Section 50C of the Act is applicable to a property held in leasehold right: Bombay HC
Recently, Bombay HC, Nagpur Bench inย ๐๐ต๐ฒย ๐ฐ๐ฎ๐๐ฒย ๐ผ๐ณย ๐ฉ๐ถ๐ฑ๐ฎ๐ฟ๐ฏ๐ต๐ฎย ๐ฉ๐ฒ๐ป๐ฒ๐ฒ๐ฟ๐ฒย ๐๐ป๐ฑ๐๐๐๐ฟ๐ถ๐ฒ๐ย ๐๐๐ฑย ๐.ย ๐๐ง๐ขย [๐๐ป๐ฐ๐ผ๐บ๐ฒย ๐ง๐ฎ๐ ย ๐๐ฝ๐ฝ๐ฒ๐ฎ๐นย ๐ก๐ผ.ย ๐ฏ๐ฐย ๐ผ๐ณย ๐ฎ๐ฌ๐ฎ๐ฎ],ย ๐ฑ๐ฎ๐๐ฒ๐ฑย ๐ฌ๐ญ.๐ฌ๐ฐ.๐ฎ๐ฌ๐ฎ๐ฑย has held an important judgement on taxation of transfer of the leasehold rights. It has held that Section 50C of the Act is applicable to a property held in leasehold right.
The Honโble Court held that:
โThe expression used in Section 50C of the IT Act is โconsideration received or accruing as a result of transfer of a capital asset, being land or building or bothโ.
This will have to be related to the definition of โcapital assetโ, as occurring in Section 2(14) of the IT Act.
A perusal of the definition of โCapital Assetโ as contained in Section 2(14) of the IT Act would indicate that it includes property of any kind, โheld by an assesseeโ.
What is material to note is, that the expression is โheld by an assesseeโ 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 โheld by an assesseeโ 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 natureโ
With this, all the properties transferred by MIDC and improvement trust wherein normally lease deed is executed will be covered by the provision of section 50C. The recent ruling has overruled the Bombay HC judgment in the case of Atul Puranik.
The Copy Of the order is as under:
