Tenancy Rights Attract Section 50C Despite Absence of Ownership: ITAT Mumbai

Kashmira Rajnikant Doshi Vs ITO (ITAT Mumbai)

Summary : The Mumbai Bench of the Income Tax Appellate Tribunal held that section 50C of the Income-tax Act, 1961 applies to the transfer of tenancy rights in the circumstances before it, following the binding interpretation of the Bombay High Court in Vidarbha Veneer Industries Ltd. v. ITO. However, it restored the valuation dispute to the Assessing Officer for examination under section 50C(2), including a reference to the Departmental Valuation Officer if the statutory conditions are satisfied. The appeal was therefore partly allowed for statistical purposes; the Tribunal did not finally accept the declared consideration or delete the disputed addition outright.

The assessee challenged the NFAC appellate order dated 13 November 2025 for assessment year 2018-19, sustaining an addition of Rs.3,80,800 as long-term capital gain. She had filed her return on 31 August 2018 declaring total income of Rs.2,85,150. During scrutiny, the Assessing Officer proposed substitution of the stamp duty value for the consideration received on transfer of tenancy rights. The source records that no submission was filed in response to that proposal. The assessment was completed under section 143(3) on 12 March 2021 after allowing indexed acquisition cost of Rs.4,35,200 and deduction of Rs.15,00,000 under section 54EC.

The registered Deed of Transfer of Tenancy dated 2 August 2017 concerned Room No.37, second floor, Lahiri Building, Khetwadi, fifth lane, Mumbai. The outgoing tenant surrendered all her right, title and interest, vacated the room and handed possession to the incoming tenant with the landlord’s consent. The deed recorded consideration of Rs.19,08,000 received by cheque. The landlord received no consideration, accepted the incoming occupant as tenant and created a fresh tenancy at monthly rent of Rs.1,000 with a deposit of Rs.3,000. The Tribunal treated the transaction as tripartite in substance, involving the outgoing tenant, incoming tenant and consenting landlord.

The supplied order contains inconsistent monetary figures. Its factual narration in paragraph 2 states consideration of Rs.19,08,30,830 and stamp valuation of Rs.23,16,00,000, whereas the reproduced CIT(A) findings use stamp valuation of Rs.23,16,000 and the deed discussion and Tribunal’s findings record consideration of Rs.19,08,000. These discrepancies are not resolved in the supplied text; the original figures are retained in the full text below.

Before the CIT(A), the assessee argued that tenancy rights were intangible rights to occupy and enjoy premises, distinct from land or building and therefore outside section 50C. Alternatively, she sought a valuation reference under section 50C(2). The CIT(A) rejected both pleas, reasoning that compulsory registration and stamp valuation of the underlying property attracted section 50C and that transfer of tenancy rights represented transfer of a valuable interest in the building. The appellate authority also held that the request for a DVO reference lacked specific evidence or objections before the Assessing Officer satisfying the statutory threshold.

Before the Tribunal, the assessee relied on Dy. CIT v. Tejinder Singh, Fleurette Marine Novelle Hatam v. ITO and Girdharlal Brothers v. Addl. CIT/JCIT/DCIT/ACIT/ITO. She submitted that section 50C was a deeming provision restricted to a capital asset “being land or building or both”, not a distinct tenancy right. The authorities cited included the Bombay High Court’s dismissal of the Revenue appeal in CIT v. Abdul Aziz Abdul Kadar, and the earlier decision in Atul G. Puranik v. ITO. Girdharlal Brothers also referred to CIT v. Mrs. Shirinbai P. Pundole concerning surrender of statutory tenancy for alternate accommodation in the pre-1988 statutory context.

The Revenue relied on Vidarbha Veneer Industries Ltd., Income Tax Appeal No.34 of 2022, decided on 1 April 2025. In rejoinder, the assessee sought to distinguish leasehold rights from tenancy rights by reference to control over property, alterations, subletting, transferability, selection of the successor occupant, duration of occupation and vulnerability to eviction. She also pointed to sections 54D, 54G, 54GA, 269UA(d), the Explanation to section 155(5A) and, in her reproduced note, section 35(2)(a), where the legislation separately refers to land or building and rights therein. Relying on GVK Industries Ltd. v. ITO, she invoked the principle that express mention of one thing excludes another. State of Orissa v. Sudhansu Sekhar Misra was cited for the proposition that a decision is authority for what it actually decides.

