ITO Vs Abdul Aziz Abdul Kadar (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai dismissed the Revenue’s appeal in ITO Vs Abdul Aziz Abdul Kadar, ruling that Section 50C of the Income Tax Act, 1961, does not apply to tenancy right transfers. The appeal, filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year 2007-08, questioned whether the Assessing Officer (AO) correctly applied Section 50C to the capital gains arising from the transfer of tenancy rights. The Revenue argued that the CIT(A) erred in relying on previous ITAT rulings that excluded tenancy rights from the scope of Section 50C. However, the tribunal reaffirmed its earlier decisions, emphasizing that Section 50C applies only to immovable property in the form of “land or building or both” and does not extend to tenancy rights.
The ITAT referred to its previous rulings in Smt. Kishori Sharad Gaitonde Vs. ITO and Shri Atul G. Puranik Vs. ITO, which held that tenancy and lease rights are distinct from land or buildings and should not be subjected to the deeming provisions of Section 50C. The tribunal also highlighted the settled legal principle that deeming provisions cannot be extended beyond their express terms. Since the tenancy rights in question did not constitute land or buildings, the tribunal ruled that the substitution of the transaction value with the stamp duty valuation, as per Section 50C, was incorrect. Consequently, the Revenue’s appeal was dismissed, reinforcing the consistent position that Section 50C does not apply to transactions involving tenancy rights.
