Case Law Details
Lalit Kumar Kalwar Sarwar Vs ITO (ITAT Jaipur)
After analyzing the provisions of section 54F(1) of the Act, we find that in Explanation to section 54F(1), it is that net consideration means the full value of consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. The meaning of full value of consideration in Explanation to s. 54F(1) will not be governed by meaning of words ‘full value of consideration’ as mentioned in s. 50C. The value adopted for stamp duty is to be considered as full value of consideration for the purpose of computing the capital gains under s. 48. Sec. 54F(1) says that capital gains is to be dealt with in accordance with the provisions of sub-ss. (a) and (b) of s. 54F(1)of the Act. In the instant case, the cost of new asset is not less than the net consideration thus the whole of the capital gains will not be charged even if the capital gains has been computed by adopting the value adopted by stamp registration authority. It is clearly mentioned in s. 54F(4) also that net consideration which is not appropriated towards the purchase of new asset then the same is to be taxed in case such net consideration not appropriated is not deposited in the capital gain account. It is not necessary that the new asset should be got registered before filing of the return. The requirement of law is that net consideration is required to be appropriated towards the purchase of the new asset. Thus deduction under s. 54F is clearly applicable.
Thus in our view also the natural meaning of full value of consideration refers to consideration specified in the Sale Deed. In this regard, Hon’ble Delhi High Court in the case CIT vs. Smt. Nilofer I. Singh (2009) 221 CTR (Del) 277: (2008) 14 DTR (Del) 108 (2009) 309 ITR 233 (Del) had held that full value of consideration refers to the consideration specified in the sale deed. For deciding the meaning of words ‘full value of consideration’,
provision of section 50C of the Act creates a limited fiction to the effect that the full value of consideration shall be substituted for the purpose of s. 48 of the Act by the amount taken by the Registrar for registration purpose. Thus, the fiction under s. 50C of the Act is extended only to the aspect of computation of capital gains and the same does not extend to the charging section or the exemptions to the charging section. The legislature consciously intended to apply the fiction under s. 50C of the Act only to the expression used in s. 48 of the Act and not in any other place. The exemption ss. 54, 54B, 54D, 54EA, 54EB, 54F, 54G and 54H, are self-contained sections which also include the method of computation of the exemption. The manner in which the profits or gains arising out of the transfer of the capital asset are to be computed as mentioned in s. 48 which goes without saying that the charge is on the profits or gains so computed. While computing the profits or gains as per s. 48, the deeming provision embedded in s. 50C has to be given effect to. The charge is created on the enhanced profits or gains arrived at from the fiction of s. 50C. This aspect was justified by the Hon’ble Finance Minister in his Budget Speech that s. 50C will curb the menace of unaccounted income in the property transactions by presuming the sale consideration to be the value of the guideline value for registration in case it is stated lower than that value of registration.
Thus when the assessee has invested entire actual sales consideration received by him in the purchase and construction of new house accordance with the provision of section 54F(1) thereafter the provision of section 50C has not been applicable.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal by the assessee is directed against the order of ld. CIT(A), Ajmer dated 04.01.2018 for the assessment year 2013-14. The assessee has raised the following grounds of appeal :-
1. That on the facts and in the circumstances of the case, the ld. CIT (A) grossly erred in not considering the explanation to provision of section 54F(1) of the Act as the assessee has made investment of full value of consideration in construction of house.
2. That on the facts and in the circumstances of the case, the ld. CIT (A) grossly erred in holding the provision of section 50C is applicable particularly when the same are not applicable as the full value of consideration was invested by the assessee in construction of house.
3. That on the facts and in the circumstances of the case, the ld. CIT (A) grossly erred in sustaining the addition made by the ld AO in respect of long term capital gain without giving proper benefit of indexation and deduction u/s 54F of the Act.
4. That on the facts and in the circumstances of the case, the ld. CIT (A) grossly erred in adopting fair market value of property from F.Y. 2004-05 without considering the explanation (iii) to provision of section 48 of the Act.
5. That on the facts and in the circumstances of the case, the ld. CIT (A) grossly erred in restricting the cost of construction to Rs. 1 lac instead of Rs. 2,57,500/- particularly when the cost of construction declared by the assessee is highly reasonable looking to the construction work carried out.
6. That on the facts and in the circumstances of the case, the ld. CIT (A) erred in not allowing benefit of deduction u/s 54F of the Act particularly when the investment made by the assessee in construction of house duly recorded and supported from the documentary evidences.
7. That on the facts and in the circumstances of the case, the ld. CIT (A) erred in sustaining partial disallowance of deduction u/s 54F particularly when the appellant has made investment of whole of the net consideration received in construction of new property.
8. That on the facts and in the circumstances of the case, the ld. CIT (A) erred in charging interest u/s 234A, 234B and 234C.
9. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing.
2. The brief facts of the case are that the assessee was engaged in the trading of Tyres under the name and style M/s. Jai Ambey Tyres. The assessee filed his return of income declaring income of Rs. 3,97,590/- on 30.09.2013. The case of the assessee was selected for scrutiny through CASS. Accordingly notice under section 143(2) was issued on 02.09.2014 which was duly served on the assessee. Further notice under section 143(2) and notice under section 142(1) along with questionnaire were issued on 03.12.2014 seeking specific details which were served upon the assessee. Thereafter, notice under section 142(1) along with detailed questionnaire issued on 10.07.2015 fixing the case for hearing on 20.07.2015. In compliance, assessee’s A/R attended and produced books of accounts, bank statement etc. which were examined on test check basis. During the year under consideration the assessee had sold a parental property for Rs. 20,78,310/- and shown long term capital gain at Nil after claiming exemption under section 54F of the IT Act. At the time of assessment, the assessee filed written reply claiming therein cost of construction of shop sold in FY 2012-13 at Rs. 2,57,500/- on estimation basis but failed to produce any documentary evidences to corroborate his claim. The assessee also failed to furnish documentary evidences in respect of year of construction, cost of acquisition etc. The AO completed the assessment by computing the total income at Rs. 24,26,600/- by taking the long term capital gain at Rs. 20,28,370/- after allowing deduction under Chapter VIA of I.T. Act, 1961. Aggrieved by the order of assessment, the assessee preferred appeal before ld. CIT (A). The ld. CIT (A) allowing some relief, allowed the appeal of the assessee in part.
