Case Law Details
Ayi Vaman Narasimha Acharya Vs DCIT (ITAT Bangalore)
Under section 45(1) of the Act, the charge on capital gain is in the year of transfer. Section 45(1) of the Act clearly lays down that any gain arising on the transfer of the capital asset effected in the previous year shall be chargeable to income tax under the head “capital gain” and shall be deemed to be the income of the previous year in which the transfer took place. Section 2(47) of the Act defines transfer which includes a sale. The transfer in the present case is “sale” and since sale in the present case has taken place in the previous year relevant to Assessment Year 2010-11, the capital gain in question cannot be brought to tax in Assessment Year 2011-12. This aspect has been accepted by the AO in the order of assessment. Because the assessment for Assessment Year 2010-11 was barred by time and could not be reopened, he resorted to the provisions of Sec.50C of the Act and taxed deemed accrued capital gain. Section 48 of the Act lays down that capital gain has to be computed by reducing from the full value of consideration received or accruing as a result of transfer expenditure incurred wholly and exclusively in connection with such transfer and the cost of acquisition of the asset and the cost of improvement if Sec.50C of the Act is a Special provision for full value of consideration in certain cases and it lays down that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority:”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed [or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. Sec.50C of the Act substitutes the full value of consideration received or accruing on transfer which otherwise would be the value as envisaged u/s.48 of the Act. Sec.50C of the Act is therefore an exception to Sec.48 of the Act in certain circumstances. Section 50C of the Act does not operate to change the year of transfer as laid down in section 45(1) of the Act.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal of the assessee against the order dated 24.05.2019 of CIT(A)-6, Bengaluru, relating to Assessment Year 2011-12. At the time of hearing, learned Counsel for the assessee submitted that he does not wish to press for adjudication ground No.2 raised by the Revenue with regard to the challenge to the validity of initiation of reassessment proceedings under section 148 of the Income Tax Act, 1961 (hereinafter called ‘the Act’).
2. The only ground that needs to be adjudicated int his appeal is as to whether the Revenue authorities were justified in bringing to tax as capital gain a sum fo Rs.25,53,315/- by invoking the provisions of section 50C of the Act.
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