Sh. Sharvan Kumar Sharma v. Income Tax Officer , Ward

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 49/2018 Sh. Sharvan Kumar Sharma S/o Late Sh. Suji Lal , R/o PlotNo.50, Malviya Nagar, Ramjipura, Jaipur 302017 ----Appellant Versus Income Tax Officer , Ward No.61 Jaipur ----Respondent For Appellant(s) : Mr. Udai Singh Sidhu HON'BLE MR. JUSTICE KALPESH SATYENDRA JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 03/07/2018 Judgment 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby tribunal has allowedthe appeal of the assessee for statistical purposes only. 2.Counsel for the appellant has framed following substantialquestions of law:- A) Whether in facts and circumstances of thepresent case, the Hon’ble Income TaxAppellate Tribunal erred in upholding theorder dt. 17.3.2017 passed by Commissionerof Income Tax and action of Income TaxOfficer vide order dt. 29.2.2016 in upholdingthe sale of right in land/contingent right assale of land and applying Section 50C of theIncome Tax Act, 1961 without appreciatingthe fact of the case that:” a. The Possession and ownership of the landvest with the RIICO/Government.” b. The transfer documents i.e. sale deed,POA etc. contains a special provision thatlitigations are going and the possession is with the RIICO/Government. The buyer willonly be entitle to claim compensation fromthe Government. Due to this fact, the sellerwill not be liable to pay anything to buyerdue to the outcome of litigation and thebuyer is only entitled to claim compensationfrom the government. c. The Transfer of Property Act Section 52specifically says that when a court case ispending, any transfer pending litigation willbe subjected to the outcome of suchlitigation failed to appreciate that in view ofthe judgment passed by Hon’ble SupremeCourt, the subject land was not de-notifiedand possession in favour of RIICO by theState Government was upheld, therefore,vide sale deed dt. 2.2.2008 appellant hadjust sold the limited right in land which alsohad gone after the aforesaid judgmentpassed by the Hon’ble Supreme Court, andthere cannot be transfer of land or building.And as per section 53A, unless thepossession is handed over to transferee therecannot be any transfer of property. d. The chain of transfer shows that it was anagriculture land and allotted by the society insmallpieceswithoutanyconversion/approval. When a property(Agriculture Land: cultivation rights) whichoriginally was a “right in nature” based onvarious judicial pronouncements and allottedin piece without any approval from thegovernment/authorities and further transferto other persons can be automatically changeas an assets (Freehold land). This is theviolation of rules that no one can pass bettertitle than he himself has. “Nemo dat quodnon habet” e) Whether ld. Tribunals below and IncomeTax Officer was justified in applying Section50C of the Act, 1961 on the transactionpertaining to contingent right/right to sue. B) Whether Tribunals below and Income TaxOfficer was justified overlooking the factfinding of the Hon’ble Supreme Court in thecase of “RSIDIC vs. Subhash SindhiCooperative Housing Society Ltd. Jaipur& ors., observing the acquisition of subjectland by RIICO prior to agreement to sellexecuted between assessee and buyer? 3.Against the common judgment in the case of Sh. Ram Ji LalMeena vs. Income Tax Officer, ITA No.53/2018, coordinate benchof this court on 1.5.2018 passed the following order:- “By this appeal, a challenge is made to theorder dated 4th October, 2017, passed by theIncome Tax Appellate Tribunal, Jaipur Bench,Jaipur (in short “the Tribunal”), dismissing theappeal preferred by the assessee. B) Whether Tribunals below and Income TaxOfficer was justified overlooking the factfinding of the Hon’ble Supreme Court in thecase of “RSIDIC vs. Subhash SindhiCooperative Housing Society Ltd. Jaipur& ors., observing the acquisition of subjectland by RIICO prior to agreement to sellexecuted between assessee and buyer? 