3. Now the assessee is in appeal before the Tribunal.
4. Before me, the ld. Counsel for the assessee has submitted his written submissions as under :-
“It is submitted that during the year under consideration the assessee has sold shops and received actual sales consideration of Rs. 12,00,000/-which was less than the value accepted by the DLC of Rs. 20,78,310/-. The assessee has claimed long term capital gain nil after exemption u/s 54F of the Act. The computation of capital gain is as under: –
| Sale of Plots (Actual Consideration) | 1200000/- |
| Less: – Brokerage | 40000/- |
| 1160000/- | |
| Less: – Exemption u/s 54F | 2389100/- |
| Long term capital gain | NIL /- |
2] The assessee has computed long term capital gain nil as the entire actual consideration was invested in construction of residential house. The exemption claimed by the assessee accordance with the provisions of section 54F of the Act. The details of investment made by the assessee are as under:
| Year | Particulars | Investment | Total Investment |
| 31/03/2012 | Purchase of plot | 2,40,000 | 2,40,000 |
| 31/03/2013 | Investment in Const. of New house | 5,00,000 | 7,40,000 |
| 31/03/2014 | Investment in Const. of New house | 6,49,100 | 13,89,100 |
| 31/03/2015 | Investment in Const. of New house | 19,00,000 | 23,89,100 |
3] It is submitted that the provision of section 50C has not applicable in the case of the assessee as entire actual sale consideration received by the assessee was invested in the construction of new house. The meaning of full value of consideration as referred to in Explanation to s. 54F(1) is not governed by the meaning of the words ‘full value of consideration’ as mentioned in s. 50C of the Act.
4] The authority below has denied the deduction u/s 54F on the reason that the assessee has not deposited the consideration received in transfer of property in capital gain a/c as per provision of section 54F (4) of the Act. The observation/ finding recorded by the authority below is apparently contrary to the provisions of the law and also material available on record. It is submitted that the actual (consideration received by the assessee was invested in purchase of plot and construction of residential house before due date of filing of return i.e. 31/03/2014 as per provision of section 139(4) of the Act. Further also from the material available on record and documentary evidences furnished by the assessee which proves beyond doubts that the intention of the assessee for construction of residential house and accordingly the assessee has made investment of Rs. 23,89,100/-whereas he has received actual sales consideration of Rs. 11,60,000/-on transfer of property.
5] The Hon’ble ITAT, Chandigarh Bench in the case of Seema Sabharwal, ITA No. 272/Chd/2017 dated 05/02/2018 in which the Hon’ble Tribunal after considering decision of various High Courts including decision of Hon’ble Karnataka High Court on the identical facts has allowed the deduction u/s 54Fof the Act. The relevant finding recorded by the Hon’ble Tribunal reads as under: –
“11. Though the Hon’ble High Court in relation to the issue of claim of exemption u/s 54F of the Act has held that what matters is the intention of the assessee to purchase/ construct new house. The Hon’ble Karnataka High Court has held that if the intention is not to retain cash but to invest in construction or any purchase in property and if such investment is made within the period stipulated therein, than section 54F(4) is not at all attracted. We may clarify here that provisions of section 54(2) are almost identically worded as in invested the amount for the purchase/ construction of the house within the stipulated period as also observed above while deciding the first issue. The assessee has proved such investment during the assessment proceedings and, thus, the assessee has complied with the requirement of substantive provisions and, thus, is entitled to the claim of exemption u/s 54F of the Act. In view of this, we direct the Assessing Officer to grant exemption to the assessee as permissible under the provisions of section 54 of the Act.”
6] Before ascertaining as to how the deduction under s. 54F is to be allowable to the assessee, it will be useful to reproduce s. 54F(1):
“54F. (1) Subject to the provisions of sub-s. (4), where, in the case of an assessee being an individual or an HUF, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,–
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under s.45;
(b)if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under s. 45:
Provided that nothing contained in this sub-section shall apply where-
(a) the assessee–
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a periodof three0000000years after the date of transfer of the original asset; and
(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head ‘Income from house property’.
Explanation: For the purposes of this section,
‘net consideration’, in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.”
7] In Explanation to s. 54F(1), it is that net consideration means the full value of consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. The meaning of full value of consideration in Explanation to s. 54F(1) will not be governed by meaning of words ‘full value of consideration’ as mentioned in s. 50C. The value adopted for stamp duty is to be considered as full value of consideration for the purpose of computing the capital gains under s. 48. Sec. 54F(1) says that capital gains is to be dealt with in accordance with the provisions of sub-ss. (a) and (b) of s. 54F(1)of the Act. In the instant case, the cost of new asset is not less than the net consideration thus the whole of the capital gains will not be charged even if the capital gains has been computed by adopting the value adopted by stamp registration authority. It is clearly mentioned in s. 54F(4) also that net consideration which is not appropriated towards the purchase of new asset then the same is to be taxed in case such net consideration not appropriated is not deposited in the capital gain account. It is not necessary that the new asset should be got registered before filing of the return. The requirement of law is that net consideration is required to be appropriated towards the purchase of the new asset. Thus deduction under s. 54F is clearly applicable.
8] It is submitted that the natural meaning of full value of consideration refers to consideration specified in the sale deed. The Hon’ble Delhi High Court in the case CIT vs. Smt. Nilofer I. Singh (2009) 221 CTR (Del) 277: (2008) 14 DTR (Del) 108 (2009) 309 ITR 233 (Del) had held that full value of consideration refers to the consideration specified in the sale deed. For deciding the meaning of words ‘full value of consideration’, The Hon’ble Delhi High Court has referred to the decision of Hon’ble Apex Court at p. 237 as under:
“This controversy has already been settled by the Supreme Court in the case of CIT vs. George Henderson & Co. Ltd. (1967) 66 ITR 622 (SC), the very expression ‘full value of consideration’ was under consideration of the Supreme Court in the context of the provisions of the Indian IT Act, 1922. The provisions of s. 12B of the 1922 Act pertain to capital gains. Sub-s. (1) was in parimateria to s. 45(1) of the present Act and sub-s. (2) of s. 12B of the 1922 Act was in parimateria to the provisions of s. 48 of the present Act. The Supreme Court was of the view that the expression ‘full value of consideration’ in the main part of s. 12B(2) of the Act cannot be construed as having a reference to the market value of the asset transferred but the expression only meant, the full value of a consideration received by the transferor in exchange of the capital asset transferred by him. The Supreme Court also observed that in the case of a sale the full value of consideration is the full sale price actually paid. It was further of the view that the expression ‘full value’ means the whole price without any deduction, whatsoever, and it cannot refer to the adequacy of the price bargained for. Nor did it have any necessary references to the market value of the capital asset which is the subject-matter of the transfer.”