The Tribunal held that section 50C must be read with section 2(14), which defines a capital asset as property of any kind “held by an assessee”. In Vidarbha Veneer Industries Ltd., the jurisdictional High Court had explained that holding is not confined to ownership and may include holding as lessee, sublessee, allottee, tenant, licensee or another legally recognised capacity. It had also interpreted “transfer” broadly to cover legally recognised modes of transfer, disagreed with Atul G. Puranik for failing to consider the statutory interplay, and found reliance on CIT v. Greenfield Hotels & Estates (P.) Ltd. unhelpful.

The Tribunal rejected the contention that this reasoning was confined to leasehold rights. The tenancy right was admittedly a property right relating to immovable property and held as a capital asset. Differences between leasehold and tenancy rights might affect the nature and value of the rights transferred, but did not answer whether the mode of holding excluded the property from section 50C. As a subordinate Tribunal, it was bound by the jurisdictional High Court’s interpretation and could not adopt a different view merely because other provisions used different language. Earlier coordinate Bench decisions taking a contrary view could not be followed after the subsequent binding High Court judgment. Accordingly, the CIT(A)’s conclusion on applicability of section 50C was upheld.

The alternative valuation plea nevertheless required fresh examination. The Tribunal noted that section 50C(2) supplies a mechanism where the assessee claims that stamp valuation exceeds fair market value and the other statutory conditions are fulfilled. Since valuation had specifically been disputed and a reference requested, the Assessing Officer was directed to examine the claim and, if the prescribed conditions are satisfied, refer it to the DVO. He must thereafter determine the full value of consideration in accordance with section 50C, considering any valuation report and the assessee’s material, after giving adequate opportunity of hearing. The remand is limited to valuation; the finding that section 50C applies remains intact. Grounds 1 and 2 were partly allowed for statistical purposes. Ground 3, described in the operative portion as relating to opportunity of hearing, was dismissed as not pressed.

Cases Discussed

• Vidarbha Veneer Industries Ltd. v. ITO, Income Tax Appeal No.34 of 2022, decided 01.04.2025 (Bombay High Court) — Followed as binding authority on the scope of sections 2(14) and 50C and the irrelevance of the mode of holding immovable property.
• Girdharlal Brothers v. Addl. CIT/JCIT/DCIT/ACIT/ITO, (2024) 209 ITD 285 (ITAT Mumbai) — Relied upon by the assessee for exclusion of tenancy-right transfers from section 50C; the Tribunal rejected the contrary approach in light of the subsequent jurisdictional High Court interpretation.
• CIT v. Abdul Aziz Abdul Kadar, Income Tax Appeal No.1821 of 2013, decided 20.08.2021 (Bombay High Court) — Referred to through Girdharlal Brothers; Revenue’s appeal was dismissed after its acceptance of the earlier Atul G. Puranik decision.
• CIT v. Greenfield Hotels & Estates (P.) Ltd., [2016] 389 ITR 68 (Bombay High Court) — Considered in the discussion of Vidarbha Veneer Industries; reliance on Revenue’s acceptance of Atul G. Puranik did not assist the assessee.
• Fleurette Marine Novelle Hatam v. ITO (International Taxation) 3(1), (2015) 70 SOT 203 (ITAT Mumbai) — Cited by the assessee on surrender of tenancy rights; its contrary approach could not prevail against the subsequent binding High Court interpretation.
• Dy. CIT v. Tejinder Singh, (2012) 50 SOT 391 (ITAT Kolkata) — Relied upon by the assessee for distinguishing tenancy or leasehold rights from land or building; not followed to the extent contrary to Vidarbha Veneer Industries.
• Atul G. Puranik v. ITO, (2011) 141 TTJ 69 / 132 ITD 499 / 11 ITR(T) 120 / 30 CCH 0239, ITA No.3051/M/2010, decided 13.05.2011 (ITAT Mumbai) — The earlier exclusion of leasehold rights was discussed; Vidarbha Veneer Industries expressly disagreed with its statutory interpretation.
• GVK Industries Ltd. v. ITO, (2011) 332 ITR 130 (Supreme Court), paragraph 54 — Cited by the assessee for the principle that express mention of one thing implies exclusion of another; the Tribunal applied the jurisdictional High Court’s interpretation of the specific provision.
• CIT v. Mrs. Shirinbai P. Pundole, [1981] 129 ITR 448 (Bombay High Court) — Referred to through Girdharlal Brothers for treatment of surrender of statutory tenancy for alternate accommodation under the pre-1988 statutory position.
• State of Orissa v. Sudhansu Sekhar Misra, AIR 1968 SC 647 (Supreme Court) — Cited by the assessee for confining a precedent to what it actually decides, in support of her attempted distinction between leasehold and tenancy rights.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal by the assessee is directed against the order dated 13.11.2025 passed by the learned National Faceless Appeals Centre, Delhi [hereinafter referred to as the “learned CIT(A)”] for A.Y. 2018-19, whereby the addition of Rs.3,80,800/-made by the Assessing Officer by invoking section 50C of the Income-tax Act, 1961 (“the Act”) in respect of transfer of tenancy rights was sustained. The assessee has raised the following grounds:

