TaxTMI 
TaxTMI 
2024 (8) TMI 1184
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.... the addition to the extent of Rs. 5,33,251/- (Rs. 74,46,583 - 69,13,333/-) disregarding the provisions of Section 54F as the actual sale consideration amounting to Rs. 21,75,000/- (being 1/6th of Rs. 1,30,50,000/-) stood reinvested which entitles the assessee for exemption u/s 54F from whole amount of Long Term Capital Gain, more particularly, when the deemed sale consideration u/s 50C is not reckoned as full value of consideration received for the purposes of Section 54F, hence, it is prayed that the addition of Rs. 5,33,251 confirmed by the Learned CIT (Appeals) may kindly be deleted." Also, the assessee has raised an additional ground of appeal which reads as under: "Additional Ground of Appeal No.1: On the facts and in the circumstances of the case, the Learned A.O has &red on facts and in law in assessing capital gain in the year under consideration as the transfer of capital asset took place in the F.Y 2005-06 relevant to A. Y 2006-07 in terms of provisions of Section 45 r.w.s. 2(47).of the Income tax Act, 1961 inasmuch as the assessee had entered into an agreement for sale of capital asset vide agreement dated 04.03.2006, therefore, the reassessment proceedings initiat....
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....sing of the assessment order the issue was still pending before the Collector of Stamps for fresh valuation of the property, thus, held the market value of the property at Rs. 5,75,11,000/-, i.e. as was adopted by the Collector of Stamps initially and calculated the LTCG accordingly. Thus, the A.O applying the provisions of Section 50C of the Act made an addition in the hands of the assessee of Rs. 74,46,583/- on account of LTCG. 4. The assessee being aggrieved with the order passed by the A.O u/s. 147 r.w.s. 143(3) of the Act dated 29.03.2016 carried the matter in appeal before the CIT(Appeals). After deliberating at length, the CIT(Appeals) partly allowed the appeal. The CIT(Appeals) observed that as the final valuation order was passed by the Collector of Stamps, according to which, the valuation of the property was determined at Rs. 1,60,31,000/-, therefore, calculation of the LTCG had to be made accordingly. The CIT(Appeals) based on his aforesaid view sustained the addition on account of LTCG to the extent of Rs. 5,33,251/-. 5. Apropos the claim of the assessee that as he had received 1/6th portion of the actual sale consideration, i.e. an amount of Rs. 21,75,000/-, and had....
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....a total of Rs. 21,75,000/- and he invested the entire amount for construction of new house property, he should be allowed deduction u/s. 54F of the Act in respect of entire LTCG, calculated on deemed valuation. This contention of the appellant cannot be accepted. As the provisions of section 54F of the Act is quite clear that the actual investment in purchase/constructed property would only be eligible for deduction u/s. 54F of the Act. The appellant cannot be given the benefit of the amount of investment, which he actually did not make. 6. Based on the above discussion, the appeal is partly allowed." 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 7. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and material available on record as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 8. Controversy involved in the present appeal lies in a narrow compass, i.e. as to where the LTCG on sale of the property is to be worked out as per the deeming provisions of Section 50C of the ....
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....on received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of two years after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as p....
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.... statutory provision, we find that the same therein contemplates that the quantification of claim of deduction would be based on the amount of the "net consideration" of the original asset which is invested by the assessee towards purchase/construction of a new asset, i.e. the residential house. Also, we find that "Explanation" to Section 54F of the Act defines the term "net consideration", as the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. We, thus, are of a firm conviction that it is the actual sale consideration received or accruing as a result of the transfer of the capital asset which is invested towards purchase/construction of the new asset, i.e. residential house which would form the basis for quantification of the deduction u/s. 54F of the Act. 11. At this stage, it would be relevant to point out that the term "net consideration" (supra) does not make any reference to the deemed sale consideration of the property, i.e. the value adopted or assessed or assessable by any authority of State government for the purpose of pay....