Kanubhai Purshottam Merchant Vs ITO (ITAT Mumbai)
Summary: The appeal was filed by the assessee against the order dated 23.12.2025 passed by the NFAC, Delhi for Assessment Year 2018-19. The dispute concerned the applicability of section 50C of the Income-tax Act, 1961 to a registered tenancy agreement relating to Room No. 16, 4th Floor, 19/21, Lad Wadi, Hanuman Lane, Mumbai. The assessee had declared total income of Rs.22,80,877/- and stated during assessment proceedings that he had neither purchased nor sold any immovable property during the relevant previous year.
The Assessing Officer relied upon information regarding a document registered on 13.06.2017 and treated the transaction as a transfer of the immovable property. The assessee submitted that the document was a tenancy agreement under which the premises were let out on monthly rent of Rs.375/-, with three months’ rent received in advance. It was contended that the value adopted by the stamp valuation authority, stated in the material as Rs.34,38,000/-, represented the value for stamp-duty purposes and not consideration actually received. The assessee also submitted that no premium, pagadi or other consideration had been received.
The Assessing Officer held that, in the absence of a duration clause, the tenancy agreement was effectively perpetual and that the transaction amounted to transfer of the building under section 2(47)(vi) read with section 269UA(d). The stamp valuation was treated as the sale consideration and long-term capital gains of Rs.34,38,000/- were assessed after taking the cost of acquisition as nil. The CIT(A) confirmed the addition.
