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2026 Supreme(Online)(ITAT) 7991
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Vikram Singh Yadav, AM, Kavitha Rajagopal, JM
Mahendra Silk Mills Pvt. Ltd. – Appellant
Versus
Income Tax Officer – Respondent
ITA No. (not specified) (Assessment Year: 2009-10)
Important Points
Subject
Taxation - Income Tax - Capital Gains
Act Referred
Headnote
(B) Income Tax Act, 1961 - Section 50C - Proviso to sub-section (1) - Retrospective application - Proviso inserted by Finance Act, 2016 allowing stamp value as on date of agreement (if different from registration date and consideration/part paid by banking channel) is curative and applies retrospectively to remove undue hardship. (Paras 12-13)
Facts of the case:
Assessee transferred permanent leasehold rights in land and superstructure vide conveyance deed in AY 2009-10 with stamp value higher than consideration. Assessee claimed transfer occurred in AY 2003-04 based on earlier agreements and possession delivery, with payments received through banking channel from 2002-2009. AO applied section 50C using stamp value on registration date, treating as short-term capital gain; CIT(A) upheld.
Findings of Court:
Section 50C applicable to permanent leasehold rights; proviso to section 50C(1) retrospectively applicable, directing AO to recompute capital gains using stamp value on agreement date.
Issues: Whether section 50C applies to leasehold rights; whether transfer year is AY 2003-04 or 2009-10; whether proviso to section 50C(1) applies retrospectively; classification as short-term capital gain.
Ratio Decidendi: Permanent leasehold rights constitute 'land or building' under section 50C read with section 2(14) as they confer substantial ownership; curative proviso to section 50C(1) operates retrospectively where agreement and registration dates differ with banking channel payments, remedying anomaly and hardship.
Result: Appeal partly allowed; AO directed to recompute capital gains per proviso to section 50C using agreement date valuation. (Paras 10, 13-14)
For the Appellants/Petitioners: Satish Mody, AR, Annavaram Kosuri, Sr. AR
| Table of Content |
|---|
| 1. appeal challenges cit(a) order on capital gains assessment. (Para 1 , 2 , 3 , 4 , 5) |
| 2. parties argue transfer date and possession timing. (Para 6 , 7) |
| 3. section 50c applies to leasehold rights akin to ownership. (Para 8 , 9 , 10) |
ORDER
Per Kavitha Rajagopal, JM:
This appeal filed by the assessee challenges the order of the Learned Commissioner of Income Tax (Appeals), Mumbai (‘Ld. CIT(A)’ for short), National Faceless Appeal Centre (“NFAC” for short) passed u/s 250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2009-10.
2. The assessee has raised the following grounds of appeal:
“1. The Learned Commissioner of Income Tax Appeal has erred in facts and in law in confirming the assessment of the capital gains arising from transfer of leasehold land and building thereon in Assessment Year 2009-10 as against in Assessment Year 2003-04 offered by the Appellant.
2. The Learned Commissioner of Income Tax Appeal has erred in accepting the findings of the Remand Report of learned Assessing Officer and thereby in not discussing and appreciating the facts brought out by the appellant in response to the Remand Report.
3. The Learned Commissioner of Income Tax Appeal erred in Law in confirming the application of the provisions of section 50C of the Income Tax Act, 1961 and thereby not appreciating the fact the subject of transfer is leasehold rights in the property and that section 50C do not apply to leasehold land.
4. The Learned Commissioner of Income Tax Appeal has erred in facts and in law in confirming the substitution of the market value of land in Assessment Year 2009-10 whereas the consideration was decided by the parties in Assessment Year 2003-04.
5. The Learned Commissioner of Income Tax Appeal erred in facts and in law in confirming the assessment of capital gains on transfer of leasehold rights in the land as short term capital gains when in facts of the appellant no depreciation was claimed on the leasehold land.
6. The Appellant reserves the right to add, delete or alter any of the above grounds of appeal.”
3. Brief facts of the case are that the assessee company filed its return of income dated 29.09.2009 declaring total income at Rs.7,23,990/- under the normal provisions and book profit of Rs.1,58,18,589/- u/s 115JB of the Act and the same was processed u/s 143(1) of the Act. The assessee’s case was reopened u/s 147 of the Act vide notice u/s 148 of the Act dated 11.01.2012 based on the information from ITO, Ward-11(3), Ahmedabad that the assessee has sold property to Mr. Rasulmiya H. Shaikh and two others for a consideration of Rs.1,24,84,085/-, which stamp duty value was Rs.4,36,45,790/- thereby resulting in under assessment of Rs.3,11,61,705/- u/s 50C of the Act where income has escaped assessment. After duly considering the assessee’s submission the Learned Assessing Officer (“Ld. AO” for short) passed the assessment order dated 18.03.2013 u/s 147 r.w.s 143(3) of the Act determining the total income at Rs.4,43,77,725/- under the normal provision after duly making an addition of Rs.4,36,45,790/- as Short Term Capital Gain (“STCG” for short) u/s 50C of the Act being the difference in the sale consideration as per the stamp duty valuation and book profits at Rs.17,92,246/- u/s 115JB of the Act.
4. Aggrieved, the assessee was in appeal before the first appellate authority who vide order dated 30.07.2025 upheld the addition made by the Ld. AO on various grounds.
5. Aggrieved, the assessee is in appeal before us, challenging the order of the Ld. CIT(A) on the abovementioned grounds.
6. The Learned Authorized Representative (“Ld. AR” for short) for the assessee contended that the assessee has sold the property during the A.Y. 2003-04 and had given possession to the transferees on 22.11.2002 which is duly reflected in the supplementary and possession deed executed by the assessee and the transferees dated 22.11.2002. The Ld. AR further contended that the assessee has furnishe
