INCOME TAX ACT, 1961

Section 50C

Capital gains - Applicability of section 50C - Applicable only to transferor and not to consenting witness -

A survey under section 133A was carried out in the premises of the assessee who was in real estate business. The assessee filed the return of income declaring a total income of Rs. 3,00,75,130. During the course of assessment proceedings, it came to the notice of the AO that the assessee had entered into an unregistered agreement for sale with one M/s. Namaste Exports Ltd. for purchase of land measuring 3639.60 square meters for a consideration of Rs. 4.25 Crores. On scrutiny of records, made available by the assessee, in this regard, AO applied section 50C to compute this sale transaction as capital gain of the assessee, instead of stock- in-trade in business and made addition accordingly. On appeal, both CIT(A) and ITAT confirmed the impugned addition. Held: Section 50C applies only in case of a transferor of land which in the instant case is M/s. Namaste Exports and not the assessee who was only a consenting party and not a transferor/co-owner of the property. Undoubtedly, the assessee had certain rights under the agreement, however, from the clear, plain and unambiguous language employed in section 50C, it is evident that the same does not apply to a case of rights in land. It is equally well settled rule of statutory interpretation with regard to taxing statute that an assessee cannot be taxed without clear words for that purpose and every Act of the Parliament has to be read as per its natural construction of words. In view of this, it was opined that provisions of section 50C were not applicable to the case of the assessee and hence, no substantial question of law arose.

Followed :M/s. Seshasayee Steels (P) Ltd. Vs. Asstt. CIT (2020) 421 ITR 46 (SC) : 2019 TaxPub(DT) 8333 (SC) Sh. Sanjeev Lal etc. Vs. CIT & Anr. (2014) 365 ITR 389 (SC) : 2014 TaxPub(DT) 2721 (SC) Suraj Lamp & Industries (P) Ltd. Vs. State of Haryana & Anr. (2012) 340 ITR 1(SC) : 2012 TaxPub(DT) 0518 (SC) Gobind Ram Vs. Gian Chand (2000) 7 SCC 548 AT PAGE 550 ITO Vs. Ch. Atchaiah (1996) 218 ITR 239 (SC) : 1996 TaxPub(DT) 0726 (SC) CIT Vs. M/s. Greenfield Hotels & Estates (P) Ltd. (2016) 389 ITR 68 (Bombay) : 2016 TaxPub(DT) 4861 (Bom-HC) Pr. CIT, Bangalore and Asstt. CIT, Circle--11 (4) Bangalore Vs. M/s. Ind Sing Developers (P) Ltd. (2016) 239 Taxman 350 (Karnataka) : 2016 TaxPub(DT) 1744 (Karn-HC) Addl. CIT, Lucknow vs. Madan Lal Ahuja (1982) 136 ITR 640 (ALLAHABAD) : 1982 TaxPub(DT) 1135 (All-HC) Shri V.S. Chandrashekar Prop: M/s. Madhura Developers Vs. Asstt. CIT Circle 4 (1), Bangalore and Dy. CIT Circle 4 (1), Bangalore Vs. Shri V.S. Chandrashekar Prop: M/s. Madhura Developers 2015 TaxPub(DT) 1049 (Bang-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11

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