Sh. Ram Ji Lal Meena v. Income Tax Officer, Ward

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 53/2018 Sh. Ram Ji Lal Meena S/o Sh. Bachu Ram Meena, R/o Fa-20,Sidharth Nagar, Malviya Nagar, Jaipur -302017 (Rajasthan) ----Appellant Versus Income Tax Officer, Ward No. 6(1), Jaipur (Rajasthan) ----Respondent For Appellant(s) : Mr. Tanuj Agrawal & Mr. Udai Singh SidhuFor Respondent(s): HON'BLE MR. JUSTICE M.N. BHANDARI HON'BLE MR. JUSTICE DINESH CHANDRA SOMANI 01/05/2018 Order By this appeal, a challenge is made to the order dated 4[th]October, 2017, passed by the Income Tax Appellate Tribunal,Jaipur Bench, Jaipur (in short “the Tribunal”), dismissing theappeal preferred by the assessee. The facts of the case are narrated in brief. It is a case wherea land was sold by the assessee-appellant under a registered saledeed on consideration. The Assessing Authority made addition ofRs.41,80,805/- under the head of capital gain. The aforesaid wasquestioned by the assessee in reference to Section 50C of theIncome Tax Act, 1961 (in short “the Act of 1961”). It was submitted that Section 50C of the Act of 1961 was notapplicable to the facts of this case. It was not a transfer of capitalasset but the rights. It was for the reason that land in question was under acquisition for RIICO. The land was sold by thekhatedar to a Co-operative Society. A writ petition forregularisation of land was filed by the Co-operative Society. It wasallowed by this court. The Apex Court reversed the judgment onan appeal preferred by the RIICO. In view of the above and due toacquisition, land vested in the State Government. The possessionof it remained with the RIICO and not with the assessee. The saledeed was wrongly taken to be a transfer of capital asset, rather, itwas only of rights. In view of the above, Section 50C of the Act of1961 was not applicable yet covering the case by the aforesaidprovision, additions were made. Learned counsel for petitioner has made reference of variousorders passed by the Tribunal and also of the High Court. It is alsosubmitted that Section 50C of the Act of 1961 cannot be invoked ifproperty is lease hold and not free hold and also when there existkhatedari rights, if it is a revenue land. The ownership vest in theState Government in both the cases. The Bombay High Court inthe case of Commissioner of Income Tax Central II, MumbaiVs. M/s. Greenfield Hotels & Estates Pvt. Ltd., reported in(2016) 389 ITR 68 (Bom) held that Section 50C of the Act of1961 would not be applicable when there is a transfer of leasehold rights of the land. In the instant case, the agriculture land was sold by thekhatedar having rights like possessed by a lease holder. Takinginto consideration the aforesaid, the order passed by the Tribunalmay be interfered. We have heard learned counsel for the appellant and perusedthe record. The appeal has been filed against the order passed by theTribunal where addition made by the assessing authority byinvoking Section 50C of the Act of 1961, has not been interfered.The CIT (Appeals) held addition to be justified. The appeal filed bythe assessee before the Tribunal was thus dismissed. The appellant has raised manifold issues for ourconsideration and, out of it, first is about nature of transfer ofland. It is submitted that possession of land was lying with theRIICO thus right in the property was transferred and not thecapital asset, thereby, Section 50C of the Act of 1961 would notbe applicable. For ready reference, aforesaid provision is quotedhereunder: ”50C. Special provision for full value ofconsideration in certain cases. The appeal has been filed against the order passed by theTribunal where addition made by the assessing authority byinvoking Section 50C of the Act of 1961, has not been interfered.The CIT (Appeals) held addition to be justified. The appeal filed bythe assessee before the Tribunal was thus dismissed. The appellant has raised manifold issues for ourconsideration and, out of it, first is about nature of transfer ofland. It is submitted that possession of land was lying with theRIICO thus right in the property was transferred and not thecapital asset, thereby, Section 50C of the Act of 1961 would notbe applicable. For ready reference, aforesaid provision is quotedhereunder: ”50C. Special provision for full value ofconsideration in certain cases. (1)Where the consideration received or accruing asa result of the transfer by an assessee of a capitalasset, being land or building or both, is less than thevalue adopted or assessed [or assessable] by anyauthority of a State Government (hereafter in thissection referred to as the “stamp valuation authority”)for the purpose of payment of stamp duty in respectof such transfer, the value so adopted or assessed [orassessable] shall, for the purpose of section 48, bedeemed to be the full value of the considerationreceived or accruing as a result of such transfer: Providedthat where the date of the agreementfixing the amount of consideration and the date ofregistration for the transfer of the capital asset arenot the same, the