Sale of Leasehold Rights taxable and Section 50C applicable

Assessee was allotted a residential plot on 19.01.2004 in Sector-105, Noida through lottery on payment of allotment money of Rs.1,30,000/-. The total purchase price of the plot was Rs. 16,75,000/-.

2. The assessee on 28.02.2004 entered into an Agreement to sell in respect of this plot with M/s Rosebud Construction Pvt. Ltd through its Director Sh. Rajeev Sharma. The assessee received an amount of Rs. 1,30,000/- from the company in lieu of agreeing to sell this plot to the company. The balance amount to be paid for the acquisition of the plot i.e. Rs. 15,45,000/- was agreed to be paid by the Company directly to the Noida Authority.

3. The AO has held that the transfer of property took place in the year under consideration on 0 1.10.2008 and further no detail of the purchase price of the property was filed by the assessee, hence, the AO adopted the whole value of Stamp Valuation Authority value at Rs. 99,20,000/- as the capital gains resulting from the transfer of the property.

4. However, the Ld. CIT(A) has observed that the assessee’s name in the deed of Transfer of lease hold rights was mentioned only because the original allotment was in his name, hence, the assessee did not have ownership of the said property during the year under consideration and therefore, there is no question of transaction of sale of the said property during the year under consideration and capital gains is not accrued.

5. However, in our considered view, the Capital Gains should be taken into account only after deducted the price of the plot from the value of the property i.e. Rs. 99,20,000 (-) Minus Rs. 16,75,000/- i.e. the cost of the plot (to be paid to the Noida Authority) = Rs. 82,45,000/-. Accordingly, we set aside the issue in dispute to the file of the AO with the direction to compute the capital gains on the difference of the Stamp duty amount and price of the impugned property after applying the relevant provisions of the Act. Accordingly, the order of the Ld. CIT(A) is reversed.

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