9] That the provision of section 50C of the Act creates a limited fiction to the effect that the full value of consideration shall be substituted for the purpose ofs. 48 of the Act by the amount taken by the Registrar for registration purpose. Thus, the fiction under s. 50C of the Act is extended only to the aspect of computation of capital gains and the same does not extend to the charging section or the exemptions to the charging section. The legislature consciously intended to apply the fiction under s. 50C of the Act only to the expression used in s. 48 of the Act and not in any other place. The exemption ss. 54, 54B, 54D, 54EA, 54EB, 54F, 54G and 54H, are self-contained sections which also include the method of computation of the exemption. The manner in which the profits or gains arising out of the transfer of the capital asset are to be computed as mentioned in s. 48 which goes without saying that the charge is on the profits or gains so computed. While computing the profits or gains as per s. 48, the deeming provision embedded in s. 50C has to be given effect to. The charge is created on the enhanced profits or gains arrived at from the fiction of s. 50C. This aspect was justified by the Hon’ble Finance Minister in his Budget Speech that s. 50C will curb the menace of unaccounted income in the property transactions by presuming the sale consideration to be the value of the guideline value for registration in case it is stated lower than that value of registration.
10] When the assessee has invested entire actual sales consideration received by him in the purchase and construction of new house accordance with the provision of section 54F(1) thereafter the provision of section 50C has not been applicable in light of following judicial decisions.
a] The Hon’ble ITAT Jaipur Bench in the case of Gyan Chand Batra V/S ITO reported in 133 TTJ 482 held as under:
“Capital gains-Exemption under s. 54F– Full value of consideration vis a-vis value adopted for stamp duty–Legislature in its wisdom has referred to s. 48 in s. 50C for adopting the stamp duty value as fair market value – Hence, the deeming fiction as provided in s. 50C in respect of the words ‘full value of consideration’ is to be applied only to s. 48-Words ‘full value of consideration’ as mentioned in other provisions of the Act are not governed by the meaning of these words as mentioned in s. 50C– Hence,for ascertaining the full value of consideration as mentioned in different provisions except s.48, consideration specified in sale deed has to be considered-Thus, meaning of full value of consideration as referred to in Explanation to s. 54F(1) is not governed by the meaning of the words full value of consideration’ as mentioned in s. 50C-In the instant case, the cost of new asset is not less than the net consideration-Thus, whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value adopted by the stamp registration authority-Hence, theassessee is entitled for exemption under s. 54F”
b] PRAKASH KARNAWAT vs. INCOME TAX OFFICER [ITAT JAIPUR] REPORTED IN 49 SOT 0160.
“8. We find similar facts are involved in the present case. Assessee has received sale consideration of Rs. 40,00,000 which has been invested in the Bonds in view of provisions of s. 54EC. Therefore, assessee is entitled for deduction under s. 54F. The provisions of s. 50C are applicable for the purposes of s. 48 and for the purpose of s. 54F as held by the Tribunal in case of Gyan Chand Batra (supra). Findings of Tribunal have been reproduced somewhere above in this order which were taken in ITA No. 9/Jp/2010 for asst. yr. 2006-07. Similar view has been expressed by the Bangalore Bench of the Tribunal in case of Gouli Mahadevappa (supra). Since entire amount of sale consideration has been invested in Bonds, therefore, in our view provisions of s. 50C are not applicable as held by Jaipur Bench and Bangalore Bench. Respectfully following the decisions of the Tribunal, we hold that AO and learned CIT(A) were not justified in invoking provisions of s. 50C and alternatively the capital gain shown by assessee. Accordingly the addition made and sustained by the lower authorities is deleted.”
c] Raj Babbar v/s Income-tax Officer – 11(1)(3), Mumbai [2013] 29 taxmann.com 11 (Mumbai – Trib.)
“14. Next, we shall examine the facts and the applicability of the decision in the case of Prakash Karnawat v. ITO [2012] 49 SOT 160/[2011] 16 taxmann.com 357 (JP). In this case, the assessee sold a property for Rs. 40 lakhs. Sale value as per the DVO at Rs. 74,58,880/. Assessee invested the said sum of Rs. 40 lakhs in Bonds. Finally, AO taxed difference of Rs.34,58,880/-. Since, the assessee contended where the entire sum of Rs. 40 lakhs is invested, the provisions of section 50C cannot be invoked. On these facts, the Tribunal held that in principle, deeming provisions of section 50C on ‘full value consideration ‘ will not be applicable to section 54F as these provisions are asset specific and it only meant for section 48 of the Act. Further, Tribunal held that where the entire sale consideration is invested in Bonds as per section 54EC of the Act, the assessee is entitled to deduction u/s 54F and provisions of section are not applicable. Literal meaning of the provisions of clause (a) of section 54F(1) of the Act was advocated. In the process, the Explanation to section 54F(1) of the Act, where ‘net consideration’ was defined, was relied. Tribunal decision of Bangalore bench in the case of Gouli Mahadevappa (supra) (para 8) and Jaipur bench decision in the case of Gyan Chand Batra(supra) were followed. This case is also distinguishable on the facts that considering the full value consideration as per the deemed provisions of section 50C, the net consideration is much higher than the invested amount, whereas in the present case, the net consideration by all methods i.e. with or without application of 50C is lesser than the investment in the new asset. Further, we have examined the decision of the Tribunal in the case of Gyan Chand Batra (supra) dated 13.08.2011. Relevant facts of this case are that the assessee sold property for Rs. 10.81 lakhs and full value consideration as per the SRO is 19,24,987/-. Assessee purchased flat for Rs. 16.74 lakhs. It was held that in view of the provisions of section 54F(1), the assessee is entitled to deduction. The conclusions reads that the “deeming fictions provided in section 50C in respect of the words ‘full value of consideration’ (FVC) is to be applied only to section 48 and, therefore, meaning of full value of consideration as referred to in Explanation to section 54F(1) is not governed by the meaning of the words ‘full value of consideration’ as mentioned in section 50C”
……
……
17. Therefore, based on the factual matrix of the present case, where the assessee invested total full value consideration of Rs. 16,87,000/-(as per the SRO) in the residential house, which is one house only as it has only one kitchen, and these FVC is less than the invested amounts of 17,65,752/-, during the specified period, the assessee is not chargeable to tax on the capital gains u/s 45 of the Act. Whether we compute the capital gains apply FVC as per the sale deed or the deemed FVC as per the section 50C, the net consideration is less than the investment in one residential house. None of the decisions of the Tribunal cited above are against such interpretation.
