Subject: Smt. Krishna Gupta, the assessee was the joint owner of the said property along
Section 50C of the I.T. Act.
Referred Cases / Judgments
Vandana D. Shetty vs. ITO
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC", NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
Assessment Year : 2013-14
Rita Goyal, ITO, Ward- 2(2), Meerut,
Kashyap & Co. CAs, Uttar Pradesh.
214, Citi Center,
Begum Bridge Road, Meerut,
PAN : AFKPG3896F
Assessee by : Shri P. S. Kashyap, CA
Department by : Shri Atiq Ahmed, Sr. DR
Date of hearing : 02-08-2018
Date of pronouncement : 21-08-2018
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated
18.12.2017 of CIT(A), Aligarh relating to assessment year 2011-12.
2. Grounds of appeal raised by the assessee are as under :-
"1. That the CIT(A) Aligarh Camp At Meerut has erred in law as well as on facts
in accepting the value of house property as per the provisions of Sec.50C of the Act
when the property in question was a lease hold property.
2. That the A.O. had framed assessment after adopting the value as per the
provisions of Sec.50C of the Act in spite of the specific request of the assessee to refer
the matter of valuation to the DVO. The lapse committed by the A.O. cannot be cured
by CIT(A). Hence the order passed by CIT(A) and addition passed by A.O. ought to
3. That on facts the addition made u/s 50C of the Act for Rs.30,12,846/- is
without any basis, totally wrong, unjustified, ill legal and unwarranted.
i) That the Ld. CIT(A) has not considered the various facts before
passing the order.
ii) That addition was made on the basis of agreement execute by the
assessee, though the property was sold by her late mother.
4. That the assessee craves leave to add, amend, alter or withdraw any of the
ground of appeal on or before the date of hearing."
3. Facts of the case, in brief, are that the assessee is an individual and
derives income from business. She filed her return of income on 21.03.2012
declaring total income of Rs.1,67,140/-. During the course of assessment
proceedings, the Assessing Officer noted from the AIR information received
that the assessee has sold property situated at Mahanagar, Lucknow for
Rs.1,08,23,309/-. On being questioned by the Assessing Officer, it was
submitted that this property was inherited property from her late mother Smt.
Krishna Gupta, who expired on 21.07.2009. As per the Will, after the death of
Smt. Krishna Gupta, the assessee was the joint owner of the said property along
with her sister Smt. Aparna Kumar. Therefore, the assessee was 50% owner of
the said property. From the perusal of calculation of long term capital gain
furnished by the assessee, the Assessing Officer observed following :-
(a) The value of acquisition of the said property as on 01.04.1981 was at
(b) The sale consideration value shown was at Rs.25,00,000/- u/s 50C.
(c) The assessee claimed deduction u/s 54F at Rs.10,50,000/-.
4. The Assessing Officer observed that as per the Sale Deed the sale value
should have been taken at Rs.54,11,655/- as per provisions of section 50C of the
I.T. Act. Further, the assessee has taken the cost of acquisition of the property
as per the rate of financial year 1981-82 at Rs.3,50,000/- and cost of
improvement in financial year 2009-10 at Rs.22,470/- without any documentary
evidence. He, therefore, adopted the prevailing circle rate in the financial year
1981-82 at Rs.46,660/- being the cost of acquisition of the property since circle
rate at that time was Rs.10/- per sq.ft. and the total area of the property was
approximately 4666 sq.ft.. Rejecting the various explanations given by the
assessee, the Assessing Officer determined the long term capital gain at
Rs.49,86,062/- after deduction of Rs.19,73,216/- u/s 54 of the I.T. Act, 1961.
The Assessing Officer made addition of Rs.30,12,846/- on account of long term
capital gain by observing as under :-
Value u/s 50C 54,11,655
Less : indexed cost
VALUATION OF LAND @ 12.50 PER SQ FOOT 2,07,349
F.Y. 1981-82 29163 x 711
F.Y. 2009-10 22470 x 711
VALUATION OLD STRUCTURE 1,92,965
F.Y. 1981-82 27140 x 711
LESS : DEDUCTION U/S 54 19,73,216
Therefore, an addition of Rs.30,12,946/- is being made in the income of the assessee
on account of LTCG.
