T Srikanth Vs DCIT (ITAT Chennai)
The ITAT Chennai allowed the assessee’s appeal, holding that the deeming fiction under Section 50C is confined to computation of capital gains under Section 48 and cannot be extended to determine the “net consideration” for exemption under Section 54F. The assessee had disclosed actual sale consideration of Rs. 2.03 crore from the sale of one shop and four immovable properties and invested Rs. 2.16 crore in purchase of land and construction of a residential house, claiming full exemption under Section 54F. The Assessing Officer substituted the stamp duty value under Section 50C, proportionately restricted the exemption, and taxed the balance capital gains, while the CIT(A) directed recomputation after the DVO’s report but did not accept the principal contention on Section 54F. The Tribunal held that “net consideration” under Section 54F refers to the actual consideration received and not the deemed value under Section 50C, observing that the statutory fiction cannot be extended beyond its purpose and that, absent proof of higher actual consideration, the assessee cannot be required to invest more than what was received. Since the entire actual sale consideration had been invested in the new residential house, the full exemption under Section 54F was allowed, and the alternate issue regarding agricultural land was left open.