value adopted or assessed orassessable by the stamp valuation authority on thedate of agreement may be taken for the purpose of computing full value of consideration for such transfer: Provided furtherthat the first proviso shall applyonly in a case where the amount of consideration, ora part thereof, has been received by way of anaccount payee cheque of account payee bank draft orby use of electronic clearing system through a bankaccount, on or before the date of the agreement fortransfer. (2)Without prejudice to the provisions of sub-section (1), where- (a)the assessee claims before anyAssessing Officer that the value adopted orassessed [or assessable] by the stampvaluation authority under sub-section (1)exceeds the fair market value of theproperty as on the date of transfer; (b)the value so adopted or assessed [orassessable] by the stmap valuationauthority under sub-section (1) has notbeen disputed in any appeal or revision orno reference has been made before anyother authority, court or the High Court, the Assessing Officer may refer the valuation of thecapital asset to a Valuation Officer and where anysuch reference is made, the provisions of sub-section(2), (3), (4), (5) and (6) of section 16A, clause (i) ofsub-section (1) and sub-sections (6) and (7) ofsection 23A, sub-section (5) of section 24, section34AA, section 35 and section 37 of the Wealth-taxAct, 1957 (27 of 1957), shall, with necessarymodifications, apply in relation to such reference as they apply in relation to a reference made by theAssessing Officer under sub-section (1) of section 16Aof that Act. Explanation 1.-For the purposes of this section,“Valuation Officer” shall have the same meaning as inclause (r) of section 2 of the Wealth-tax Act, 1957 (27of 1957). Explanation 2.-For the purposes of this section, theexpression “assessable” means the price which thestampvaluationauthoritywouldhave,notwithstanding anything to the contrary contained inany other law for the time being in force, adopted orassessed, if it were referred to such authority for thepurposes of the payment of stamp duty.] they apply in relation to a reference made by theAssessing Officer under sub-section (1) of section 16Aof that Act. Explanation 1.-For the purposes of this section,“Valuation Officer” shall have the same meaning as inclause (r) of section 2 of the Wealth-tax Act, 1957 (27of 1957). Explanation 2.-For the purposes of this section, theexpression “assessable” means the price which thestampvaluationauthoritywouldhave,notwithstanding anything to the contrary contained inany other law for the time being in force, adopted orassessed, if it were referred to such authority for thepurposes of the payment of stamp duty.] (3)Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed[or assessable] by the stamp valuation authorityreferred to in sub-section (1), the value so adoptedor assessed [or assessable] by such authority shallbe taken as the full value of the considerationreceived or accruing as a result of the transfer.” The provision aforesaid applies in the circumstancesexplained therein. If facts of this case are taken intoconsideration, a sale deed was executed for sale of the land. Theappellant has received consideration. The sale deed was registeredby the Sub-Registrar-IV, Jaipur. The transfer of capital asset exists, that too, onconsideration. The dispute has been raised about possession ofthe property. According to the revenue, the possession of property lies with the assessee, whereas, according to the assessee, it lieswith the RIICO. The material available on record does not showpossession of RIICO as copy of award for acquisition of land andthe “fard” possession are not on record. The documents showissuance of Notification under Sections 4 and 6 of the LandAcquisition Act, 1894 and not the award. The judgment of theApex Court was also on challenge to the Notification underSections 4 and 6 of the Act of 1894. Section 50C of the Act of 1961 has been invoked for thereasons explained by the Tribunal inasmuch as sale deed wasmade on consideration of Rs.11,70,000/-, whereas, value of theproperty taken by the Sub-Registrar IV, Jaipur for registration ofsale deed was at Rs.53,11,367/- and, accordingly, it was stamped.In those circumstances, the question was whether Section 50C ofthe Act of 1961 would apply or not. According to CIT (Appeals)and the Tribunal, addition was rightly made by the AssessingOfficer by applying Section 50C of the Act of 1961. In view of the above, we do not find that a question of law isinvolved in this case. The dispute has been raised on facts. Thatcannot be a ground for maintaining an appeal as it can beadmitted only if question of law is involved. Taking intoconsideration the aforesaid, we do not find that appeal preferredby the assessee against the order passed by the Tribunal can beadmitted. Learned counsel for appellant has made reference of certainorders passed by the Income Tax Appellant Tribunal, JaipurBench, Jaipur in the case of Income Tax Officer, Ward 6(1),Jaipur Vs. Tara Chand Jain, 2/1, Malviya