Therefore, considering the provisions of section 54F(1)(a) of the Act, we are of the opinion that the order of the CIT(A) is not proper in denying exemption in respect of the capital gains relatable to the deemed full value of the consideration mentioned in section 50C of the Act. Accordingly, the grounds raised by the assessee are allowed and in favour of the assessee. “
d] The Hon’ble Karnataka High Court in the case of GouliMahadevappa vs. ITO reported in 356 ITR 0090 (Karn). The Hon’ble Court held that “When capital gain is assessed on notional basis, whatever amount invested in new residential house within prescribed period u/s. 54F, entire amount invested, should get benefit of deduction irrespective of fact that funds from other sources are utilized for new residential house”
In light of above the addition made by the ld. AO may kindly be deleted.
ALTERNATIVE SUBMISSION
1] That while passing the assessment order the AO has worked out long term capital gain amounting to Rs. 20,28,370/- the working made by the ld. AO is as under: –
| Sale Consideration | 20,78,310/- |
| Less:- Brokerage | 40,000/- |
| Net Consideration | 20,38,310/- |
| Less: – Indexed Cost
*F.Yr 2004-05 (5,600/-)*852/480. |
9,940/- |
| Capital Gain | 20,28,370/- |
| Less: – Deduction u/s 54/54F | Nil |
| Long Term Capital Gain | 20,28,370/- |
2] That in appeal before CIT (A) the ld. CIT (A) has directed to the AO worked out the capital gain as per direction issued in the order. The working of capital gainafter the decision of ld. CIT (A) is as under: –
| Sale Consideration | 20,78,310/- |
| Less:- Brokerage | 40,000/- |
| Net Consideration | 20,38,310/- |
| Less: Indexed Cost
*F. Yr 1981 (6,156/-) *852/100 52,449/- |
|
| Less Cost of Improvement
(100000.00 *852/480) |
1,77,500/- 2,29,949/- |
| Capital Gain | 18,08,361/- |
| Less: Deduction u/s 54/54F
(18,08,361 x 721000/116000) |
11,23,989/- |
| Long Term Capital Gain | 6,84,372/- |
3] The ld. CIT (A) ought to have allowed deduction u/s 54F amounting to Rs. 6,49,100/- and Rs. 19,00,000/- invested by the assessee in construction of residential house in A.Y. 2014-15 & 2015-16 respectively. The denial of the deduction only reason that the assessee has not deposited consideration in capital gain account. Particularly when entire net consideration received by the assessee was invested in the purchase of plot and construction of house as on 31/03/2014 which is accordance with provision of section 139(4) of the Act and made further investment out of his regular source of income. The Hon’ble Guwahati High Court in the case of CIT v/s Rajesh Kumar Jalan reported in 286 ITR 0274 which was followed by Hon’ble Bench in number of cases. The Hon’ble High Court held as under: –
“Capital Gains–Exemption under s. 54–Time-limit for making deposit under the Scheme–Only s. 139 is mentioned in s. 54(2)–Sec. 139 cannot mean only s. 139(1) but means all sub-sections of s. 139–Therefore, assessee can fulfil the requirement of s. 54 of depositing the unutilised portion of the capital gain on sale of residential property in notified scheme upto the expiry of time-limit for filing return under s. 139(4)
a. R. Krishnamurthy vs. CIT (1989) 76 CTR (SC) 18: (1989) 176 ITR 417 (SC)
b. Bhavnagar University vs. Palitana Sugar Mill (P) Ltd. (2003) 2 SCC 111
c. K. Palshikar (HUF) vs. CIT (1988) 70 CTR (SC) 31: (1988) 172 ITR 311 (SC)
d. State of Maharashtra vs. Santosh Shankar Acharya (2000) 7 SCC 463″
In light of above I request Hon’ble Bench may kindly be allowed the deduction u/s 54F amounting to Rs. 32,89,100/- and the addition made by the ld. AO and confirmed by the CIT (A) may kindly be deleted.”
The ld. A/R, in continuation to above submissions, further submitted ground-wise written submissions as under :-
“ GOA 1,2,6,7: Deduction u/s 54F wrongly denied
1. For fact kindly refer pg. 2 & 3 of CIT(A) Order as also Assessment Order. The same is not being repeated for the sake of brevity. However, the computation of LTCG as per AO and as per CIT(A) may kindly be referred to at pages no. 9 & 10 of the earlier written submission for better appreciation.
2. The crux of the finding ld. CIT are as under:
i) However, with respect to the cost of construction of the shop, the appellant has not furnished any documentary evidence either with respect to the period of construction or cost of construction. Therefore, the AO is directed to compute the capital gain by allowing the cost of construction of the shop at Rs. I lac with the benefit of indexation from the Financial Year 2004-05.
ii)The investment made in subsequent years shall not be considered for the purpose of computing proportionate deduction admissible u/s 54F, as the appellant had not deposited sales consideration in the capital gain investment scheme u/s 54F(4) before the date of filing of return of income.
Thus, the disputes, after the availability of the order of the ld. CIT(A),boil down to the issues narrated above, on which our submission follows hereinafter.
3. At the outset, the fats are not disputed that the assessee made total investment of Rs. 23,89,100/- towards the purchase of the plot and the construction thereon, of a new residential house starting from A.Y.2012-13 to A.Y. 2015-16 (as per the following table at page 2 of ITA WS):
| Previous year ended on | Nature of investment | Amount of Investment (Rs) | Total Investment (Rs) | PB | Remark |
| 31/03/2012 | Purchase of plot | 2,40,000 | 2,40,000 | 75 | |
| 31/03/2013 | Investment in const. of new house |
5,00,000 | 7,40,000 | 93 | |
| 31/03/2014 | Investment in const. of new house |
6,49,100 | 13,89,100 | 115 | |
| 31/03/2015 | Investment in const. of new house |
19,00,000 | 23,89,100 | 140 |
The other undisputed facts are that the due date of filing of the ROI u/s 139(4) of the Act for the relevant AY was 31.03.2014. The net sale consideration (actual) was Rs.11,60,000/- which was the net consideration, as defined in the Explanation, for the purpose of S.54.
