Transfer of leasehold rights in land won’t attract Section 50C

Brief of the case:

The ITAT Mumbai in the case of Farid Gulmohamed vs. ITO held that the provisions of Sec 50C is applicable only to transfer of land of which the assessee is absolute and legal owner and cannot be applicable to the transfer of leasehold rights in land.Thus, the transfer value cannot be benchmarked to stamp duty value.

Facts of the case:

• The assessee filed his return of income for A.Y. 2010-11 on 21.07.2010 declaring income of 4,14,78,131/-.The return was processed under section 143(1) of the Income Tax Act, 1961 and the same subsequently picked up for scrutiny.
• AO observed that the assessee had assigned leasehold right in a property situated at 16, Napean Sea Road, Mumbai to M/s. Orbit Dwelling Pvt. Ltd. for a total consideration of Rs.90,00,000/-, whereas the market value of the said property was determined by the Stamp Valuation Authority, Mumbai at Rs.3,41,59,500/-
• AO was of the opinion that income escaped assessment due to the difference between the value of the property determined by the Stamp Valuation Authority and the consideration as declared by the assessee and based on such opinion AO initiated proceedings under section 147 of the Act to bring to tax income of the assessee which he had reason to believe escaped assessment.
• The assessment was completed determining the assessee’s income at Rs. 6,21,37,650/- wherein the AO invoking the provisions of section 50C of the Act computed the Long Term Capital Gain (LTCG) of the aforesaid property at Rs. 3,03,82,674/-.
• The CIT(A) also upheld the order of AO. Aggrieved assessee is in appeal before tribunal.
  

Contention of the Assessee: