Baskarababu Usha Vs ITO (ITAT Chennai)
These two appeals for Assessment Year 2016-17 were filed by different assessees against separate but identical orders of the Commissioner of Income Tax (Appeals)-12, Chennai dated 13.02.2020 and were disposed of through a consolidated order as the facts and issues were common. In the lead case, the assessee had jointly sold 2.99 acres of land for ₹4 crore, computed long-term capital gains on her 50% share, and claimed exemption under Section 54F on the ground that the sale consideration was invested in constructing a residential house. During assessment, the Assessing Officer proposed adoption of the stamp duty value under Section 50C, referred the valuation to the Departmental Valuation Officer (DVO), and restricted the Section 54F exemption by excluding expenditure not supported by bills and expenditure incurred before the sale of the original asset. The Assessing Officer also adopted deemed sale consideration under Section 50C while computing the exemption.
Before the Tribunal, the assessees contended that the Assessing Officer ought to have awaited the DVO’s valuation after referring the matter under Section 50C(2), that construction commenced before the sale but was completed within the prescribed period in accordance with the jurisdictional High Court decision in C. Aryama Sundaram v. CIT, and that exemption under Section 54F should be computed with reference to the actual sale consideration and not the deemed consideration under Section 50C.