4.1 The provisions of S.54F(4) has been misinterpreted in as much as what the said provision requires is only that
“1. the amount of net consideration which is not appropriated,
2. Or which is not utilised by the assessee for the purchase or construction of the new asset before the date of furnishing the return income u/s 139 (which is relevant for the present case),
3. Shall be deposited by him before furnishing of return (such deposit being made in any case not later than the due date u/s 139(1)) not applicable in the case.
Further since S.139 includes S.139(1) as also S.139(4) as well hence, it will also include the extended due date of filing of ROI i.e. up to the end of the relevant assessment year. Thus, what the legislature has recognized is the fact of utilization of the net sale consideration up to the due date filing of the belated ROI u/s 139(4), which in the present case falls 31.03.2014. However, the undisputed fact of this case are that up to the said due date the appellant had already invested Rs.13,89,100/- towards purchase of plot and construction of new house thereon, which certainly exceeded the actual/real net sale consideration of Rs. 11,60,000/- Thus, evidently the entire net consideration (actual) having been utilised before the due date, there was left nothing to be deposited in the Capital Gain Account Scheme.
4.2 Such interpretation is also in accordance with the intention of the legislature as expressed by the Hon’ble Finance Minister in his budget speech reproduced at pg 5-6 & 12 of CIT(A) order.
4.3 Supporting Case Laws: In fact, the issue involved is directly covered by the various decisions, some of which are already referred in written submission pg.5-9. In addition, further reliance is placed on the following :
4.3.1 Nandlal Sharma v/s ITO (2015) 172TTJ 412 (Jp) (DPB 1-5) held that:
Time-Limit of making investment:
“Income-tax Act, 1961, s.54; In favour of: AssesseeCapital gains – Exemption under s.54 – Time-limit for investment – Sec.54 refers to s.139 for the time-limit to acquire eligible new asset, which includes return under s.139(4) also i.e., time-limit of one year from the end of assessment year – Therefore, assessee having utilized the sale consideration of his old house for the purchase of a new residential house before the due date of filing of return under s.139(4), the same is eligible for exemption under s.54 – CIT vs. Md. Jagriti Agarwal (2011) 245 CTR (P&H) 629: (2011) 64 DTR (P&H) 333: (2011) 339 ITR 610 (P&H), CIT vs. Rajesh Kumar Jalan (2006) 206 CTR (Gau) 361: (2006) 286 ITR 274 (Gau), Fathuma Bai v/s ITO (2009) 32 DTR (Kar) 243 and CIT v/s Smt. Vrinder P. Issac (2011) 64 DTR (Kar) 376 relied on. (para 3.7)
Conclusion: Assessee having utilized the sale consideration of his old house for purchase of new residential house before the due date of filing of return under s. 139(4), the same is eligible for exemption under s.54.
4.3.2 In CIT vs Rajesh Kumar Jalan (2006) 296 ITR 274 (Gau), wherein it was held that:
“Capital gains—Exemption under s. 54—Time-limit for making deposit under the scheme—Only s. 139 is mentioned in s. 54(2)—Sec. 139 cannot mean only s. 139(1) but means all sub-sections of s. 139—Therefore, assessee can fulfil the requirement of s. 54 of depositing the unutilised portion of the capital gain on sale of residential property in notified scheme upto the expiry of time-limit for filing return under s. 139(4)”
4.3.3 In Fathima Bai vs. ITO (2009) 32 DTR 243 (Kar), wherein it was held that:
“Capital gains—Exemption under s. 54—Time limit for making deposit under the scheme—Sec 54(2) requires that the assessee should deposit the amount of capital gain either in the Capital Gain Account Scheme or invest the same before filing of return within the period permitted under s. 139—In the instant case, the due date for filing of return was 30th July, 1988 and the assessee was entitled to file return under s. 139(4) within the extended time i.e., upto 31st March, 1990—Assessee had utilised the entire capital gains by purchasing a house property before the extended due date under s. 139(4)— Therefore, she is eligible for exemption under s. 54.”
4.3.4 Also CIT v/s Jagriti Aggarwal (2011) 245 CTR 629/339 ITR 610 (P&H)(DPB 6-9) following Rajesh Kumar and Fathima Bai (Supra).
4.4 Other Supporting Case laws:
i. Rakesh Nain Trivedi (2015) 152 ITD 869 (Amritsar)
ii. Ram Kumar vs. ACIT (2012) 150 TTJ 656 (HydTrib)
iii. ITO vs Mr. Gope M. Rochlani (2014) 158 TTJ 120 (MumTrib)
4.5 Even assuming a contrary view is available, the issue become debateable and hence the one which favours the assessee, must be applied as held in the case of Vegetable Products 88 ITR 192 (SC).
5. Total investment exceeded the actual as also estimated net consideration: Another aspect is thatundisputedly, that the total investment made by assessee till the end of the third year i.e., on or before 31.03.2015, the assessee has already invested Rs. 23,89,100/-as against actual sale consideration which certainly exceeded the actual/real sale consideration of Rs. 11,60,000/- (as also the stamp duty valuation u/s 50C at Rs. 20,78,310/-). Moreover, the assessee right from the beginning intended to construct a new residential house and within the stipulated period of 3 years, the assessee can’t be denied the benefit of deduction u/s 54F.
5.2 Supporting Case Laws: On this aspect direct decision are in the cases of
5.2.1 Ajay Goyal vs ITO (2006) 99 TTJ 164 (JodTrib),wherein it was held that:
“…There seems to be no dispute with regard to the fact that the sale proceeds of plot in question were utilised by the assessee within three years as required, but what is in dispute is the time of completion of the house in question………. When the assessee had invested this sale proceed within the stipulated time, and admittedly much more investment was needed in the construction of the house, it would be unjustified to hold that the assessee has not carried out the intention of the legislature. So, the assessee is entitled to the relief as claimed for.—Jagan Nath Singh Lodha vs. ITO (2004) 85 TTJ (Jd) 173 relied on.”