5. In appeal, the ld. CIT(A) upheld the action of the Assessing Officer by
observing as under :-
7.1 The A.O. had computed LTCG by taking full value of consideration as the
value determined for stamp duty purposes. However, the appellant was contesting
this valuation and claimed that the fair market value is much less than the value
determined for stamp purposes. Accordingly, the matter of valuation was referred to
the DVO. The DVO has determined the value of the appellant's share at
Rs.59,32,450/- (half share of Rs.1,18,64,900/-). The value determined by the DVO is
even higher than the value determined for stamp purposes at Rs.54,11,655/-. Under
these circumstances, the value determined for stamp purposes i.e. Rs.54,11,655/- has
to be taken as the full value of consideration for the purpose of section 48. The DVO
has determined the value as on 01.04.1981 at Rs.70,000/- which is much lower than
what the appellant has claimed. In the assessment proceedings, the A.O. had
accepted the appellant's calculation with regard to the indexed cost of acquisition of
Rs.4,25,593/-. Since the reference for valuation was made under the provisions of
section 50C, the DVO was not required to give his opinion with regard to the cost of
acquisition. Moreover, since there was no dispute with regard to the cost of
acquisition, the value determined by the DVO needs to be ignored.
In view of the above, no error is established in the computation of LTCG made
by the A.O. Therefore, the assessment is being confirmed and the grounds of appeal
are being dismissed."
6. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal
before the Tribunal.
7. The ld. counsel for the assessee, at the outset, submitted that since the
property is a leasehold property, therefore, the provisions of section 50C are not
applicable. Referring to the decision of the Mumbai Bench of the Tribunal in
the case of Vandana D. Shetty vs. ITO vide ITA No.6668/Mum/2016 order
dated 05.07.2017, he submitted that the Tribunal following various decisions
has held that the transfer of capital asset and not transfer of leasehold rights
attract the provisions of section 50C of the Act. Since the property in question
was a residential house having municipal no.498/237/2 with leasehold rights in
land measuring 4666 sq.ft., therefore, the provisions of section 50C do not
apply. Therefore, entire addition made by the Assessing Officer and sustained
by the ld. CIT(A) should be deleted.
8. The ld. DR on the other hand supported the orders of the authorities
below. He submitted that it was neither stated before the Assessing Officer nor
before the ld. CIT(A) that the property is a leasehold property. Nothing is
coming out of the record that the impugned property is a leasehold property.
Therefore, the argument of the ld. counsel for the assessee cannot be accepted at
9. I have considered the rival arguments made by both the sides and perused
the material available on record. It is the submission of the ld. counsel for the
assessee that the property in question is a leasehold property and, therefore, the
provisions of section 50C are not applicable. However, a perusal of the
assessment order and the order of the ld. CIT(A) nowhere mentions that it is a
leasehold property since nothing is coming out from the record. It is also not
coming out of record as to what has happened in the case of the co-owner.
Considering the totality of the facts of the case and in the interest of justice, I
deem it proper to restore the issue to the file of the Assessing Officer with a
direction to adjudicate the issue afresh. While doing so, he has to give his
opinion as to whether the property is a leasehold property or not and whether
long term capital gain is chargeable on the leasehold property or not. Further,
the Assessing Officer while passing the order shall keep in mind the decision of
the Mumbai Bench of the Tribunal in the case of Vandana D. Shetty (supra).
The Assessing Officer shall decide the issue as per fact and law after giving due
opportunity of being heard to the assessee. I hold and direct accordingly. The
grounds raised by the assessee are accordingly allowed for statistical purposes.
10. In the result, the appeal filed by the assessee is allowed for statistical
Order pronounced in the open Court on this 21st August, 2018.
(R. K. PANDA)
Copy of order to: -
1) The Appellant
2) The Respondent
3) The CIT
4) The CIT(A)
5) The DR, I.T.A.T., New Delhi
ITAT, New Delhi