AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 1204
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....he enhanced and notional sale consideration under section 50 C of the Act, inspite of the fact that the Appellant had invested the entire sale consideration accruing on transfer of the immovable property in the prescribed bonds in terms of section 54 EC of the Act?" 2. The assessee was a joint owner of a plot of land situated at Borivali, Mumbai, having 25% undivided share in the plot. The assessee and other co-owners transferred the plot in favour of purchaser under a sale deed dated 29/09/2007 pursuant to which the assessee received a sum of Rs. 25 lakhs by way of sale consideration. The assessee invested entire amount of Rs. 25 lakhs in the bond of 'Rural Electrification Corporation Ltd.' as specified under section 54 EC of the Income Tax Act, 1961 ('the Act' for short). In the return of income filed for the year 2008-2009 the assessee had declared the long term capital gain on transfer of land at Rs. 21,19,344/and claimed full exemption of such capital gain, under section 54 EC of the Act. 3. The Stamp Duty Authorities however had valued the land for the purpose of levying stamp duty at Rs. 3,04,70,810/. The Assesse's share of such stamp valuati....
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....e revenue as accepted by the tribunal would lead to anomalous situation which should be avoided. (iv) It was further contended that the legislature would not expect a person to perform an impossible task. If the assessee had received total sale consideration of Rs. 25 lakhs from transfer of the land, he could not be expected to invest any amount in access thereto, for claiming full exemption under section 54 EC of the Act. (v) Our attention was drawn to the decision of Supreme Court in case of K.P. Verghese Vs. Income Tax Officer, as reported in 131 ITR 597 (SC) in support of the proposition that to avoid absurdity and incongruent consequences, the Court would adopt an interpretation not emerging from the plain language of a statute. 7. On the other had, the learned Counsel Mr.Arvind Pinto for the revenue contended that tribunal has correctly interpreted the relevant statutory provisions. The interpretation advanced by the Assessee would effectively render the provisions of section 50C of the Act redundant. The exemption provision should be strictly construed. Assessee can claim exemption only in relation to investment made in the specified bond and not beyond. 8. Havin....
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.... 10. Section 50C of the Act introduced by the legislature under Finance Act 2002 with effect from 01/04/2003, reads as under ; 50 C. (1) 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 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 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. "Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been rece....
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....ll be deemed to be the income of the assessee for the previous year in which the transfer took place. In terms of the provisions contained in section 48 the capital gain would be computed by deducting from the full value of consideration received or accruing as a result of transfer, expenditure incurred wholly and exclusively in connection with the transfer and the cost of acquisition of the asset and cost of improvement thereof. It is at the stage of computation that section 50C of the Act kicks in. This provision, as can be seen, provides for a deeming fiction. Subsection (1) of section 50C provides 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 plot or both is less than the value adopted or assessed or assessable by stamp valuation authority for the purpose of stamp duty collection in respect of such transfer, the value so adopted, assessed or assessable shall for the purpose of section 48 be deemed to be the full value of consideration for transfer received or accruing as a result of such transfer. In plain terms, the stamp valuation assessment by the stamp duty officer of the State Gove....