5.2.2 In Jagan NathSingh Lodha vs. ITO (2004) 85 TTJ 173 (JodhTrib), wherein it was held that:
“Intention of assessee from the very beginning being to purchase residential house and he having done so within two years of sale of plot, he was entitled to exemption under s. 54F in respect of the amount invested even though he failed to deposit the amount in Capital Gain Account Scheme during the interregnum.”
5.2.3 In SMT. Nirmala Yadav Vs. Income Tax Officer (2017) 183 TTJ (Jd) 769 it was held as:
Assessee having sold a property and invested more than the net consideration thereof in a new residential plot even before the due date prescribed under s. 139(1) and also completed construction of the house within the time-limit of three years prescribed in s. 54F(1), exemption cannot be denied on the ground that the assessee did not deposit the sale consideration as per the scheme notified by the Government under s. 54F(4).
Thus, it is not the entire net consideration but only that part of the net consideration which is not utilized for the purchase or construction of the new asset before the due date prescribed u/s139.
6.1 For S.54F, actual net consideration relevant- S.50C not applicable:
The objection raised was that the amount claimed as deduction u/s 54F was not allowable in as much as the same was not deposited in the bank a/c under Capital Gain Scheme. However, the ld. CIT(A) did not appreciate that the assesse did not receive the entire estimated sale consideration of Rs. 20,00,000/- u/s 50C but has actually received only Rs. 11,60,000/- therefore, he did not answer how the assessee could have been expected to invest the entire amount even though not received. This is nothing but an impossibility and the doctrine of impossibility of performance will come to the rescue of the assessee.
It is further submitted that for the limited purpose of examining the allowbility of deduction claimed u/s 54F, which is a special provision, has alone to be seen which do not at all refer to S.50C. therefore, revenue cannot be permitted to argue that the deemed sale consideration u/s 50C was Rs. 20,78,310/-, which exceed the investment made of Rs. 13.89 lakh up to 31.03.20214, as submitted in detail in para 7 onwards of the ITAT WS.
6.2 Supporting Case Law: In fact, the issue involved is directly covered by the various decisions, some of which are already referred in written submission pg. 5-9. In addition, further reliance is placed on the following:
In Income Tax Office vs. Rajkumar Parashar (2018) 195 TTJ (Jp) 212(DPB 10-17) it was held as:
“Where the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under s. 45. What is therefore, relevant is the investment of the net consideration in respect of the original asset which has been transferred and where the net consideration is fully invested in the new asset, the whole of the capital gains shall not be charged under s. 45. The net consideration for the purposes of s. 54F has been defined as the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Thus, the consideration which is actually received or accrued as a result of transfer has to be invested in the new asset. In the instant case, the consideration which accrued to the assessee as per the sale deed is Rs. 24,60,000 and the whole of the said consideration has been invested in the Capital Gains Accounts Scheme for purchase of the new house property which is again not disputed by the Revenue. The consideration as determined under s. 50C based on the stamp duty authority valuation is not a consideration which has been received by or has accrued to the assessee. Rather, it is a value which has been deemed as full value of consideration for the limited purposes of determining the income chargeable as capital gains under s. 48. Therefore, the provisions of s. 54F(1)(a) are complied with by the assessee and he is eligible for deduction of the whole of the capital gains so computed under s. 45 r/w s. 48 and s. 50C. Therefore, the provisions of s. 50C(1) are not applicable to s. 54F for the purpose of determining the meaning of full value of consideration.—Gyanchand Batra vs. ITO (2010) 45 DTR (Jp)(Trib) 41 : (2010) 133 TTJ (Jp) 482, Prakash Karnawat vs. ITO (2012) 49 SOT 160 (Jp) and Nand Lal Sharma vs. ITO (2015) 122 DTR (Jp)(Trib) 404 : (2015) 172 TTJ (Jp) 412 followed; Gouli Mahadevappa vs. ITO & Anr. (2013) 259 CTR (Kar) 579: (2013) 88 DTR (Kar) 59 : (2013) 356 ITR 90 (Kar) distinguished.”
7. Hence, the entire or the part net consideration which has already been utilized within the aforesaid period, is not required to be deposited but it is only the balance left out of the total net consideration, which remained unutilized and is required to be deposited.
GOA 3,4,5: Cost of Acquisition (COA) and Indexed Cost of Acquisition (ICOA) wrongly denied:
1. The undisputed facts as stated in the written submission to the CIT(A) (para 4.2 page2 of his order) are that the mother purchased a plot on 3rd July 1976 and thereafter constructed 4 shops thereon of 800sq.ft after getting permission from Nagar Palika vide their letter dated 14.06.1979, the cost of which was estimated at rate of Rs.323/-psft of Rs. 2,57,500/- and indexed cost being Rs. 4.80 lakh. The cost also included construction of bridge from waste site to the house along with a protection wall of 30’x 3’ as per agreement dated 27.04.1979 to cover a nala (drain) of 30’ft length and 5’ft depth. The property was transferred to the assessee through release deed on 19.02.2005. The facts and the contentions remained uncontroverted in as much as the detailed submissions filed before the CIT(A) to the AO for submitting remand report was not submitted despite repeated reminders (Page 5).
2. The CIT(A) did not allow the claimed Cost of Acquisition (COA) and Indexed Cost of Acquisition (ICOA) but estimated the cost at Rs. 1 lakh from the Financial Year 2004-2005 and onwards, as against Rs.2,57,500/- claimed. However, such an estimation was absolutely without any basis and made on whims & fancies. On the contrary, the appellant furnished the relevant details and reliable basis for making the estimation. In any case, initially it was a case of vacant plot and thereon shops were constructed, which fact is not denied.
3. The CIT(A) didn’t deny the fact (and otherwise this is in accordance with the human probability) that the assessee couldn’t be expected to place supporting evidences to support the claim of the cost of acquisition and/or the improved cost of acquisition carried out several years before (i.e. around 30 years back in this case). In absence, a fair estimation is required to be made based on the reliable material only, (as contemplated u/s 144 and/or u/s 145 of the Act). The ld. CIT(A) completely failed to bring any material but made an estimation @ Rs. 1 lakh by rule of thumb.
Lastly, at the outset we strongly rely the written submission filed before the Hon’ble ITAT.