1. On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) – NFAC, hereinafter referred to as the “CIT (A)”, has erred in confirming the addition of Rs. 3,80,800/- made by the assessment unit by replacing the stamp duty value in respect of tenancy rights in place of the actual consideration while computing the long term capital gains invoking the provisions of section 50C in the case of the appellant.

2. The appellant respectfully submits that both the lower authorities have erred in not appreciating the correct legal position that section 50C of the Act can be applied only when the transfer is in respect of any land or building. The section cannot be applied in relation to transfer of tenancy rights.

3. The appellant submits that the CIT (A) has erred in passing a non-speaking order on the subject without giving reasons for the conclusion and accordingly the order of the CIT (A) deserves to be quashed.

4. The appellant therefore prays that the impugned addition arising in the case of the appellant on account of invoking of section 50C may please be deleted or any other relief as deemed fit may please be allowed to the appellant.”

2. Briefly stated facts of the case are that The assessee filed her return of income for A.Y. 2018-19 on 31.08.2018 declaring total income of Rs.2,85,150/-. The return was selected for scrutiny and statutory notices were duly served. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had transferred tenancy rights in Room No.37, 2nd Floor, Lahiri Building, Khetwadi, 5th Lane, Mumbai, for a stated consideration of Rs.19,08,30,830/-, whereas the stamp valuation authority had adopted the value at Rs.23,16,00,000/-. Proceeding on the premise that section 50C was applicable, the Assessing Officer asked the assessee as why the stamp duty value might not be adopted instead of sale consideration for computing capital gain , but no submission was filed on the part of the assessee. Accordingly, he adopted the stamp duty value at Rs.23,16,00,000/- as the full value of consideration and after allowing indexed cost of acquisition of Rs.4,35,200/- and deduction under section 54EC of Rs.15,00,000/-, the balance amount of Rs.3,80,800/- was brought to tax as long-term capital gain. The assessment was accordingly completed under section 143(3) on 12.03.2021.

3. Before the learned CIT(A), the assessee contended that tenancy right is an ‘intangible asset’ , which is a right to occupy and enjoy the property held under tenancy. It was submitted that it constitute a distinct capital asset and are neither ‘land’ nor ‘building’ or both and, therefore, fall outside the scope of section 50C. In the alternative, it was submitted that, if section 50C were held applicable, the matter ought to be referred to the Departmental Valuation Officer (“DVO”) under section 50C(2). The learned CIT(A), however, rejected the contention and held that transfer of tenancy rights in an immovable property was covered by section 50C. He reasoned that the transaction was compulsorily registrable and subjected to stamp duty valuation on the underlying building, that this fact alone attracted Section 50C, and that a tenancy right, when transferred for consideration, is “essentially the sale of a valuable interest in the building itself.” He further held that the assessee’s request for reference to the DVO under Section 50C(2) did not meet the threshold condition of that sub-section, as no specific evidence had been furnished to the AO disputing the stamp duty Authority(SVA) valuation. The relevant finding of the learned CIT(A) on this issue is reproduced as under:

“5. Observations, Findings and Decision

I have carefully considered the facts of the case, the findings of the Assessing Officer (AO), and the detailed submissions made by the Appellant. My observations, findings, and decision on each ground are as follows:

5.1. Grounds 1: Application of Section 50C to Sale of Tenancy Right

5.1.1. Observations and Findings The core of this ground is the Appellant’s assertion that a ‘tenancy right’ is an intangible asset and thus, Section 50C, which refers to “land or building or both,” cannot be applied.

This argument is flawed and disregards the established legal interpretation and the functional nature of the asset being transferred. While a tenancy right is technically a right in a property, the transaction registered with the subregistrar, which triggered the Stamp Valuation Authority (SVA) valuation, effectively involved the transfer of a substantial interest in the building.

