Mahoharlal Jiwandas Sachani Vs CIT (Appeals) (ITAT Nagpur)
The ITAT Nagpur considered an appeal against the order of the Commissioner of Income Tax (Appeals)/NFAC for Assessment Year 2018-19 concerning the taxability of a 50-year lease of agricultural land. The Assessing Officer had invoked Section 269UA(f) of the Income-tax Act, treating the lease as a transfer of immovable property and, consequently, applied Section 50C to adopt the stamp duty value for computing capital gains under Section 45. The CIT(A) upheld the addition, not under Section 2(47)(v), but by treating the long-term lease as a transfer under Section 2(47)(vi), relying on judicial precedents and the provisions of Section 53A of the Transfer of Property Act, 1882.
The assessee contended that the transaction was a lease creating tenancy rights and not a perpetual lease or an agreement to sell. It was argued that the invocation of Section 269UA(f) itself was erroneous and that the transaction could not be regarded as a transfer merely due to the duration of the lease.
The Tribunal observed that where the Department invokes deeming provisions to tax income on the basis of alleged tax avoidance, it must establish through substantive evidence the facts giving rise to such a presumption. It noted that the Assessing Officer had treated the lease as a transfer under Section 269UA(f), whereas the CIT(A) accepted that Section 2(47)(v) was inapplicable but invoked Section 2(47)(vi) by treating the lease as an arrangement amounting to transfer.
