Case Law Details
Sri Justice B. Subhashan Reddy (HUF) Vs ACIT (ITAT Hyderabad)
The issue under consideration is whether section 50C can be invoked in respect of the right to receive compensation on compulsory acquisition of land & the TDR rights as the same would not come within the meaning of “immovable property”?
ITAT states that it is pertinent to mention that the provisions of section 50C was introduced to curb the menace of unaccounted cash being infused in the real estate transactions. Quite often the actual sale consideration paid for acquiring immovable property is more than the sale consideration disclosed in the sale deed executed. In order to overcome the escapement of Capital Gain Tax on such transactions, Section 50C was introduced in the Statute, so as to at least adopt the market value of the State Revenue Authority as the sale consideration for the purpose of computing Capital Gain under the provisions of the Act. In the case of the assessee, the value of the property is already determined by the State Government which is coupled with certain TDS rights. It is pertinent to mention that no compensation is paid by way of cash for acquisition of the land in the case of both the assessees. Moreover considering the facts and circumstances of the case, it is apparent that the assessees have not actually transferred their immovable property consisting of land and building but have only transferred their right to receive the amount of the compensation and the TDR rights and both these asset do not fall under the category of immovable property. Further there is no finding by the Ld. Revenue Authorities that the market value of the TDR rights received by the assessees is at par with the SRO value of the property. It is also evident that the transaction is a distress transaction causing mental agony due to loss arising out of land acquisition and wastage of land. Keeping in view of all these facts and circumstances of the case, ITAT is of the considered view that the provisions of section 50C of the Act cannot be invoked in the hands of both these assessees. Hence, ITAT hereby set aside the order of the Ld. CIT (A) and direct the Ld. AO to delete the addition made invoking the provisions of section 50C of the Act in the case of both the assessees.
FULL TEXT OF THE ITAT JUDGEMENT
These appeals are filed by Shri B. Subhashan Reddy (HUF) and Smt. B. Ratna against the order of the Ld CIT (A) in appeal Nos.0072 & 0073/CIT(A)-1/Hyd/2015-16/2018-19, dated 01/05/2018 respectively for the AY 2007-08. Since both the appeals are with respect to related parties and on identical issues and grounds, for the sake of convenience they are taken up together for adjudication and disposed of by this common order.
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