More importantly, it is a consistent view that where a transaction is compulsorily registrable and subject to stamp duty on the value fixed by the SVA, the provisions of Section 50C are attracted. The very fact that the subregistrar valued the transaction, based on its underlying asset (the building/flat) for stamp duty purposes at Rs. 23,16,000, establishes that the transfer falls within the statutory framework covered by the stamp duty act.

The Income Tax Act uses the SVA value as a benchmark for consideration in capital asset transfers covered by Section 50C. Although the term ‘tenancy right’ might suggest an intangible asset, in the context of the Stamp Duty Act, the consideration is determined based on the fair market value of the underlying immovable property rights transferred. The Supreme Court has repeatedly affirmed the legislature’s intent to curb the understatement of sale consideration in transactions involving immovable property. A tenancy right, when transferred for consideration, is essentially the sale of a valuable interest in the building itself, and the SVA value is the best indicator of its true market price. Therefore, the AO’s action of adopting the SVA value of Rs. 23,16,000 as the full value of consideration, which is statutorily mandated, is legally sound.

Furthermore, the Appellant’s request to refer the matter to the Departmental Valuation Officer (DVO) under Section 50C(2) is not warranted. The Appellant has not contested the SVA value as required under the conditions of Section 50C(2), nor has she provided specific evidence, reports, or objections before the AO that the property’s fair market value was less than the stamp duty value. The request is merely a general plea and does not fulfill the threshold condition for DVO reference.

5.1.2. Decision on Ground 1 The provisions of Section 50C are applicable to the transfer of rights in immovable property, including tenancy rights, when the transaction is subjected to stamp valuation. The AO was correct in adopting the Stamp Valuation Authority’s valuation of Rs. 23,16,000 as the full value of consideration. This ground is rejected.”

4. The sole issue in the Ground Nos. 1 and 2 of appeal raised before us is invocation of the section 50C of the Act on sale of the tenancy rights.

5. The ld Counsel filed a copy of the registered deed of transfer of tenancy right before us. The material terms of the registered Deed of Transfer of Tenancy dated 02.08.2017 are these: the outgoing tenant surrendered “all right, title and interest” in the room to the landlord (clause 2); declared that she had “vacated the said Room and handed over vacant possession” to the new tenant, with the landlord’s consent (clause 3); received the entire consideration of Rs. 19,08,000/- by cheque (clause 5); and the landlord, without receiving any consideration himself, accepted the new occupant as tenant, at a fresh monthly rent of Rs. 1,000/- and a deposit of Rs. 3,000/- (clauses 6, 9, and 10). The transaction is thus tripartite in substance — outgoing tenant, incoming tenant, and landlord — the landlord’s role confined to consenting to the change of tenant and creating a fresh tenancy.

5.1 Learned counsel submitted that a tenancy right is a right to occupy and enjoy property, not the land or building itself, and cannot be brought within the plain words of Section 50C, which applies only to a capital asset “being land or building or both.” In support, three Coordinate decisions were relied upon:

(a) Dy. CIT v. Tejinder Singh 50 SOT 391 (Kolkata), holding that consideration received by a lessee for surrendering tenancy rights is distinct in character from consideration for ownership rights, that Section 50C is attracted only where the capital asset transferred is itself “land or building or both,” and that a leasehold or tenancy right in such an asset cannot be equated with the asset itself;

(b) Fleurette Marine Novelle Hatam v. ITO (International Taxation) 3 (1) 70 SOT 203 (Mumbai), reproducing the text of Section 50C and following the same reasoning in respect of surrender of tenancy rights;

(c) Girdharlal Brothers v. Addl.CIT/JCIT/DCIT/ACIT/ITO 209 ITD 285 (Mumbai – Trib.), which, in turn, relied upon the jurisdictional High Court’s dismissal of the Revenue’s appeal in CIT v. Abdul Aziz Abdul Kadar [IT Appeal No. 1821 of 2013, dated 20-8-2021], a case concerning transfer of tenancy rights , where the High Court, noting that the Revenue had not challenged the Tribunal’s earlier decision in Atul G. Puranik v. ITO, 12(1)(1) 141 TTJ 69/132 ITD 499/11 ITR(T) 120 (Mumbai)/(ITA No. 3051/M/2010, Mum-Trib., 13.05.2011) holding tenancy rights outside Section 50C, held that no substantial question of law arose and dismissed the Revenue’s appeal; and onCIT v. Mrs. Shirinbai P. Pundole [1981] 129 ITR 448 (Bombay), for the proposition, in the pre-1988 statutory context there considered, that surrender of a statutory tenancy for alternate accommodation did not attract capital gains at all.