Nagar, Jaipur, reported in (2015) 155 ITO 956 (JP), SCC ITAT and of theIncome Tax Appellant Tribunal, Ahmedabad in the case of Smt.Devindraben I. Barot Vs. Income Tax Officer, reported in(2016) 159 ITD 162 (Ahm) apart from judgment of theBombay High Court in the case of M/s. Greenfield Hotels & EstatesPvt. Ltd. (supra). Learned counsel for appellant has made reference of certainorders passed by the Income Tax Appellant Tribunal, JaipurBench, Jaipur in the case of Income Tax Officer, Ward 6(1),Jaipur Vs. Tara Chand Jain, 2/1, Malviya Nagar, Jaipur, reported in (2015) 155 ITO 956 (JP), SCC ITAT and of theIncome Tax Appellant Tribunal, Ahmedabad in the case of Smt.Devindraben I. Barot Vs. Income Tax Officer, reported in(2016) 159 ITD 162 (Ahm) apart from judgment of theBombay High Court in the case of M/s. Greenfield Hotels & EstatesPvt. Ltd. (supra). The perusal of order passed by the ITAT, Ahmedabad revealschange of tenor of transaction for sale of land. The sale thereinwas through a registered sale deed for consideration but it wastaken to be relinquishment of right. Without there beingrelinquishment deed and without examining what is the differencebetween sale of the land and relinquishment of right in theproperty, case was decided. In view of the above, order passed bythe ITAT, Ahmedabad cannot be accepted. It failed to appreciateeven legal provisions in reference to relinquishment of right vis avis sale of the property. The another order has been passed by the ITAT, JaipurBench, Jaipur. In the aforesaid case, the Tribunal drawn itsconclusion in Paras 6.9 and 6.11. Both the paras are quotedhereunder for ready reference: “6.9 Section 50C is a deeming provision and it is only applicable in respect of capital assets which are landof building or both. It is thus clear that this deemingprovision of section 50C will come into play only if thecapital asset transferred by the assessee is a land orbuilding or both. If, in the absence of capital assettransferred is neither the land nor building nor both, this deeming provision shall not be applicable to suchtransfer. 6.11 In the opinion of the Bench, the rights in landcannot be equated with the land or building.Therefore, it is concluded that section 50C isapplicable to transfer of capital asset only in respectof land or building or both and is not applicable toright in land. In the present case, the assessee hasonly transferred the right in land for a valuableconsideration, therefore, in the opinion of the Bench,the long term capital gain cannot be calculated byinvoking the deeming provisions provided undersection 50C. Therefore we hold that section 50C is notapplicable to present case. This is also of view ofMumbai Tribunal in the case of Atul G. Puranik v. ITO(2011) 11 ITR 120 (Trib.).” Learned Tribunal came to the conclusion that Section 50C ofthe Act of 1961 would apply if there is a transfer of land orbuilding or both. It would not apply in absence of transfer ofcapital asset. In Para 6.11, the Tribunal found that assessee hastransferred only right in the land for valuable consideration,thereby, did not transfer capital asset. The finding aforesaid hasbeen recorded without proper scrutiny of facts. How the land andbuilding or both were disclosed by the assessee in the balance-sheet has not been taken note of. It is also as to how it is nottransfer of capital asset. If it is reflected as capital asset, transferthereupon for consideration would attract Section 50C of the Act of 1961 but the aforesaid aspect has not been considered by theITAT Tribunal, Jaipur Bench, Jaipur. It is nothing but an orderwithout elaborate finding on the issue, that too, after taking intoconsideration the requisite facts for its adjudication. of 1961 but the aforesaid aspect has not been considered by theITAT Tribunal, Jaipur Bench, Jaipur. It is nothing but an orderwithout elaborate finding on the issue, that too, after taking intoconsideration the requisite facts for its adjudication. The appellant has referred judgment of Bombay High Courtwhere it was held that Section 50C of the Act of 1961 would notbe applicable on transfer of lease hold rights of the land. Bareperusal of Section 50C of the Act of 1961 does not show thattransfer of capital asset for consideration should be other than oflease hold property or khatedari land. The court cannot re-writethe provision. If analogy taken by the Bombay High Court in thecase (supra) is applied in general then Section 50C of the Act of1961 would not be applicable in majority of the cases as not it isallowed as lease hold property. Section 50C of the Act of 1961 isapplicable on transfer of capital assets for consideration. TheBombay High Court has not referred as how the land was in thebalance-sheet. It is as a capital asset or not thus we are unable toapply the judgment of Bombay High Court in the case of M/s.Greenfield Hotels & Estates Pvt. Ltd. (supra). In view of the discussion made above, we do not find thatany question of law is involved herein. The appeal is, accordingly, dismissed. (DINESH CHANDRA SOMANI),J (M.N. BHANDARI),J FRBOHRA