TMI Blog2013 (11) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... the value fixed by the DVO exceeded the value fixed by the Stamp Valuation Authority, then value fixed by the Stamp Valuation Authority alone had to be considered. Here, the value fixed by the Stamp Valuation Authority was Rs.3,61,84,512/- whereas the value fixed by DVO was Rs.1,95,33,000/-. Assessing Officer, in our opinion, therefore, had proceeded in accordance with law, in considering the fair market value at Rs.1,95,33,000/-. Nevertheless, for working out the exemption under section 54EC available to the assessee, Assessing Officer was required to apply the proportion mentioned in sub clause (b) of Sec.54EC(1) of the Act, which has not been done - matter remanded back - Decided partly in favour of Assessee. - ITA No.2168/Mds/2012 - - - Dated:- 2-5-2013 - Abraham P George and Challa Nagendra Prasad, JJ. For the Appellant : Shri K Raghu, CA For the Respondent : Shri Guru Bashyan, JCIT-DR ORDER:- Per: Abraham P George: In this appeal filed by Assessee , it has raised seven grounds of which grounds Nos.1 7 are general needing no adjudication. Grievance raised by the Assessee through its grounds No.2 to 5 is that Ld. CIT(A) confirmed an addition made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred the valuation to the District Valuation Officer (DVO). No doubt, he did not accept the contention of assessee that reopening was not validly done. District Valuation Officer in his report dated 23.11.11 estimated the value of the property at Rs.1,95,33,000/-. Though the assessee objected to the valuation done by the District Valuation Officer, Assessing Officer relying on sub-section (3) of Sec.50C of the Act, accepted the value fixed by the District Valuation Officer, as the fair market value for the purpose of computation of capital gains. He therefore, re-worked the capital gains taking the consideration received on sale as Rs.1,95,33,000/- and gave a deduction of Rs.75,00,000/- for investments under section 54EC of the Act. 5. Assessee moved in appeal before the CIT(A), argument of the assessee was that consideration received proportionate to the investment of Rs. 75,00,000/- in SIDBI Bonds had to be excluded, while computing capital gains under section 45 of the Act. Further, as per the assessee, the reassessment was only a review of the earlier assessment and all materials were available on record, at the time of original assessment itself. According to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of 0.2 acres. For sale of 7.96 acres of land, the capital gains worked out only to Rs. 74,96,959/-, pro-rating the sale consideration mentioned in the document. Assessee had invested Rs. 75 lakhs in SIDBI capital gain Bonds and was therefore, eligible for claiming exemption under section 54EC of the Act for the surplus arising on sale of 7.96 acres. If at all there could be any capital gains, it would only be in respect of .02 acres of land and such gains came to Rs. 18,837/- only. According to him, at the best, capital gains of Rs. 15,796/- admitted by the assessee in the original return could be enhanced to Rs. 18,837/- and nothing more. Reliance was once again placed on the decision of Tribunal in the case of Gyan Chand Batra Vs. ITO(supra) [(2010) 6 ITR (Trb.) 147]. Ld. A.R also placed reliance on the decision of Jaipur Bench of this Tribunal in the case of Shri Prakash Karnawat Vs. ITO (ITA No.364/JP/2011 dt.18th Nov.2011). 9. Per contra, Ld. D.R strongly supporting the order of lower authorities submitted that assessee s case fell under subclause(b) of Sec.54EB(1) and not clause (a). 10. We have heard the rival contentions and perused the orders of the lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case the consideration received is less than the value adopted by stamp valuation authority then the value so adopted is to be taken as full value of the consideration for the purposes of s. 48 of the Act. Sec. 50C provides a deeming provision for considering the full value of consideration as the value adopted for stamp duty. In modern statutes, the expression deem is used a great deal and for many purposes. It is at times used to introduce artificial conceptions which are intended to go beyond legal principles or to give an artificial construction of a word for phrase. Thus the artificial meaning of full value of the consideration has been given in s. 50C of the IT Act for the purpose of s. 48 of the IT Act. One is entitled to ascertain the purpose for creating a statutory fiction. After ascertaining the purpose, full effect must be given to the statutory fiction and it should be carried to its logical conclusion and to that end, it would be proper and even necessary to assume all those facts on which alone fiction can operate. The legislature in its wisdom has referred to s. 48 of IT Act in s. 50C for adopting the same value as fair market value. Hence, the deeming fiction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deduction under s. 54F is to be given, it will be useful to reproduce s. 54F(1) : "54F. (1) Subject to the provisions of sub-s. (4), where, in the case of an assessee being an individual or an HUF, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under s. 45; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the return. The requirement of law is that net consideration is required to be appropriated towards the purchase of the new asset. Thus deduction under s. 54F is clearly applicable. 7.4 We have also considered the decision of Hon ble Bombay High Court in the case of CIT vs. Ace Builders (P) Ltd. (supra). Sec. 50 of the IT Act provides that capital gains on sale of depreciable asset is to be deemed as short-term capital gains . The Hon ble Bombay High Court has held that fiction limited to s. 50 will apply to computation of capital gains and not to exemption provisions. For allowing deduction under s. 54E, one will have no distinction between depreciable asset and non-depreciable asset. Hence, it is clear that deeming fiction mentioned in one section will not automatically apply to all the provisions. In case deeming fiction has been created in specific provision of the Act then Hon ble Gauhati High Court in the case of CIT vs. Assam Petroleum Industries (P) Ltd. (supra) also held that s. 54E is not controlled by s. 50. Hence deeming provisions as mentioned in s. 50C will not be applicable to s. 54F so far as the meaning of full value of consideration is concerned as deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45 : Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.] 13. Where a transaction calls for a computation specified under clause(b) above, then it is necessary to find out the quantum of capital gains that could be claimed as exempt. For working out ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