6. The learned Departmental Representative relied on Vidarbha Veneer Industries Ltd. v. ITO,/Income Tax Appeal No. 34 of 2022, dated 01.04.2025 where the jurisdictional High Court held that the definition of “capital asset” in Section 2(14) i.e. “property of any kind, held by an assessee”, turns on the fact of holding, not on the mode or title by which it is held; that land or building may be held as owner, lessee, sub-lessee, allottee, tenant, licensee, or otherwise, and the mode of holding cannot be equated with, or treated as an exception to, the property itself; that the word “transfer” in Section 50C(1) must be given the widest amplitude to include every mode of transfer recognised in law; and that Atul G. Puranik (supra), in failing to consider Section 2(14) and in treating the mode of holding as though it were a distinct species of property outside the reach of Section 50C, does not lay down good law, a conclusion the Hon’ble High Court expressly extended to CIT v. Greenfield Hotels & Estates (P.) Ltd. [2016] 389 ITR 68 (Bombay), which had merely followed Atul Puranik (supra) on the footing that it stood unchallenged by the Revenue.

7. In rejoinder to the Revenue’s reliance on Vidarbha Veneer Industries Ltd. (supra), learned counsel submitted that the ratio of a decision is confined to what it actually decides (State of Orissa v. Sudhansu Sekhar Misra AIR 1968 SC 647), and that Vidarbha Veneer Industries (supra) was concerned only with leasehold rights, materially different from tenancy rights in that: a lessee holds virtually as owner, free to alter, sub-let, or transfer the leasehold without the lessor’s fresh consent, and cannot be displaced during the lease term; whereas a tenant merely occupies the property, cannot alter it, cannot sub-let or assign without the landlord’s consent, has no say in the choice of a successor tenant, and remains liable to eviction for breach of the tenancy terms. The ld Counsel further submitted that Sections 54D, 54G, 54GA, 269UA(d), and the Explanation to Section 155(5A) of the Act each separately employ the phrase “land or building” alongside “any right in land or building,” demonstrating that the Legislature, when it intends to cover a mere right in land or building, says so expressly; Section 50C uses only “land or building or both,” and on the principle that the express mention of one thing excludes anotherGVK Industries Ltd. v. ITO 332 ITR 130 (SC), para 54), a right in land or building , whether leasehold or tenancy, falls outside its reach. For ready reference and clarity, said submission is reproduced as under

“Note on applicability of judgement of the Hon’ble Bombay High Court in the case of Vidarbha Veneer Industries Ltd. v. ITO (Income-tax Appeal No. 34 of 2022) in the case of the appellant.

During the course of the hearing before the Hon’ble Bench, the learned Departmental Representative has relied on the judgement of the Hon’ble Bombay High Court in the case of Vidarbha Veneer Industries Ltd. v. ITO (Income-tax Appeal No. 34 of 2022). The Hon’ble High Court has held in this case that section 50C applies to the transfer of leasehold rights. Relying on this judgement, the learned Departmental Representative has argued that section 50C also applies to transfer of tenancy rights and therefore the addition made in the case of the appellant is justified.

In connection with the said contention of the learned Departmental Representative, the appellant would like to submit as under for the kind consideration of the Hon’ble Bench :

1. The appellant would like to submit that by the above judgement, the Hon’ble High Court has overruled the decision of the Mumbai Tribunal in the case of Atul G. Puranik v. ITO (2011) 30 CCH 0239. The High Court has further distinguished the earlier judgement in the case of CIT v. Greenfiled Hotels and Estates. Pvt. Ltd. 389 ITR 68 (Bom.) by observing that the said judgement has not discussed the merits of the matter and has merely held that since the Tribunal (sic. Revenue) did not challenge the earlier decision of the Tribunal in the case of Atul G. Puranik, it was binding upon it.

2. The appellant respectfully submits that the High Court was concerned with the transfer of leasehold rights in the above judgement and not with the transfer of tenancy rights. The leasehold rights are much different in nature as compared to the tenancy rights as explained hereunder :

3. Hon’ble Bombay High Court, while deciding the above case has considered the definition property of capital of asset as prescribed in section 2(14) of the Act. As defined, Capital Asset means any kind held by an assessee. In connection that with this, the appellant submits The there appellant is no dispute by the appellant as regards the tenancy right being a capital asset. has offered the transaction from the assessment under the head of capital gains as can be seen However, order and the revenue has also accepted the same as capital gains. the contention both” in section of the appellant is that the phrase “being land or building or together 50C of the Act cannot be brushed aside. The phrase has to be read with the definition of capital asset and accordingly in respect of a capital section 50C can apply only nor building but asset which is either land or building. Tenancy right is neither land section 50C.

