Transfer of development rights or transfer of property? Is S.50C applicable?

This case examines whether Section 50C of the Income Tax Act, which deals with the deemed sale consideration of property, applies to the transfer of development rights. The assessee argued that Section 50C was incorrectly invoked as they only transferred development rights, not ownership of the land. Furthermore, they contended that a significant portion of the land was a non-construction green belt, located in an ecologically sensitive area, and reserved for economically weaker sections, making the departmental valuation inappropriate.

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI
BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM

ITA No.1582/Mum/2019
(Assessment Year: 2012-13)

Radharaman Constructions
Ground Floor, Shri Kunj,
3A Altamount Road,
Mumbai-400 026
PAN/GIR No. AAAAR 3741 A
(Appellant) : 

Vs.

Asst. CIT, Circle – 19(3),
Mumbai
(Respondent)

Appellant by : Dr. K. Shivaram
Respondent by : Shri Rakesh Ranjan

Date of Hearing : 27.10.2020
Date of Pronouncement : 05.01.2021

O R D E R

Per Shamim Yahya, A. M.:

This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-59, Mumbai (‘ld.CIT(A) for short) dated 23.01.2019 and pertains to the assessment year (A.Y.) 2009-10.

2. The grounds of appeal read as under:

The Ld. Commissioner of Income Tax (Appeals) and Id Assessing Officer erred in making addition of Rs. 1,62,09,900/- to the Long Term Capital Gain as offered by the appellant under Section 50C of the Act on the basis of the valuation done by the Departmental Valuation Officer. The Ld. Commissioner of Income Tax (Appeals) and Id Assessing Officer erred in invoking provisions of section 50C of the Income Tax Act, 1961 despite the fact that:

• The land consisted of 9,685 sq metres of which a major portion was occupied by green belt (7,873 sq metres) on which no construction is permitted.

• The land was next to river having mangroves and was in ecologically sensitive area.

• The land was reserved for Economically Weaker Section of Society,

• The sale of green belt land was part and parcel of two other sales of land adjacent to the said land. The combined sales consideration exceeded combined stamp duty valuation.

• It was not a transfer of land but only transfer of development rights in the land. The appellant was not the owner of the land but only owned development rights in the land. The appellant prays that aforesaid additions made may be deleted. The appellant craves your honour's leave to add, alter or amend any ground of appeal at the time of hearing or before.

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