Case Law Details
M/S. Fashion Group International Vs ACIT (ITAT Delhi)
ITAT Delhi held that provisions of section 50C of the Income Tax Act applies only in case of transfer of land or immovable property. Invocation of deeming provision of section 50C in case of mere transfer of right in property accrued under agreement without transfer of title is unjustifiable.
Facts- The main issue in this appeal filed by the assessee is an addition of Rs. 1,58,56,968/- made by AO invoking the provisions of Section 50C of the Act, confirmed by CIT (Appeals).
The assessee, a partnership firm, has claimed long term capital loss in its return of income for the relevant assessment year on transfer of two properties. AO invoking the provisions of section 50C of the Act and applying stamp valuation of the properties made an addition.
The assessee had purchased two properties for construction of factory building via two separate Agreement to Sell. The assessee intended to construct a factory building on the impugned land. However, due to certain restrictions from HUDA, the assessee could not register the land in its name. As the properties were not in its name, the assessee was unable to construct the factory building. The sale consideration / was fully paid at the time of entering into the Agreement to Sell. In this manner the total funds of the assessee in the form of sale consideration was tied up as legally the assessee not being a registered owner, it could not construct the factory building and also could not sell the same to any third party.
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