3.Against the common judgment in the case of Sh. Ram Ji LalMeena vs. Income Tax Officer, ITA No.53/2018, coordinate benchof this court on 1.5.2018 passed the following order:- “By this appeal, a challenge is made to theorder dated 4th October, 2017, passed by theIncome 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 isa case where a land was sold by the assessee-appellant under a registered sale deed onconsideration. The Assessing Authority madeaddition of Rs.41,80,805/- under the head ofcapital gain. The aforesaid was questioned bythe assessee in reference to Section 50C of theIncome Tax Act, 1961 (in short “the Act of1961”). It was submitted that Section 50C of the Act of1961 was not applicable to the facts of thiscase. It was not a transfer of capital asset butthe rights. It was for the reason that land inquestion was under acquisition for RIICO. Theland was sold by the khatedar to a Co-operativeSociety. A writ petition for regularisation of landwas filed by the Co-operative Society. It wasallowed by this court. The Apex Court reversedthe judgment on an appeal preferred by theRIICO. In view of the above and due toacquisition, land vested in the StateGovernment. The possession of it remained withthe RIICO and not with the assessee. The saledeed was wrongly taken to be a transfer ofcapital asset, rather, it was only of rights. Inview of the above, Section 50C of the Act of1961 was not applicable yet covering the caseby the aforesaid provision, additions weremade. Learned counsel for petitioner has madereference of various orders passed by theTribunal and also of the High Court. It is alsosubmitted that Section 50C of the Act of 1961cannot be invoked if property is lease hold andnot free hold and also when there exist khatedari rights, if it is a revenue land. Theownership vest in the State Government in boththe cases. The Bombay High Court in the caseof Commissioner of Income Tax Central II,Mumbai Vs. M/s. Greenfield Hotels & EstatesPvt. Ltd., reported in (2016) 389 ITR 68 (Bom)held that Section 50C of the Act of 1961 wouldnot be applicable when there is a transfer oflease hold rights of the land. In the instant case, the agriculture land wassold by the khatedar having rights likepossessed by a lease holder. Taking intoconsideration the aforesaid, the order passed bythe Tribunal may be interfered. We have heard learned counsel for the appellantand perused the record. The appeal has been filed against the orderpassed by the Tribunal where addition made bythe assessing authority by invoking Section 50Cof the Act of 1961, has not been interfered. TheCIT (Appeals) held addition to be justified. Theappeal filed by the assessee before the Tribunalwas thus dismissed. The appellant has raised manifold issues for ourconsideration and, out of it, first is about natureof transfer of land. It is submitted thatpossession of land was lying with the RIICOthus right in the property was transferred andnot the capital asset, thereby, Section 50C ofthe Act of 1961 would not be applicable. Forready reference, aforesaid provision is quotedhereunder: We have heard learned counsel for the appellantand perused the record. The appeal has been filed against the orderpassed by the Tribunal where addition made bythe assessing authority by invoking Section 50Cof the Act of 1961, has not been interfered. TheCIT (Appeals) held addition to be justified. Theappeal filed by the assessee before the Tribunalwas thus dismissed. The appellant has raised manifold issues for ourconsideration and, out of it, first is about natureof transfer of land. It is submitted thatpossession of land was lying with the RIICOthus right in the property was transferred andnot the capital asset, thereby, Section 50C ofthe Act of 1961 would not be applicable. Forready reference, aforesaid provision is quotedhereunder: ”50C. Special provision for full value ofconsideration in certain cases. (1) Where theconsideration received or accruing as a result ofthe transfer by an assessee of a capital asset,being land or building or both, is less than thevalue adopted or assessed [or assessable] byany authority of a State Government (hereafterin this section referred to as the “stampvaluation authority”) for the purpose ofpayment of stamp duty in respect of suchtransfer, the value so adopted or assessed [orassessable] shall, for the purpose of section 48,be deemed to be the full value of the consideration received or accruing as a result ofsuch transfer: Provided that where the date ofthe agreement fixing the amount ofconsideration and the date of registration forthe transfer of the capital asset are not thesame, the value adopted or assessed orassessable by the stamp valuation authority onthe date of agreement may be taken for thepurpose of computing full value of considerationfor such transfer: Provided further that the first proviso shallapply only in a case where the amount ofconsideration, or a part thereof, has beenreceived by way of an account payee cheque ofaccount payee bank draft or by use of electronicclearing system through a bank account, on orbefore the date of the agreement for transfer. (2) Without prejudice to the provisions ofsubsection (1), where- (a) the assessee claimsbefore any Assessing Officer that the valueadopted or assessed [or assessable] by thestamp