Pramod Kumar, Accountant Member - By way of this appeal, the appellant Assessing Officer has challenged correctness of learned Commissioner (Appeals)'s order dated 9th August 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 CIT(A) has erred in deleting addition of Rs. 14,64,692 on account of long term capital gain.

2. That, in doing so, learned CIT(A) 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 CIT(A) 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 19th November 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 20th day of July 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.

5. In the course of assessment proceedings, however, the Assessing Officer noted that the stamp duty valuation of the property, which was sold by KSCT, was Rs. 5,59,57,375, whereas the stated sales consideration of the property was only Rs. 4,19,00,000. He was of the view that, in terms of the provisions of Section 50 C, the sales consideration, for the purpose of computing the capital gains, is to be taken at the stamp duty valuation adopted by the stamp valuation authority. He thus adopted the amount of Rs. 5,59,57,375 as sales consideration, and proceeded to notionally divide the said amount amongst the owner and the lessees in the same ratio in which the actual consideration was divided. Accordingly, as against the amount of Rs. 1,59,50,000 actually received by the assessee, he included the amount of Rs. 2,12,47,375 in computation of capital gains in the hands of the assessee. He then proceeded to compute cost of acquisition as the lease rentals paid by the assessee over the years, and after indexing the same, computed the cost of acquisition at Rs. 28,79,698. On this basis, long term capital gain was computed at Rs. 1,84,17,692. The Assessing Officer then noted that since while