4. that With Section utmost 50C respect to the Hon’ble Bombay High Court, the appellant further submits land or building refers to “land or building or both” only without referring to “right in or both”. In fact, the distinction building or both’ between a capital asset being ‘land or Income Tax Act and any ‘right in land or building or both’ is well recognized under the compulsory itself. Section 54D deals with certain cases in which capital gain on acquisition of land and building is charged. Sub-sec.(1) with: “Subject of sec. 54D opens to the provisions of sub-section transfer (2), where the capital gain arises from the or building by way of compulsory acquisition under any law of a capital asset, being land or any right in land or building, forming part of an industrial undertaking”. The Legislature beyond doubt in its wisdom has used both the terms in sections 54D which proves that these two terms are different. Similar is the case with sections been 35(2)(a), so, 54G(1), 54GA(1), 269UA(d) and explanation to section 155(5A). Had it not have been there was no need to use both the terms & only term “land & building” could the judgement used. It has been clearly held by Hon’ble Supreme Court in paragraph 54 of in the case of G.V.K. Industries Ltd. v. ITO. (2011) 332 ITR 130 (SC) that the express mention of one implies the exclusion of another. But in section 50C, unlike these sections, both the terms are not used but only the term “capital asset, being land or building or both”has been used. Therefore, it is conclusively proved that ‘land & building’ excludes ‘right in land & building’. Hence, ‘right in land & building’ is not covered u/s 50C.

5. The appellant submits that the Judgement of the Hon’ble High Court was rendered in the context of leasehold rights and therefore the operation of the same is confined to leasehold rights and cannot be extended to tenancy rights. As held by the Hon’ble Supreme Court in the case of State of Orissa v. Sudhansu Sekhar Misra 1968 AIR 647,2 “a decision is only an authority for what it actually decides. The essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. It is not a profitable task to extract a sentence, here and there from a judgment and to build upon it.” In view of this, the appellant submits that in so far as tenancy rights are concerned the same are not covered by the Judgement of the Hon’ble Bombay High Court and therefore the decisions of the Tribunal in the cases of Fleurette Marine Novelle Hatam v. ITO (Mun)and Girdharlal Brothers v. Addl. CIT/JCIT/DCIT/ACIT (Mum.) are still a good law.”

8. We have carefully considered the rival submissions and perused the material available on record. The short issue for our consideration is whether the provisions of section 50C of the Act can be invoked in respect of the consideration received by the assessee on transfer of tenancy rights in the property in question.

8.1 There is no dispute with regard to the fact that the assessee was a tenant in the premises and was not the owner thereof. As is evident from the registered Deed of Transfer of Tenancy dated 02.08.2017, the assessee surrendered and transferred her tenancy rights in the premises to the incoming tenant with the consent of the landlord. The consideration of Rs.19,08,000/- was received by the assessee from the incoming tenant, whereas the landlord did not receive any consideration and merely consented to the transfer and accepted the incoming tenant as the tenant of the premises. Thus, the right transferred by the assessee was the tenancy right in the premises.

8.2 The contention of the learned counsel for the assessee is that section 50C is a deeming provision which, by its express language, applies only where the capital asset transferred is “land or building or both”. According to the assessee, tenancy right is a distinct capital asset and cannot be equated with land or building. Reliance in this regard has been placed upon the decisions of the coordinate Benches in Tejinder Singh (supra), Fleurette Marine Novelle Hatam (supra) and Girdharlal Brothers (supra). It has also been contended that the judgment of the Hon’ble Bombay High Court in Vidarbha Veneer Industries Ltd. (supra) was rendered in the context of leasehold rights and, therefore, its ratio cannot be extended to tenancy rights.

8.3 We find that section 50C(1) provides for substitution of the stamp valuation where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted, assessed or assessable by the stamp valuation authority. At the same time, section 2(14) defines “capital asset” to mean property of any kind held by an assessee. The expression “held by an assessee”, therefore, assumes significance while examining the nature of the capital asset for the purposes of section 50C.

