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2019 (3) TMI 1204 - HC - Income TaxDeduction u/s 54EC - computation of capital gain tax after claiming exemption under section 54EC - applicability of deeming fiction application u/s 50C - Tribunal reversing the order of CIT in confirming the action of the assessing officer in taxing capital gain, to the extent of the enhanced and notional sale consideration under section 50C - whether Appellant had invested the entire sale consideration accruing on transfer of the immovable property in the prescribed bonds in terms of section 54 EC? - assessee was a joint owner of a plot of land situated at Borivali, Mumbai, having 25% undivided share in the plot - HELD THAT:- Clauses (a) and (b) of subsection (1) of section 54EC would always have limit of ₹ 50 lakhs specified in the further proviso for investment in the specified asset. No conflict or any incongruent consequences of applying the provisions of section 50C for the purpose of computation of capital gain tax after claiming exemption under section 54EC of the Act. The deeming fiction under section 50C of the Act, must be given its full effect and the Court should not allow to boggle the mind while giving full effect to such fiction. We are not opposing the proposition canvassed by the Counsel of the Assessee that deeming fiction must be applied in relation to the situation for which it is created. However, while giving full effect to the deeming fiction contained under section 50C of the Act for the purpose of computation of the capital gain under section 48, for which section 50C is specifically enacted, the automatic fallout thereof would be that the computation of the assessee’s capital gain and consequently the computation of exemption under section 54EC, shall have to be worked out on the basis of substituted deemed sale consideration of transfer of capital asset in terms of section 50C. Any other interpretation, particularly one canvassed by the learned Counsel for the Assessee, would render the provisions of section 50C redundant. In a situation like the one on hand, even if for the purpose of section 48, in terms of section 50C of the Act, the sale consideration deemed to have been received by the Assessee may be much higher than one declared in the sale deed, the Assessee would claim no further capital gain tax liability by simply claiming to have made investment in specified asset the full declared sale consideration. Tribunal has not committed error in interpreting the relevant statutory provision. Income Tax Appeals are therefore dismissed.
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