Section 50C is not applicable to leasehold properties: Bombay HC

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Section 50C is not applicable to leasehold properties: Bombay HC

This is what the conclusions can be drawn by the judgment of Bombay High court in the case of Commissioner Of Income Tax Vs. Greenfield Hotels & Estates Pvt. Ltd (2016) 389 ITR 0068 (Bom). It may be noted that this view was earlier expressed by the ITAT and the department has not filed any appeal in such case. Bombay High Court has held that where the Revenue has accepted the decision of the Court/Tribunal on an issue of law and not challenged it in appeal then a subsequent decision following the earlier decision cannot be challenged.

Greenfield Hotels & Estates Pvt. Ltd (2016) 389 ITR 0068 (Bom) was the case related to capital Gains & special Provision for full Value of Consideration in Certain Cases covered by section 50C. The issue before the Bombay High court was as to whether on facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the order of the CIT(A) in deleting the addition of Long Term Capital Gain of Rs.80,58,000/on the ground that provisions of section 50C of the IT Act, 1961 were not applicable to transfer of land and building, being a leasehold property?

The Revenue has not preferred any appeal against the decision of the Tribunal in the case of Atul G. Puranik vs. ITO (ITA No.3051/Mum/2010) decided on 13 May 2011. Thus, it could be inferred that it has been accepted.

Bombay HC further observed that this Court in DIT vs. Credit Agricole Indosuez 377 ITR 102 (dealing with Tribunal order) and Apex Court in UOI vs. Satish P. Shah 249 ITR 221 (dealing with High Court order) had laid down salutary principle that where Revenue had accepted a decision of Court/Tribunal on an issue of law and not challenged it in appeal, then subsequent decision following earlier decision could not be challenged.

In short, Bombay HC has concluded, by the principle of silent estoppels, that section 50C is not applicable in case of leasehold properties.

Here is the copy of the judgement of Commissioner Of Income Tax Vs. Greenfield Hotels & Estates Pvt. Ltd (2016) 389 ITR 0068 (Bom) as under:

COMMISSIONER OF INCOME TAX

vs.

GREENFIELD HOTELS & ESTATES PVT. LTD.

HIGH COURT OF BOMBAY

M.S.SANKLECHA, & S.C. GUPTE, JJ.

ITA NO.735 OF 2014

24th October, 2016

(2016) 97 CCH 0143 MumHC

(2016) 389 ITR 0068 (Bom)

Legislation Referred to

Section 260-A

Case pertains to

Asst. Year 2007-08

Decision in favour of:

Assessee

JUDGMENT}PC:-

  1. This appeal under Section 260A of the Income Tax Act, 1961 (“the Act”) challenges the order dated 23 October 2013 passed by the Income Tax Appellate Tribunal (“Tribunal”). The impugned order relates to Assessment Year 2007-08.
  2. The Revenue urges the following question of law for our consideration :

“Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the order of the CIT(A) in deleting the addition of Long Term Capital Gain of Rs.80,58,000/on the ground that provisions of section 50C of the IT Act, 1961 were not applicable to transfer of land and building, being a leasehold property?”

  1. The impugned order of the Tribunal has dismissed the Revenue’s appeal from the order dated 15 June 2012 passed by the Commissioner of Income Tax (Appeals). The issue before the Tribunal was whether Section 50C of the Act would be applicable to transfer of leasehold rights in land and buildings. The impugned order of the Tribunal followed its decision in Atul G. Puranik vs. ITO (ITA No.3051/Mum/2010) decided on 13 May 2011 which held that Section 50C is not applicable while computing capital gains on transfer of leasehold rights in land and buildings.
  2. Mr. Kotangale, learned Counsel for the Revenue, states that the Revenue has not preferred any appeal against the decision of the Tribunal in the case of Atul Puranik (supra). Thus, it could be inferred that it has been accepted. Our Court in DIT vs. Credit Agricole Indosuez 377 ITR 102 (dealing with Tribunal order) and the Apex Court in UOI vs. Satish P. Shah 249 ITR 221 (dealing with High Court order) has laid down the salutary principle that where the Revenue has accepted the decision of the Court/Tribunal on an issue of law and not challenged it in appeal, then a subsequent decision following the earlier decision cannot be challenged. Further, it is not the Revenue’s case before us that there are any distinguishing features either in facts or in law in the present appeal from that arising in the case of Atul Puranik (supra).
  3. In the above view, the question as framed by the Revenue does not give rise to any substantial question of law. Thus, not entertained.
  4. Appeals dismissed. No order as to costs.

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