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2018 Supreme(Raj) 2194
IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
Mr. M.N. Bhandari and Mr. Dinesh Chandra Somani, JJ.
Sh. Ram Ji Lal Meena - Appellant
Versus
Income Tax Officer - Respondent
Income Tax Appeal No. 53 of 2018
Decided On : 01-05-2018
Mr. Tanuj Agrawal and Mr. Udai Singh, Advs., for the Appellants
Section 50C of the Income Tax Act, 1961 is applicable to the transfer of capital asset, being land or building or both, where the consideration received or accruing as a result of the transfer is less than the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer.
Headnote:
INCOME TAX - SECTION 50C - SECTION 48 - STAMP DUTY - CAPITAL ASSET - TRANSFER - SALE DEED - CONSIDERATION - FULL VALUE - VALUATION OFFICER - LEASE HOLD RIGHTS - KHATEDARI LAND - ACQUISITION - POSSESSION - REVENUE LAND - STAMP VALUATION AUTHORITY - FAIR MARKET VALUE - WEALTH-TAX ACT, 1957 - SECTION 16A - SECTION 23A - SECTION 24 - SECTION 34AA - SECTION 35 - SECTION 37 - LAND ACQUISITION ACT, 1894 - SECTION 4 - SECTION 6 - INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH, JAIPUR - INCOME TAX OFFICER, WARD 6(1), JAIPUR VS. TARA CHAND JAIN - SCC ITAT - INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD - SMT. DEVINDRABEN I. BAROT VS. INCOME TAX OFFICER - COMMISSIONER OF INCOME TAX CENTRAL II, MUMBAI VS. M/S. GREENFIELD HOTELS & ESTATES PVT. LTD. - Whether Section 50C of the Income Tax Act, 1961 is applicable to the transfer of capital asset, being land or building or both, where the consideration received or accruing as a result of the transfer is less than the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer.
Fact of the Case:
The assessee sold a piece of land under a registered sale deed for consideration. The Assessing Authority made an addition of Rs.41,80,805/- under the head of capital gain, invoking Section 50C of the Income Tax Act, 1961. The assessee challenged the addition, contending that Section 50C was not applicable as it was not a transfer of capital asset but only of rights, since the land was under acquisition by RIICO and the possession of the land remained with RIICO and not with the assessee.
Finding of the Court:
The court held that Section 50C of the Income Tax Act, 1961 was applicable to the transfer of capital asset, being land or building or both, where the consideration received or accruing as a result of the transfer is less than the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer. The court found that the assessee had transferred a capital asset for consideration, and that the value adopted by the Sub-Registrar for registration of the sale deed was higher than the consideration received by the assessee. Therefore, the court upheld the addition made by the Assessing Authority under Section 50C.
Issues: Whether Section 50C of the Income Tax Act, 1961 is applicable to the transfer of capital asset, being land or building or both, where the consideration received or accruing as a result of the transfer is less than the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer.
Ratio Decidendi: The court held that Section 50C of the Income Tax Act, 1961 is applicable to the transfer of capital asset, being land or building or both, where the consideration received or accruing as a result of the transfer is less than the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer. The court found that the assessee had transferred a capital asset for consideration, and that the value adopted by the Sub-Registrar for registration of the sale deed was higher than the consideration received by the assessee. Therefore, the court upheld the addition made by the Assessing Authority under Section 50C.
Final Decision: The court dismissed the appeal filed by the assessee.
JUDGMENT
M.N. Bhandari, J. - By this appeal, a challenge is made to the order dated 4th October, 2017, passed by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (in short "the Tribunal"), dismissing the appeal preferred by the assessee.
2. The facts of the case are narrated in brief. It is a case where a land was sold by the assessee-appellant under a registered sale deed on consideration. The Assessing Authority made addition of Rs.41,80,805/- under the head of capital gain. The aforesaid was questioned by the assessee in reference to Section 50C of the Income Tax Act, 1961 (in short "the Act of 1961").
3. It was submitted that Section 50C of the Act of 1961 was not applicable to the facts of this case. It was not a transfer of capital asset but the rights. It was for the reason that land in question was under acquisition for RIICO. The land was sold by the khatedar to a Co-operative Society. A writ petition for regularisation of land was filed by the Co-operative Society. It was allowed by this court. The Apex Court reversed the judgment on an appeal preferred by the RIICO. In view of the above and due to acquisition, land vested in the State Government. The possession of it remained with the RIICO and not with the assessee. The sale deed was wrongly taken to be a transfer of capital asset, rather, it was only of rights. In view of the above, Section 50C of the Act of 1961 was not applicable yet covering the case by the aforesaid provision, additions were made.
4. Learned counsel for petitioner has made reference of various orders passed by the Tribunal and also of the High Court. It is also submitted that Section 50C of the Act of 1961 cannot be invoked if property is lease hold and not free hold and also when there exist khatedari rights, if it is a revenue land. The ownership vest in the State Government in both the cases. The Bombay High Court in the case of Commissioner of Income Tax Central II, Mumbai Vs. M/s. Greenfield Hotels & Estates Pvt. Ltd., reported in (2016) 389 ITR 68 (Bom) held that Section 50C of the Act of 1961 would not be applicable when there is a transfer of lease hold rights of the land.
5. In the instant case, the agriculture land was sold by the khatedar having rights like possessed by a lease holder. Taking into consideration the aforesaid, the order passed by the Tribunal may be interfered.
6. We have heard learned counsel for the appellant and perused the record.
7. The appeal has been filed against the order passed by the Tribunal where addition made by the assessing authority by invoking Section 50C of the Act of 1961, has not been interfered. The CIT (Appeals) held addition to be justified. The appeal filed by the assessee before the Tribunal was thus dismissed.
8. The appellant has raised manifold issues for our consideration and, out of it, first is about nature of transfer of land. It is submitted that possession of land was lying with the RIICO thus right in the property was transferred and not the capital asset, thereby, Section 50C of the Act of 1961 would not be applicable. For ready reference, aforesaid provision is quoted hereunder:
"50C. Special provision for full value of consideration in certain cases.
(1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed [or assessable] shall, for the purpose of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer:
Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same , the value adopted or assessed or assessable
