Bombay High Court
Vidarbha Veneer Industries Ltd., (In ... vs Income Tax Officer, Ward-7(1), Nagpur on 1 April, 2025
Author: Avinash G. Gharote
Bench: Avinash G. Gharote
2025:BHC-NAG:3741-DB
4-ITL34.22.odt
1/5
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
INCOME TAX APPEAL NO. 34 OF 2022
Vidarbha Veneere Industries Ltd.
(In Liquidation),
Office of Official Liquidator,
Civil Lines, Nagpur. ......PETITIONER.
-VERSUS-
Income Tax Officer,
Ward-7(1), Civil Lines,
Nagpur. ......RESPONDENT.
---------------------------------------------------------------
Mr. R.R.Dawda, Adv. for the appellant.
Mr. Bhushan N. Mohata, Adv.for the respondent.
---------------------------------------------------------------
CORAM : AVINASH G. GHAROTE &
ABHAY J. MANTRI, JJ.
DATE : 1ST APRIL, 2025
ORAL JUDGMENT (PER: Avinash G. Gharote, J.)
Heard.
2. Rule. Rule returnable forthwith. The petition is heard finally with
the consent of the learned counsel for the parties.
3. The appeal questions the order dated 24/03/2017 (Pg.72), passed by
the learned Tribunal in MA No.07/Nag/2016, whereby the claim of the
appellant of non-applicability of Section 50C of the Income Tax Act, 1961
KHUNTE
4-ITL34.22.odt
(for short "IT Act") to a property held in leasehold right has been negated by
dismissing the appeal.
4. Mr. Dawda, learned counsel for the appellant, by relying upon the
language of Section 50C read with the definition of 'Capital Asset' as defined
in Section 2(14) of the IT Act submits, that since the lands in question which
are Plot Nos.G-17, 18, 6 and 7, situated in the MIDC, Nagpur, were
transferred by the MIDC, in favour of M/s. Vidarbha Veneeer Industries Ltd.
by way of a lease dated 31/03/1979, rights under which have been assigned
by the lessee, by way of a Deed of Assignment dated 30/08/2004 in favour of
the present appellant (Pg.118), the same would not attract Section 50C of
the IT Act and therefore, the income tax would not be payable on the sale
consideration. In support of his contention learned counsel placed his
reliance upon Atul G.Puranik v. Income Tax Officer, (2011) 30 CCH 0239
MumTrib.
4. Mr.Mohata, learned counsel for the respondent, supports the
impugned decision contending, that the manner in which, a property is held,
is immaterial, for the purpose of applicability of Section 50C of the IT Act.
5. 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 [or assessable] by any authority of a State
Government (hereafter in this section referred to as the
"stamp valuation authority") for the purpose of payment of
KHUNTE
4-ITL34.22.odt
stamp duty in respect of such transfer, the value so adopted
or assessed [or assessable] 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
KHUNTE
4-ITL34.22.odt
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
KHUNTE
4-ITL34.22.odt
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.
9. Rule stands discharged. No order as to costs.
Signed by: Mr. G.S. Khunte
(ABHAY J. MANTRI,J) (AVINASH G. GHAROTE, J)
Designation: PS To Honourable Judge
Date: 09/04/2025 13:33:56
KHUNTE