Thus, the LTCG upheld by the CIT(A) at Rs.6,84,372/- deserves a complete a deletion.”
5. On the other hand, the ld. D/R supported the orders of the revenue authorities. He placed reliance in the case of Arpit Khairari vs. ITO, (2020) 116 taxmann.com 720 (Jaipur Trib.) and the judgment of Hon’ble Punjab & Haryana High Court in the case of Jagwinder Singh vs. CIT (2014) 50 taxmann.com 145 (P&H).
6. We have heard rival contentions, perused the material available on record and gone through the orders of the revenue authorities. As per the facts of the present case, assessee has sold shops and received actual sale consideration of Rs. 12,00,000/-, which was less than the value accepted by the DLC of Rs. 20,78,310/-. However, assessee claimed long term capital gain at NIL after seeking exemption under section 54F of the IT Act. The reason for the assessee to compute long term capital gain as NIL was as according to the assessee the entire actual sale consideration was invested in the purchase and construction of the residential house. The details of investment made by the assessee has been enumerated as under :-
| Year | Particulars | Investment | Total investment |
| 31.03.2012 | Purchase of plot | 2,40,000/- | 2,40,000/- |
| 31.03.2013 | Investment in Const. of New House | 5,00,000/- | 7,40,000/- |
| 31.03.2014 | Investment in Const. of New House | 6,49,100/- | 13,89,100/- |
| 31.03.2015 | Investment in Const. of New House | 19,00,000/- | 23,89,100/- |
It was submitted that the actual consideration received by the assessee was invested in purchase of plot and construction of residential house before due date of filing of return on 31.03.2014 as per provisions of section 139(4) of the IT Act. It was also submitted that the intention of the assessee was to construct residential house and accordingly the assessee had made investment of Rs. 23,89,100/-whereas he has received actual sale consideration of Rs. 11,60,000/- on transfer of the property.
However, the lower authorities denied the deduction under section 54F for the reason that the assessee has not deposited the sale consideration received on transfer of the property in capital gain account as per provisions of section 54F(4) of the Act. Therefore, in order to deal with the controversy in question, it is necessary to first of all deal with the provisions of section 54F of the Act which is reproduced below :-
“54F. (1) Subject to the provisions of sub-s. (4), where, in the case of an assessee being an individual or an HUF, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,–
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under s.45;
(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under s. 45:
Provided that nothing contained in this sub-section shall apply where–
(a) the assessee–
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head ‘Income from house property’.
Explanation: For the purposes of this section,
‘net consideration’, in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.”
After analyzing the provisions of section 54F(1) of the Act, we find that in Explanation to section 54F(1), it is that net consideration means the full value of consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. The meaning of full value of consideration in Explanation to s. 54F(1) will not be governed by meaning of words ‘full value of consideration’ as mentioned in s. 50C. The value adopted for stamp duty is to be considered as full value of consideration for the purpose of computing the capital gains under s. 48. Sec. 54F(1) says that capital gains is to be dealt with in accordance with the provisions of sub-ss. (a) and (b) of s. 54F(1)of the Act. In the instant case, the cost of new asset is not less than the net consideration thus the whole of the capital gains will not be charged even if the capital gains has been computed by adopting the value adopted by stamp registration authority. It is clearly mentioned in s. 54F(4) also that net consideration which is not appropriated towards the purchase of new asset then the same is to be taxed in case such net consideration not appropriated is not deposited in the capital gain account. It is not necessary that the new asset should be got registered before filing of the return. The requirement of law is that net consideration is required to be appropriated towards the purchase of the new asset. Thus deduction under s. 54F is clearly applicable.
The Hon’ble ITAT, Chandigarh Bench in the case of Seema Sabharwal, ITA No. 272/Chd/2017 dated 05/02/2018 in which the Hon’ble Tribunal after considering decision of various High Courts including decision of Hon’ble Karnataka High Court on the identical facts has allowed the deduction u/s 54Fof the Act. The relevant finding recorded by the Hon’ble Tribunal reads as under: –
“11. Though the Hon’ble High Court in relation to the issue of claim o f exemption u/s 54F of the Act has held that what matters is the intention of the assessee to purchase/ construct new house. The Hon’ble Karnataka High Court has held that if the intention is not to retain cash but to invest in construction or any purchase in property and if such investment is made within the period stipulated therein, than section 54F(4) is not at all attracted. We may clarify here that provisions of section 54(2) are almost identically worded as in invested the amount for the purchase/ construction of the house within the stipulated period as also observed above while deciding the first issue. The assessee has proved such investment during the assessment proceedings and, thus, the assessee has complied with the requirement of substantive provisions and, thus, is entitled to the claim of exemption u/s 54F of the Act. In view of this, we direct the Assessing Officer to grant exemption to the assessee as permissible under the provisions of section 54 of the Act. “
The Coordinate Bench of the Tribunal, Jaipur in the case of Income Tax Office vs. Rajkumar Parashar (2018) 195 TTJ (Jp) 212(DPB 10-17) it was held as:
“Where the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under s. 45. What is therefore, relevant is the investment of the net consideration in respect of the original asset which has been transferred and where the net consideration is fully invested in the new asset, the whole of the capital gains shall not be charged under s. 45. The net consideration for the purposes of s. 54F has been defined as the full value of the consideration received or accruing as a result o f the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Thus, the consideration which is actually received or accrued as a result o f transfer has to be invested in the new asset. In the instant case, the consideration which accrued to the assessee as per the sale deed is Rs. 24,60,000 and the whole of the said consideration has been invested in the Capital Gains Accounts Scheme for purchase of the new house property which is again not disputed by the Revenue. The consideration as determined under s. 50C based on the stamp duty authority valuation is not a consideration which has been received by or has accrued to the assessee. Rather, it is a value which has been deemed as full value of consideration for the limited purposes o f determining the income chargeable as capital gains under s. 48. Therefore, the provisions of s. 54F(1)(a) are complied with by the assessee and he is eligible for deduction of the whole of the capita l gains so computed under s. 45 r/w s. 48 and s. 50C. Therefore, the provisions of s. 50C(1) are not applicable to s. 54F for the purpose o f determining the meaning of full value of consideration.—Gyanchand Batra vs. ITO (2010) 45 DTR (Jp)(Trib) 41 : (2010) 133 TTJ (Jp) 482, Prakash Karnawat vs. ITO (2012) 49 SOT 160 (Jp) and Nand La l Sharma vs. ITO (2015) 122 DTR (Jp)(Trib) 404 : (2015) 172 TTJ (Jp) 412 followed; Gouli Mahadevappa vs. ITO & Anr. (2013) 259 CTR (Kar) 579: (2013) 88 DTR (Kar) 59 : (2013) 356 ITR 90 (Kar) distinguished. ”
