Provisions of section 50C are not applicable in case of mere transfer of tenancy rights Appearing Parties by : A.P. Roy and L.K. Kanoongo ORDER *Pramod Kumar, A.M.* By way of this appeal, the appellant assessing officer has challenged correctness of learned Commissioner (Appeals)'s order dated 9-8-2011, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act), on the following ground: 1. That, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in deleting addition of Rs. 14,64,692 on account of long term capital gain. 2. That, in doing so, learned Commissioner (Appeals) erred in holding that section 50C has no application on transfer of leasehold right in building. 2. In the related cross objection filed by the assessee, following grievance has been raised: For that the learned Commissioner (Appeals) is not justified in not considering the alternative ground that section 50 C is not applicable when full value of the consideration is invested under section 54F as far as meaning of full value of consideration under section 54F is concerned. 3. The grievances, which have been raised in the appeal and the cross objections, are interconnected and centre around treatment of capital gains on sale of a property in which the assessee had tenancy rights. We will, therefore, take up all the grievances together. 4. The material facts are not in dispute. The assessee, alongwith one Amardeep Singh, had acquired, vide registered lease deeds dated 19-11-1992 with Shree Khubchand Sethia Charitable Trust (KSCT, in short), lease hold rights for 99 years in a house property situated at 5/1, Ripon Street, Kolkata. This property was collectively purchased by three entities, namely Sugam Builders Pvt Ltd, Neelanchal Sales and Suppliers Pvt Ltd and Pleasant Niryat Pvt Ltd. (collectively referred to as purchasers, in short), from the owner, i.e. Khubchand Sethia Charitable Trust, vide registered deed dated 20-7- 2007. This registered sales deed was a tripartite agreement between the owner, i.e. KSTC, the lessees, i.e. the assessee and Amardeep Singh, and the purchasers. Under the said agreement, while owner transferred inter alia all its rights, title and interest, ownership and reversionary rights in the said property' etc for a consideration of Rs. 1,00,00,000, the lessees gave up all its rights and interests in the said property and proceeded to, inter alia, 'grant, convey, transfer and assign their leasehold rights, title and interest in the said premises', for a consideration of Rs. 3,19,00,000. The total consideration of Rs. 3,19,00,000 paid by the purchasers for the said premises was thus divided as follows:- (i) Rs. 1,00,00,000 for the owner of the premises i.e. KSCT; (ii) Rs. 1,59,50,000 for Tejinder Singh, i.e. the assessee before us in this appeal; and (iii) Rs. 1,59,50,000 for Amardeep Singh, i.e. co lessee. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1985 (Kol-Trib) : (2012) 047 (II) ITCL 0510 : (2012) 147 TTJ 0087 : (2012) 050 SOT 0391 : (2012) 072 DTR 0160 : (2012) 016 ITR (Trib) 0045

INCOME TAX ACT, 1961

--Capital gains--Applicability of section 50CTransfer of tenancy rights--Assessee was a lessee on the property which was sold by owner. Assessee gave up all its rights and interests in the said property and proceeded to grant or convey, transfer and assign its leasehold right, title and interest in the said property for a part in total consideration. Assessee invoked section 50C and calculated the higher capital gain by taking value adopted by stamp value authority. Assessee contended that he was a tenant in the property sold by the owner therefore, so far as assessee was concerned, the receipt was in the nature of receipt on surrendering tenancy rights. Section 50C could not be applicable where only tenancy rights were transferred or surrendered. Commissioner (Appeals) held that the provisions of section 50C will apply on receipt of consideration on transfer of a property, being land or building or both. These provisions will not come into play in a case where only tenancy rights are transferred or surrendered. Held: The monies received by assessee, under the said agreement, were clearly in the nature of receipts for transfer of tenancy rights since there was nothing on record to show that assessee was owner of the property and, accordingly, as the Commissioner (Appeals) rightly holds, section 50C could not have been invoked on the facts of the case.

Income Tax Act, 1961 section 50C

IN THE ITAT KOLKATA BENCH 'B'

PRAMOD KUMAR, A.M. & MAHAVIR SINGH, J.M.

Dy. CIT v. Tejinder Singh

ITA No. 1459 (Kol) of 2011 C.O. No. 62 (Kol) of 2011

A.Y. 2008-09

29 February, 2012

Provisions of section 50C are not applicable in case of mere transfer of tenancy rights

Appearing Parties by : A.P. Roy and L.K. Kanoongo

ORDER

Pramod Kumar, A.M.

By way of this appeal, the appellant assessing officer has challenged correctness of learned Commissioner (Appeals)'s order dated 9-8-2011, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act), on the following ground:

1. That, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in deleting addition of Rs. 14,64,692 on account of long term capital gain.

2. That, in doing so, learned Commissioner (Appeals) erred in holding that section 50C has no application on transfer of leasehold right in building.

2. In the related cross objection filed by the assessee, following grievance has been raised:

For that the learned Commissioner (Appeals) is not justified in not considering the alternative ground that section 50 C is not applicable when full value of the consideration is invested under section 54F as far as meaning of full value of consideration under section 54F is concerned.

3. The grievances, which have been raised in the appeal and the cross objections, are interconnected and centre around treatment of capital gains on sale of a property in which the assessee had tenancy rights. We will, therefore, take up all the grievances together.

4. The material facts are not in dispute. The assessee, alongwith one Amardeep Singh, had acquired, vide registered lease deeds dated 19-11-1992 with Shree Khubchand Sethia Charitable Trust (KSCT, in short), lease hold rights for 99 years in a house property situated at 5/1, Ripon Street, Kolkata. This property was collectively purchased by three entities, namely Sugam Builders Pvt Ltd, Neelanchal Sales and Suppliers Pvt Ltd and Pleasant Niryat Pvt Ltd. (collectively referred to as purchasers, in short), from the owner, i.e. Khubchand Sethia Charitable Trust, vide registered deed dated 20-7- 2007. This registered sales deed was a tripartite agreement between the owner, i.e. KSTC, the lessees, i.e. the assessee and Amardeep Singh, and the purchasers. Under the said agreement, while owner transferred inter alia all its rights, title and interest, ownership and reversionary rights in the said property' etc for a consideration of Rs. 1,00,00,000, the lessees gave up all its rights and interests in the said property and proceeded to, inter alia, 'grant, convey, transfer and assign their leasehold rights, title and interest in the said premises', for a consideration of Rs. 3,19,00,000. The total consideration of Rs. 3,19,00,000 paid by the purchasers for the said premises was thus divided as follows:- (i) Rs. 1,00,00,000 for the owner of the premises i.e. KSCT; (ii) Rs. 1,59,50,000 for Tejinder Singh, i.e. the assessee before us in this appeal; and (iii) Rs. 1,59,50,000 for Amardeep Singh, i.e. co lessee.