8.4 The Hon’ble jurisdictional High Court, in Vidarbha Veneer Industries Ltd. (supra), has considered the interplay between sections 2(14) and 50C and held that the expression “held by an assessee” is not confined to ownership. The Hon’ble High Court observed that land or building may be held in different recognised modes, including as owner, lessee, sublessee, allottee, tenant, licensee or in any other mode permissible or recognised by law. The Hon’ble High Court further held that the expression “transfer” occurring in section 50C cannot be given a restricted meaning and would include the modes and methods of transfer recognised in law. It is in this context that the Hon’ble High Court did not agree with the earlier view taken in Atul G. Puranik (supra). The relevant finding of the Hon’ble High Court in Vidarbha Veneer Industries Ltd. (supra), as under:

“Section 50C of the IT Act reads as under:-

“50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed for assessablel by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed for assessablel shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer: (emphasis supplied) [Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer:

Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer:]

[Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and [ten] per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.]”

The expression ‘Capital Asset’ has been defined in Section 2(14) of the IT Act reads as under:-

“(14) “capital asset” means –

(a) property of any kind held by an assessee, whether or not connected with his business or profession;” (emphasis supplied)

6. The expression used in Section 50C of the IT Act is ‘consideration received or accruing as a result of transfer of a capital asset, being land or building or both’. This will have to be related to the definition of ‘capital asset’, as occurring in Section 2(14) of the IT Act. A perusal of the definition of ‘Capital Asset’ as contained in Section 2(14) of the IT Act would indicate, that it includes property of any kind, “held by an assessee”. What is material to note is, that the expression is “held by an assessee” and not owned by an assessee. Insofar as the immovable property, i.e. land or building is concerned, there are number of ways, in which it can be held. The holding can be either as an owner, lessee, sub-lessee, allottee, tenant, licensee, gratuitous licensee or any other mode, permissible or recognized by law. The expression “held by an assessee” therefore does not restrict the manner in which the land or building can be held. The holding of land, is merely a method in which rights to the land, can be held or acquired, by a person. That cannot be in any manner equated with land or building, but rather, would be a species of the right to hold it, which as indicated above, are of multiple nature.

7. We, therefore, find that merely because the land was originally allotted by the MIDC by way of a lease to the predecessor of the appellant, who in turn has received the same by way of an assignment, that being one of the modes of transfer, of land or building, the mere use of a particular mode of transfer, cannot create any exception vis-a-vis the holding of the land or building by the Assesee. The word ‘transfer’ as used in Section 50C(1) of the IT Act, also cannot be used in a restricted sense and will have to be given widest amplitude, considering the nature and purpose of the section and thus would include all modes and methods of transfer as are permissible and recognizable in law.

8. Atul Puranik (supra) relied upon by the learned counsel for the appellant does not consider the effect and import of Section 2(14)(a) in conjunction with the language used in section 50C of the IT Act, and merely goes on to hold, that since the land is held in a leasehold right, it cannot be equated with land or building, which does not address the issue altogether, neither does it consider the position, that mode of holding of a property, cannot be equated with the property itself, as against which what Section 50C read with Section 2(14) of the IT Act speaks about, is the property. We are therefore, not in agreement with what has been held in Atul Puranik (supra). In Commissioner of Income Tax v. Greenfield Hotels and Estates Pvt.Ltd., (2016) 389 ITR 0068 (Bom), all that has been said, is that since the Tribunal did not challenge its earlier view, it was binding upon it. As indicated above, Atul Puranik (supra), does not address the issue at all in light of the language of the statutory provision and therefore cannot be considered as a good law, in view of which, Greenfield Hotels and Estates Pvt. Ltd. (supra) would also be of no assistance. In view of the above discussion, we do not see any reason to entertain the appeal. The same is therefore dismissed.

8.5 The contention of the assessee that the aforesaid judgment was confined to leasehold rights and cannot extend to tenancy rights does not, in our considered view, advance the case of the assessee. The statutory reasoning adopted by the Hon’ble jurisdictional High Court is not founded merely upon the nomenclature of the particular right, but upon the scope of the expressions “capital asset” and “held by an assessee”, read with section 50C. The tenancy right in the present case is admittedly a property right arising from and relating to the immovable property and was held by the assessee as a capital asset. Once the binding interpretation placed by the Hon’ble jurisdictional High Court is applied to the statutory language, the distinction sought to be drawn between leasehold rights and tenancy rights cannot, by itself, take the present transaction outside the ambit of section 50C.

