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Issues: Whether the assessee is entitled to deduction under Section 54F of the Income-tax Act, 1961 in respect of long-term capital gains on sale of land/plot where (i) the Assessing Officer adopted value under Section 50C for computing full value of consideration and (ii) the claim for exemption was not made at assessment stage but was made before the Commissioner (Appeals).
Analysis: The Court examined Section 48 (computation of capital gains), the deeming provision in Section 50C(1) (adoption of stamp valuation authority value for purposes of Section 48) and the explanation to Section 54F(1) (definition of "net consideration" for exemption). It held that the deeming fiction in Section 50C is intended for computation under Section 48 only and does not alter the meaning of "full value of consideration" for the purpose of Section 54F(1). Section 54F operates by reference to net consideration and permits exemption where the cost of the new asset equals or exceeds the net consideration, subject to appropriation requirements; such appropriation need not be completed by registration before filing of return. The Court also considered the appellate power to admit claims under Section 254 and precedent limiting the Assessing Officer's power to entertain belated claims, and found that the assessee had legitimately raised the Section 54F claim before the Commissioner (Appeals) and that the appellate authority properly entertained it. On facts the assessee's investment in the new residential property met the statutory requirement and exceeded the net consideration, entitling him to deduction under Section 54F.
Conclusion: The assessee is entitled to deduction under Section 54F of the Income-tax Act, 1961; the appeal is allowed in favour of the assessee.
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