Neha Gupta Vs ITO (ITAT Delhi)
Tribunal delivered a significant ruling where it examined both the applicability of Section 50C to leasehold property & the eligibility of exemption u/s 54G.
Assessee had sold an industrial unit at Narela, Delhi for ₹60 lakhs, but the stamp duty authority valued it at ₹1.20 crore. Although AO referred the matter to DVO, the valuation could not be completed due to lack of access. Instead of making a fresh reference, AO directly adopted the stamp value & added ₹60 lakhs u/s 50C.
Tribunal held that Section 50C applies only to transfer of “land or building or both” & not to transfer of “rights in land or building”. Since the property sold was only a leasehold right & not freehold land or building, Section 50C could not be invoked. Relying on the Karnataka High Court in V.S. Chandra Shekhar & other coordinate bench decisions, & applying the Supreme Court principle in Vegetable Products, Tribunal deleted the entire addition of ₹60 lakhs.
On the issue of Section 54G, Tribunal found that AO had misapplied the law. Section 54G permits purchase of a new asset within one year before or three years after the transfer, not merely within one year as assumed by AO. In this case, Assessee sold the old unit on 28.08.2008 & obtained allotment of a new industrial plot at Tronica City on 16.09.2008, which is well within the prescribed period. Judicial precedents hold that date of allotment constitutes the date of purchase. The entire investment of ₹69.43 lakhs was made before the due date of return, so no capital gains deposit was required.
