The case involves Fashion Group International, based in Panipat, as the appellant challenging the application of Section 50C of the Income Tax Act by the CIT(A) Karnal for the assessment year 2014-15. The appeal is against the addition of Rs. 1,58,56,968 as per the provisions of section 50C.
The appellant argued that the transactions in question did not involve the sale of land or buildings but were merely transfers of property rights, for which section 50C should not apply. They contended that the transactions were based on agreements to sell, which were not registered and thus did not confer ownership, precluding the applicability of Section 50C.
The tribunal, led by Shri Chandra Mohan Garg, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member, held that the provisions of Section 50C are specific to transfers of land or buildings, which did not occur in this case. Thus, the addition made under this section was overturned.
The decision referenced several precedents that supported the view that unregistered agreements do not constitute a transfer of property rights under the law, reinforcing the tribunal’s decision. The tribunal’s ruling highlighted the necessity for clear legislative language and specific conditions to be met for the application of certain tax provisions, such as Section 50C.
This case serves as a significant example for similar cases where the nature of property rights and the applicability of specific tax provisions are in question. It emphasizes the need for clear and precise documentation in property transactions to determine tax liabilities accurately.
Fashion Group International vs ACIT, Panipat on Section 50C Dispute for AY 2014-15
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