The assessee had booked a flat with a builder and paid advance of Rs.16.12 lakh for the same from time to time. Since the entire amount was not paid by the assessee, the builder had neither handed over the possession of the flat to the assessee nor had he executed any registered sale deed in favour of the assessee. During the relevant assessment year, the assessee requested the builder to cancel the booking and return the advance paid of Rs. 16.12 lakh. The builder, the new buyer and the assessee entered into a tripartite registered sale agreement for transfer of the said flat, wherein the appellant (addressed as the vendor in the sale agreement) was to transfer all his rights, title and interest in the said flat to the buyer, the builder (addressed as the confirming party in the sale agreement) was to give possession of the said flat to the buyer and was also to allot the said flat to the buyer, which was originally agreed to be allotted to the assessee and the new buyer (addressed as the purchaser in the sale agreement) was to acquire only the rights in the said flat from the appellant and the possession and the allotment thereof from the builder. Accordingly, during the year under consideration, the assessee received back from the buyer the booking amount paid by him to the builder.
The Assessing Officer held that the flat was registered for value of Rs.57.57 lakh as against Rs.16.12 lakh refund received by the assessee. He, therefore, treated the difference of Rs.41.45 lakh as unexplained income u/s.50C. The CIT(A) deleted the addition made by the Assessing Officer.
The Tribunal, relying on the decision in the case of Dy.CIT V. Tejinder Singh (2012) 147 TTJ 87 (Kol)/ (2012) 72 DTR (Kol) (Trib) 160 held in favour of the assessee. The Tribunal noted as under:
Prior to the execution of the tripartite agreement, the assessee had neither paid full consideration of the flat nor had he acquired the possession of the flat from the builder.
From the agreement, it was evident that it is the builder who is transferring the capital asset i.e. the flat to the new buyer by handing over the possession of the flat as also the legal ownership thereof to the new buyer and the appellant only received back the advance paid by him to the builder by relinquishing his booking right in respect of the said flat.
From the reading of section 50C, it is evident that it is a deeming provision and it covers only to land or building or both. Section 50C can come into play only in a situation where the consideration received or accruing as a result of the transfer by an appellant of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of State Government for the purpose of payment of stamp duty in respect of such transfer. It is a settled legal proposition that deeming provision can be applied only in respect of the situation specifically given and hence cannot go beyond the explicit mandate of the section.
Therefore, it is essential that for application of section 50C 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 will not apply.
From the facts of the case, it is seen that the assessee has transferred booking rights and received back the booking advance. Booking advance cannot be equated with the capital asset and therefore section 50C cannot be invoked.
