Section 50C cannot be avoided merely for sufficiency of exemption u/s 54EC

Jagdish C. Dhabalia Vs ITO (Bombay High Court)

Conclusion: Once deeming fiction contained u/s 50C is adopted, consequently, the capital gain and the exemption u/s 54EC would be worked out based on the deemed sale consideration.

Facts –

Assessee received INR 25 Lakhs as sale consideration on transfer of plot vide sale deed dated 29.09.2007 and invested the amount in bond specified under 54EC. In return, assessee declared LTCG of INR 21,19,344 and claimed full exemption u/s 54EC.

Stamp duty authority valued land at INR 3,04,70,810 and assessee’s 25% share comes to INR 76,17,702. Accordingly applying provisions of section 50C, during scrutiny, AO determined LTCG of INR 49,47,344.

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