valuation authority under sub-section (1)exceeds the fair market value of the property ason the date of transfer; (b) the value so adopted or assessed [orassessable] by the stmap valuation authorityunder sub-section (1) has not been disputed inany appeal or revision or no reference has beenmade before any other authority, court or theHigh Court, the Assessing Officer may refer the valuation ofthe capital asset to a Valuation Officer andwhere any such reference is made, theprovisions of sub-section (2), (3), (4), (5) and(6) of section 16A, clause (i) of sub-section (1)and sub-sections (6) and (7) of section 23A,sub-section (5) of section 24, section 34AA,section 35 and section 37 of the Wealth-tax Act,1957 (27 of 1957), shall, with necessarymodifications, apply in relation to suchreference as they apply in relation to areference made by the Assessing Officer undersub-section (1) of section 16A of that Act.Explanation 1.-For the purposes of this section,“Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth-taxAct, 1957 (27 of 1957). Explanation 2.-For the purposes of this section,the expression “assessable” means the pricewhich the stamp valuation authority wouldhave, notwithstanding anything to the contrarycontained in any other law for the time being inforce, adopted or assessed, if it were referred tosuch authority for the purposes of the paymentof stamp duty.] as in clause (r) of section 2 of the Wealth-taxAct, 1957 (27 of 1957). Explanation 2.-For the purposes of this section,the expression “assessable” means the pricewhich the stamp valuation authority wouldhave, notwithstanding anything to the contrarycontained in any other law for the time being inforce, adopted or assessed, if it were referred tosuch authority for the purposes of the paymentof stamp duty.] (3) Subject to the provisions contained insubsection (2), where the value ascertainedunder subsection (2) exceeds the value adoptedor assessed [or assessable] by the stampvaluation authority referred to in sub-section(1), the value so adopted or assessed [orassessable] by such authority shall be taken asthe full value of the consideration received oraccruing as a result of the transfer.” The provision aforesaid applies in thecircumstances explained therein. If facts of thiscase are taken into consideration, a sale deedwas executed for sale of the land. The appellanthas received consideration. The sale deed wasregistered by the Sub-Registrar-IV, Jaipur. The transfer of capital asset exists, that too, onconsideration. The dispute has been raisedabout possession of the property. According tothe revenue, the possession of property lieswith the assessee, whereas, according to theassessee, it lies with the RIICO. The materialavailable on record does not show possession ofRIICO as copy of award for acquisition of landand the “fard” possession are not on record.The documents show issuance of Notificationunder Sections 4 and 6 of the Land AcquisitionAct, 1894 and not the award. The judgment ofthe Apex Court was also on challenge to theNotification under Sections 4 and 6 of the Act of1894. Section 50C of the Act of 1961 has beeninvoked for the reasons explained by theTribunal inasmuch as sale deed was made onconsideration of Rs.11,70,000/-, whereas, valueof the property taken by the Sub-Registrar IV, Jaipur for registration of sale deed was atRs.53,11,367/- and, accordingly, it wasstamped. In those circumstances, the questionwas whether Section 50C of the Act of 1961would apply or not. According to CIT (Appeals)and the Tribunal, addition was rightly made bythe Assessing Officer by applying Section 50C ofthe Act of 1961. In view of the above, we do not find that aquestion of law is involved in this case. Thedispute has been raised on facts. That cannotbe a ground for maintaining an appeal as it canbe admitted only if question of law is involved.Taking into consideration the aforesaid, we donot find that appeal preferred by the assesseeagainst the order passed by the Tribunal can beadmitted. Learned counsel for appellant has madereference of certain orders passed by theIncome Tax Appellant Tribunal, Jaipur Bench,Jaipur in the case of Income Tax Officer, Ward6(1), Jaipur Vs. Tara Chand Jain, 2/1, MalviyaNagar, Jaipur, reported in (2015) 155 ITO 956(JP), SCC ITAT and of the Income Tax AppellantTribunal, Ahmedabad in the case of Smt.Devindraben I. Barot Vs. Income Tax Officer,reported in (2016) 159 ITD 162 (Ahm) apartfrom judgment of the Bombay High Court in thecase of M/s. Greenfield Hotels & Estates Pvt.Ltd. (supra). The perusal of order passed by the ITAT,Ahmedabad reveals change of tenor oftransaction for sale