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Khazan Singh Anand, Kothi No. 2, GF Kailash Enclave, Pitampura, New Delhi Vs. ITO, Ward 40(5), New Delhi
December, 03rd 2020

INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “SMC-I”: NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER

AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

(Through Video Conferencing)

ITA No. 5837/Del/2019

(Assessment Year: 2016-17)

Khazan Singh Anand, Vs. ITO,

Kothi No. 2, GF Kailash Enclave, Ward-40(5),

Pitampura, New Delhi New Delhi

PAN: AAAPA1872A

(Appellant) (Respondent)

Assessee by : Shri Baldev Raj, CA
Revenue by: Shri R. K. Gupta, Sr. DR
Date of Hearing
Date of pronouncement 29/10/2020
02/12/2020

O R D E R

PER PRASHANT MAHARISHI, A. M.

1. This appeal is filed by the assessee against the order of the ld CIT(A)-14,

New Delhi dated 22.05.2019 for the Assessment Year 2016-17, wherein, the

appeal filed by the assessee against the order passed u/s 143(3) of the Act,

where total income of the assessee was assessed at Rs. 27,77,120/- against

the return filed at Rs. 5,67,120/- passed u/s 143(3) of the Act by the ITO,

Ward-40(5), Delhi was dismissed.

2. The assessee has raised the following grounds of appeal:-

“1. That on the facts and circumstances of the case, the order
datedaslS,12.2016 passed by the Income-tax Officer, Ward 40(5), New
Delhi [hereinafter referred to as "the Ld. A.O."] under section 14313) of
the Income-tax Act, 1961 [hereinafter referred to as "the Act"] and as
upheld by the Ld. Commissioner of Income-tax (Appeals) - 14, New
Delhi [hereinafter referred to as "the CIT(A)"] is bad at law and mid ab
initio.

2. That on the facts and in the circumstances of the case and in law, the
CIT(A) erred in upholding the Applicability of section SOC of the Act cm
transfer of lease hold land.

3. That, without prejudice to the ground no 2 :
That, on the facts and in the circumstances of the case and its law, the
CIT(A) erred in upholding Rs 42,10,000 as full value of consideration
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being the value adopted by stamp valuation authority, even when the
Ld, AO had not referred this matter to Valuation Officer and or not
followed the mandatory procedure law down U/S 50C(2 ) of the Act.
where Appellant had disputed the value so adopted and submitted that
value adopted by the stamp duty authority is higher than the fair
market value.


4. That on the facts and in circumstances of the case, the Ld. CIT(A) erred
Rs. 6,38,302/- in upholding the addition to the tune of Rs, 22,10,000/-
in short term capital gain as per provision of section 50 C of the Act
5.1 All the above-mentioned grounds are independent and without
prejudice General ground to other.”

3. Brief facts of the case shows that the assessee is an individual. He filed his
return of income on 04.07.2016 declaring income of Rs. 567120/-. The case
of the assessee was selected for limited scrutiny for the reason that sale
consideration of property shown in income tax return is less than the value
as per stamp authority. Therefore, notice u/s 143(3) was issued on
14.07.2017.

4. During the year it was found that the assessee was allotted leasehold right
of plot NO. 25, Pocket A3 in Sector 28, Rohini , New Delhi on 27.11.2014 by
Delhi Development Authority. The total cost of the plot was Rs. 1395120/-
which was sold on 26.10.2015 for Rs. 20 lakhs. The circle rate of plot as per
stamp duty rate was Rs. 42,10,000/-. However, the assessee opted for
showing the capital gain on the same by adopting the sale consideration as
per sale deed of Rs. 20 lakhs and supported it by a market value
certification from registered valuer. The assessee declared the resultant
capital gain as short term capital gain of Rs. 554880/-.

5. The ld AO noted that provisions of section 50C applies and therefore, show
cause notice was issued on 02.12.2018. The assessee submitted which is
reply on 05.12.2018 stating that market value of the above property is very
low as compared to circle rate. The assessee supported it by the valuation
certificate.

6. The ld AO rejected the contention of the assessee and substituted the sale
consideration of Rs. 20 lakhs by the stamp duty valuation u/s 50C of the
property of Rs. 4210000/-. Accordingly, short term capital gain was worked
out at Rs. 2764880/- against the short term capital gain assessed by the
assessee at Rs. 554880/-. Consequently, addition of Rs. 2210000/- was

Page | 2
made. The assessment order was passed u/s 143(3) of the Act on
15.12.2018 determining the total income of the assessee at Rs. 2777120/-
against the return income of Rs. 567120/-.
7. Aggrieved by the order of the ld AO the assessee preferred appeal before the
ld CIT(A) who confirmed the addition and therefore, the assessee is in
appeal before us.


8. The rival parties are heard, paper book produced by the ld representative
was perused. On careful consideration of the whole issue it is apparent that
ground No. 1 is general in nature and hence, same is dismissed.
9. Ground No. 2 and 3 of the appeal are on the merits of the addition. The fact
shows that DDA allotted to the appellant the leasehold right of a plot of land
at Plot No. 25 Pocket No. 3A, Sector 28, Rohini, New Delhi as per allotment
letter dated 27.11.2014. The assessee took the possession of the above plot
on 03.05.2015. Above leasehold right were transferred by the assessee as
per registered agreement to sale to one Smt. Deepika Kapoor. The claim of
the assessee is that provisions of section 50C applies only to the transfer of
land and Building or both but it does not extend to the transfer of leasehold
right. According to the assessee leasehold rights are neither land or building
or both. For this proposition the assessee relied upon the decision of the
coordinate bench in case of Noida Cyber Park Pvt. Ltd ITA No.
165/Del/2020 dated 12.10.2020. However, on careful perusal of the fact it
is apparent that the issue is squarely covered in favour of the assessee by
the decision of the Hon’ble Bombay High Court in 389 ITR 68 CIT Vs.
Greenfield Hotels and Estates Pvt. Ltd wherein, the Hon’ble High Court has
upheld the order of the coordinate bench holding that provisions of section
50C will not be applicable while computing the capital gain on transfer of
leasehold rights in land and plot. The issue is also covered in favour of the
assessee by the decision of the coordinate bench in case of Ritz Suppliers
Pvt. Ltd Vs. ITO 182 ITD 227 (Kol), Pyaribai K Jain Vs. CIT 175 ITD 177
(Mum), Kencast Pvt. Ltd Vs. ITO 68 SOT 110(Pune). In view of the above
binding precedents we allow ground No. 2 of the appeal which challenges
that provision of section 50C of the Act do not apply on transfer of leasehold
right in plot of land and direct the ld AO to delet the addition of Rs

Page | 3
2210,000/- made u/s 50C of the act . Accordingly, ground No. 2 of the
appeal is allowed.
10. Ground no. 3 and 4 are on the merit of the issue which are not required to
be adjudicated in view of the finding in ground No. 2 of the appealwherein ld
AO s directed to delete the addition of Rs. 2210000/- made u/s 50C of the
Act as short term capital gain.
11. Accordingly, appeal of the assessee is partly allowed.
Order pronounced in the open court on 02/12/2020.

-Sd/- -Sd/-
(AMIT SHUKLA) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 02/12/2020
A K Keot

Copy forwarded to

1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT

ASSISTANT REGISTRAR
ITAT, New Delhi

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