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Case Law Details

Case Name : Shivdeep Tyagi Vs ITO (ITAT Delhi)
Appeal Number : ITA No.484/Del/2024
Date of Judgement/Order : 18/06/2024
Related Assessment Year : 2011-12
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Shivdeep Tyagi Vs ITO (ITAT Delhi)  

Introduction: In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Delhi, in the case of Shivdeep Tyagi vs Income Tax Officer (ITO), clarified that the deeming provisions of Section 50C of the Income Tax Act, 1961, do not apply to leasehold rights. This decision highlights the specific applicability of Section 50C to capital assets classified as land or buildings and not to leasehold interests. The ruling serves as a precedent for similar cases, offering clarity on the tax implications of leasehold property transactions.

Detailed Analysis: The case revolves around the appellant, Shivdeep Tyagi, who contested the order dated January 19, 2024, from the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre (NFAC), New Delhi. The appeal was primarily based on two issues: the reopening of the assessment under Section 147 and the quantum addition made by the Assessing Officer (AO).

Background: Shivdeep Tyagi, a salaried employee, filed his Income Tax Return (ITR) for the assessment year 2011-12, declaring an income of INR 5,06,850. However, the AO reopened the case based on information that Tyagi sold a leasehold property for INR 60,00,000 but did not declare the capital gains. Consequently, the AO assessed the income at INR 75,94,850, considering the stamp duty value, leading to a tax dispute.

Legal Arguments: The appellant’s counsel argued that the AO failed to consider the cost of acquisition while reopening the assessment, thereby misapplying the provisions of Section 50C. They emphasized that Section 50C applies exclusively to capital assets categorized as land or buildings, not to leasehold rights. This argument was supported by various judicial precedents, including decisions in Atul G. Puranik, Ritz Suppliers (P.) Ltd., and others, which consistently held that Section 50C does not extend to leasehold properties.

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July 2024