of land. The sale thereinwas through a registered sale deed forconsideration but it was taken to berelinquishment of right. Without there beingrelinquishment deed and without examiningwhat is the difference between sale of the landand relinquishment of right in the property, casewas decided. In view of the above, order passedby the ITAT, Ahmedabad cannot be accepted. Itfailed to appreciate even legal provisions inreference to relinquishment of right vis a vissale of the property. The perusal of order passed by the ITAT,Ahmedabad reveals change of tenor oftransaction for sale of land. The sale thereinwas through a registered sale deed forconsideration but it was taken to berelinquishment of right. Without there beingrelinquishment deed and without examiningwhat is the difference between sale of the landand relinquishment of right in the property, casewas decided. In view of the above, order passedby the ITAT, Ahmedabad cannot be accepted. Itfailed to appreciate even legal provisions inreference to relinquishment of right vis a vissale of the property. The another order has been passed by the ITAT,Jaipur Bench, Jaipur. In the aforesaid case, theTribunal drawn its conclusion in Paras 6.9 and6.11. Both the paras are quoted hereunder forready reference: “6.9 Section 50C is a deeming provision and itis only applicable in respect of capital assetswhich are land of building or both. It is thusclear that this deeming provision of section 50Cwill come into play only if the capital assettransferred by the assessee is a land or buildingor both. If, in the absence of capital assettransferred is neither the land nor building norboth, this deeming provision shall not beapplicable to such transfer. 6.11 In the opinion of the Bench, the rights inland cannot be equated with the land orbuilding. Therefore, it is concluded that section50C is applicable to transfer of capital assetonly in respect of land or building or both and isnot applicable to right in land. In the presentcase, the assessee has only transferred theright in land for a valuable consideration,therefore, in the opinion of the Bench, the longterm capital gain cannot be calculated byinvoking the deeming provisions provided undersection 50C. Therefore we hold that section 50Cis not applicable to present case. This is also ofview of Mumbai Tribunal in the case of Atul G.Puranik v. ITO (2011) 11 ITR 120 (Trib.).” Learned Tribunal came to the conclusion thatSection 50C of the Act of 1961 would apply ifthere is a transfer of land or building or both. Itwould not apply in absence of transfer of capitalasset. In Para 6.11, the Tribunal found thatassessee has transferred only right in the landfor valuable consideration, thereby, did nottransfer capital asset. The finding aforesaid hasbeen recorded without proper scrutiny of facts.How the land and building or both weredisclosed by the assessee in the balancesheethas not been taken note of. It is also as to howit is not transfer of capital asset. If it is reflectedas capital asset, transfer thereupon forconsideration would attract Section 50C of theAct of 1961 but the aforesaid aspect has not been considered by the ITAT Tribunal, JaipurBench, Jaipur. It is nothing but an order withoutelaborate finding on the issue, that too, aftertaking into consideration the requisite facts forits adjudication. The appellant has referred judgment of BombayHigh Court where it was held that Section 50Cof the Act of 1961 would not be applicable ontransfer of lease hold rights of the land. Bareperusal of Section 50C of the Act of 1961 doesnot show that transfer of capital asset forconsideration should be other than of lease holdproperty or khatedari land. The court cannot re-write the provision. If analogy taken by theBombay High Court in the case (supra) isapplied in general then Section 50C of the Actof 1961 would not be applicable in majority ofthe cases as not it is allowed as lease holdproperty. Section 50C of the Act of 1961 isapplicable on transfer of capital assets forconsideration. The Bombay High Court has notreferred as how the land was in the balance-sheet. It is as a capital asset or not thus we areunable to apply the judgment of Bombay HighCourt in the case of M/s. Greenfield Hotels &Estates Pvt. Ltd. (supra). In view of the discussion made above, we donot find that any question of law is involvedherein. In view of the discussion made above, we donot find that any question of law is involvedherein. The appeal is, accordingly, dismissed. 4.In that view of the matter, no substantial question of law arises. 5.The appeal stands dismissed. (VIJAY KUMAR VYAS),J (KS. JHAVERI),J Brijesh 8.