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Where assessee sold right to property and not land or building, section 50C would not apply.


Assessee entered into an agreement for purchase of unconstructed flats with ‘S’. Assessee acquired certain rights to purchase flats. Before flats were complete, assessee sold his rights to ‘B’ and ‘N’ by nominating them for registration, and flats were registered by originally vendors in name of these two ultimate purchasers. Assessee was confirming party to this transaction. Assessee received consideration for sale of such rights and profits from sale was declared as long-term capital gain. 
AO invoked provisions of section 50C and held that market value as determined by registration authority should be applied. 
CIT(A) upheld AO’s order. 


Held: The issue was no more *res integra*. 
The Tribunal in ITA No. 2519/Ahd/2009, Order, dt. 13-4-2012 ITO v. Yasin Moosa Godil, had decided the issue under similar facts and circumstances, according to which it was essential for application of section 50C that the transfer must be of a capital asset, being land or building or both. If the capital asset under transfer cannot be described as “land or building or both” then section 50C would cease to apply. 
Following the said decision, it was held that section 50C did not apply as what was sold was right in property but not land or building.
Decision: In assessee’s favour.
 
     
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