Himanshu Jain Vs DCIT (ITAT Pune)
Pune ITAT: Section 54 Relief Cannot Be Denied Merely Because Section 50C Enhances Sale Consideration; Matter Remanded for Verification
The Pune ITAT held that where an assessee sells a residential house for a value lower than the stamp duty valuation, resulting in an addition under section 50C, such deeming fiction does not automatically disentitle the assessee from claiming exemption under section 54/54F if the capital gains have been invested in a new residential house.
In this case, the assessee sold a residential property for ₹1.10 crore against a stamp duty valuation of ₹1.962 crore, leading to an addition of ₹86.20 lakh under section 50C. The assessee contended that the sale was under distress due to transfer of employment and had invested the entire sale proceeds, along with housing finance, in purchasing a new residential flat costing ₹1.92 crore. Although the claim under section 54/54F had not been made in the original return, it was raised before the CIT(A) as an additional ground.
The Tribunal observed that section 50C is only a deeming provision for computation of capital gains and does not override the beneficial provisions of sections 54/54F. It further held that if the investment in the new residential house is sufficient even after adopting the deemed sale consideration under section 50C, the assessee would, in principle, be entitled to the exemption.