8.6 The distinction sought to be drawn by the assessee between leasehold rights and tenancy rights, namely, with regard to the extent of control, duration of occupation, transferability of the right and requirement of consent of the landlord, may have relevance for determining the nature and value of the right transferred. However, such distinction does not answer the fundamental question as to whether the mode in which the property is held takes the property outside the expression “land or building” occurring in section 50C.

8.7 The submission of the learned counsel that the tenancy right is itself a distinct capital asset and, therefore, cannot be regarded as land or building has also been considered. There can be no dispute that tenancy rights constitute a capital asset for the purposes of the Act. However, the question before us is not whether tenancy rights constitute a capital asset; rather, the question is whether the transfer of such rights in land or building is outside the statutory expression used in section 50C. On this aspect, the Hon’ble jurisdictional High Court, while interpreting the same statutory provision, has held that the manner or mode in which land or building is held does not take the property itself outside the ambit of section 50C.

8.8 We have also considered the submission based upon the use of the expression “any right in land or building” in certain other provisions of the Act. No doubt, the Legislature has, in certain provisions, separately employed the expressions “land or building” and “any right in land or building”. However, we are concerned here with the interpretation placed by the Hon’ble jurisdictional High Court upon the expression occurring specifically in section 50C read with section 2(14). As a subordinate Tribunal, we are bound by the interpretation placed by the jurisdictional High Court on the very statutory provision which falls for our consideration. It is, therefore, not open to us to adopt a different interpretation merely on the basis of a textual distinction which has not found acceptance in the binding judgment of the Hon’ble jurisdictional High Court.

8.9 We may also observe that the decisions of the coordinate Benches relied upon by the assessee, including Tejinder Singh (supra) and Fleurette Marine Novelle Hatam (supra), were rendered prior to the aforesaid judgment of the Hon’ble Bombay High Court in Vidarbha Veneer Industries Ltd. (supra). Once the jurisdictional High Court has subsequently interpreted the scope and ambit of section 50C in the context of the expression “capital asset, being land or building or both”, the said interpretation is binding upon us. The earlier coordinate Bench decisions, to the extent they take a contrary view, therefore, cannot be followed by us.

8.10 Applying the aforesaid legal position to the facts of the present case, the assessee admittedly held the tenancy rights in the building and transferred/surrendered those rights in favour of the incoming tenant. The fact that the assessee was a tenant and not the owner of the premises does not, in view of the binding ratio of Vidarbha Veneer Industries Ltd. (supra), take the transaction outside the ambit of section 50C. We, therefore, hold that the provisions of section 50C are applicable to the transfer of tenancy rights in the present case. To this extent, the finding of the learned CIT(A) is upheld and the principal contention raised by the assessee is rejected.

8.11 The assessee has, however, taken an alternative plea that, even if section 50C is held applicable, the matter ought to be referred to the Departmental Valuation Officer under section 50C(2), since the stamp valuation does not represent the fair market value of the rights transferred. We find that section 50C(2) itself provides a statutory mechanism for dealing with such a claim. Once the assessee raises a claim before the Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority exceeds the fair market value and the other statutory conditions are fulfilled, the Assessing Officer is required to consider the claim in accordance with the provisions of the said section.

8.12 In the present case, the assessee had specifically raised the issue of valuation and prayed for reference to the DVO. We, therefore, consider it appropriate to restore this limited aspect to the file of the Assessing Officer. The Assessing Officer shall examine the assessee’s claim in the light of section 50C(2) and, if the conditions prescribed therein are satisfied, make a reference to the DVO for determination of the fair market value. Thereafter, the Assessing Officer shall determine the full value of consideration in accordance with section 50C, after taking into consideration the valuation report, if any, and the material furnished by the assessee.

8.13 Needless to state, the Assessing Officer shall afford adequate opportunity of being heard to the assessee and shall decide the issue afresh in accordance with law. We make it clear that our finding in the present order is confined to the applicability of section 50C to the transfer of tenancy rights and that the question of the appropriate value to be adopted for the purposes of section 50C shall be determined by the Assessing Officer in accordance with the statutory mechanism contained in section 50C(2).

8.14 In view of the foregoing discussion, Ground Nos. 1 and 2 are partly allowed for statistical purposes in the terms indicated above.

9. The ground No.3 of the appeal of the assessee regarding not providing opportunity of being heard was not pressed, and accordingly same is dismissed as not pressed

In the result appeal of the assessee is partly allowed for statistical purposes.