Thus in our view also the natural meaning of full value of consideration refers to consideration specified in the Sale Deed. In this regard, Hon’ble Delhi High Court in the case CIT vs. Smt. Nilofer I. Singh (2009) 221 CTR (Del) 277: (2008) 14 DTR (Del) 108 (2009) 309 ITR 233 (Del) had held that full value of consideration refers to the consideration specified in the sale deed. For deciding the meaning of words ‘full value of consideration’, The Hon’ble Delhi High Court has referred to the decision of Hon’ble Apex Court at page 237 as under:
“This controversy has already been settled by the Supreme Court in the case of CIT vs. George Henderson & Co. Ltd. (1967) 66 ITR 622 (SC), the very expression ‘full value of consideration’ was under consideration of the Supreme Court in the context of the provisions o f the Indian IT Act, 1922. The provisions of s. 12B of the 1922 Act pertain to capital gains. Sub-s. (1) was in parimateria to s. 45(1) of the present Act and sub-s. (2) of s. 12B of the 1922 Act was in parimateria to the provisions of s. 48 of the present Act. The Supreme Court was of the view that the expression ‘full value of consideration’in the main part of s. 12B(2) of the Act cannot be construed as having a reference to the market value of the asset transferred but the expression only meant, the full value of a consideration received by the transferor in exchange of the capital asset transferred by him. The Supreme Court also observed that in the case of a sale the full value of consideration is the full sale price actually paid. It was further of the view that the expression ‘full value’ means the whole price without any deduction, whatsoever, and it cannot refer to the adequacy of the price bargained for. Nor did it have any necessary references to the market value o f the capital asset which is the subject-matter of the transfer. “
That the provision of section 50C of the Act creates a limited fiction to the effect that the full value of consideration shall be substituted for the purpose of s. 48 of the Act by the amount taken by the Registrar for registration purpose. Thus, the fiction under s. 50C of the Act is extended only to the aspect of computation of capital gains and the same does not extend to the charging section or the exemptions to the charging section. The legislature consciously intended to apply the fiction under s. 50C of the Act only to the expression used in s. 48 of the Act and not in any other place. The exemption ss. 54, 54B, 54D, 54EA, 54EB, 54F, 54G and 54H, are self-contained sections which also include the method of computation of the exemption. The manner in which the profits or gains arising out of the transfer of the capital asset are to be computed as mentioned in s. 48 which goes without saying that the charge is on the profits or gains so computed. While computing the profits or gains as per s. 48, the deeming provision embedded in s. 50C has to be given effect to. The charge is created on the enhanced profits or gains arrived at from the fiction of s. 50C. This aspect was justified by the Hon’ble Finance Minister in his Budget Speech that s. 50C will curb the menace of unaccounted income in the property transactions by presuming the sale consideration to be the value of the guideline value for registration in case it is stated lower than that value of registration.
Thus when the assessee has invested entire actual sales consideration received by him in the purchase and construction of new house accordance with the provision of section 54F(1) thereafter the provision of section 50C has not been applicable in light of following judicial decisions.
a] The Hon’ble ITAT Jaipur Bench in the case of Gyan Chand Batra V/S ITO reported in 133 TTJ 482 held as under:
“Capital gains-Exemption under s. 54F– Full value of consideration vis a-vis value adopted for stamp duty– Legislature in its wisdom has referred to s. 48 in s. 50C for adopting the stamp duty value as fair market value – Hence, the deeming fiction as provided in s. 50C in respect of the words ‘full value of consideration’ is to be applied only to s. 48-Words ‘full value of consideration’ as mentioned in other provisions of the Act are not governed by the meaning of these words as mentioned in s. 50C–Hence,for ascertaining the full value of consideration as mentioned in different provisions except s.48, consideration specified in sale deed has to be considered-Thus, meaning of full value of consideration as referred to in Explanation to s. 54F(1) is not governed by the meaning of the words full value of consideration’ as mentioned in s. 50C-In the instant case, the cost of new asset is not less than the net consideration-Thus, whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value adopted by the stamp registration authority-Hence, theassessee is entitled for exemption under s. 54F”
b] PRAKASH KARNAWAT vs. INCOME TAX OFFICER [ITAT JAIPUR] REPORTED IN 49 SOT 0160
“8. We find similar facts are involved in the present case. Assessee has received sale consideration of Rs. 40,00,000 which has been invested in the Bonds in view of provisions of s. 54EC. Therefore, assessee is entitled for deduction under s. 54F. The provisions of s. 50C are applicable for the purposes of s. 48 and for the purpose of s. 54F as held by the Tribunal in case of Gyan Chand Batra (supra). Findings o f Tribunal have been reproduced somewhere above in this order which were taken in ITA No. 9/Jp/2010 for asst. yr. 2006-07. Similar view has been expressed by the Bangalore Bench of the Tribunal in case o f Gouli Mahadevappa (supra). Since entire amount of sale consideration has been invested in Bonds, therefore, in our view provisions of s. 50C are not applicable as held by Jaipur Bench and Bangalore Bench. Respectfully following the decisions of the Tribunal, we hold that AO and learned CIT(A) were not justified in invoking provisions of s. 50C and alternatively the capital gain shown by assessee. Accordingly the addition made and sustained by the lower authorities is deleted. “
On the other hand, judgments referred to by ld. D/R in the case of Arpit Khairari vs. ITO, (2020) 116 taxmann.com 720 (Jaipur Trib.) and the judgment of Hon’ble Punjab & Haryana High Court in the case of Jagwinder Singh vs. CIT (2014) 50 taxmann.com 145 (P&H) are not applicable as the facts of the present case are altogether different. Therefore, the para materia contained in those judgments are different from the para materia contained in the present case. Therefore, considering the above discussions, we are of the view that assessee is entitled to exemption under section 54F. Thus, the disallowance made is hereby deleted.
7. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 30/05/2023.
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