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The Income Tax Officer, Ward-9 (3) , Hyderabad Versus Mr. Kondal Reddy Mandal Reddy

Exemption under section 54F - whether the deemed consideration under section 50C of the I.T. Act is to be taken into consideration or the consideration mentioned in the sale deed only is to be taken into consideration? - Held that:- The ultimate object and purpose of section 50C of the I.T. Act is to see that the undisclosed income of capital gains received by the assessee should be taxed and that the law should not encourage and permit the assessee to peg down the market value at their whims an .....

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I ), respectfully following the decision of the Coordinate Bench, we do not see any reason to interfere with the order of the CIT(A). - ITA.No.848/Hyd/2015, Cross Objection No.01/Hyd/2016 - Dated:- 13-5-2016 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Revenue : Mr. B.R. Ramesh For The Assessee : Mr. K.C. Devdas ORDER PER SMT. P. MADHAVI DEVI, J.M. This is an appeal filed by the Revenue for the A.Y. 2010-2011 while the cross-objection is filed by the .....

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tioned in the sale deed only is to be taken into consideration. 3. Brief facts of the case are that the assessee, an individual, deriving income from house property, capital gains and interest income, filed his return of income for the A.Y. 2010-2011 on 13.04.2011 declaring income of ₹ 5,19,930. During the assessment proceedings under section 143(3) of the Act, the A.O. observed that the assessee has sold his plot at Banjarahills for a consideration of ₹ 20 lakhs as is mentioned in t .....

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A.O. however, held that the sale consideration of ₹ 20 lakhs mentioned in the sale deed alone is eligible for exemption under section 54F and not deemed consideration arrived at by invoking the provisions of section 50C of the I.T. Act. He therefore, brought the sum of ₹ 69,60,000 to tax as capital gain. Aggrieved, assessee preferred an appeal before the CIT(A) who allowed the same and the Revenue is in appeal before us. 4. The Ld. D.R., while relying upon the order of the A.O, has p .....

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ported the orders of the CIT(A) and also placed reliance upon the following decisions. (1) Raj Babbar vs. ITO (2013) 56 SOT 1 (ITAT) (Mum.) (2) Gouli Mahadevappa vs. ITO (2013) 356 ITR 90 (Kar.) 6. Having regard to the rival contentions and the material on record, we find that there is no dispute that the assessee has invested a sum of ₹ 1,37,00,000 in the construction of a new residential house at Saroornagar. It is also not disputed that the sale consideration under section 50C is to be .....

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t that the provisions of section (a) and (b) read with the explanation on 'net consideration' decides if any chargeable capital gains u/s 45 exists or not subject to the conditions specified therein. As per the provisions of section 54F(1)(a) of the Act, no capital gains are chargeable u/s 45 of the Act, "If the cost of the cost of the new asset is not less than the net consideration in respect of the original asset". The principle of proportionate exemption vide clause (b) abo .....

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tion with such transfer." It is a settled issue that the provisions of section 54F of the Act are code by itself. Thus, the plain reading of the provisions of sections 45, 48, 50C and 54F of the Act suggest that there is nothing to bar benefits of exemption u/s 54F in respect of the capital gains relatable to the FVC as per the deemed fiction u/s 50C of the Act. Clause (a) of section 54F(I) specifies that If the cost of the new asset is not less than the net consideration in respect of the .....

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refers to the provisions of section 45 of the Act. In the given facts of the instant case, no chargeable capital gains arises u/s 45 of the Act. Thus, in this case, with investment of ₹ 17,65,752/in new asset, the cost of the new asset is not less than the net consideration (NC) in respect of the original asset. Of course, the 'net consideration' has two variants depending on FVC adopted and in this case, the NCs are quantitatively lesser than the cost of the new asset leaving no .....

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purchased new asset for ₹ 24 lakhs and invested entire sale proceeds. AO calculated capital gains at ₹ 14,06,494 and allowed exemption to the extent of FVC of ₹ 20 lakhs and not on FVC of ₹ 36 lakhs. On these facts, the Tribunal held that the deeming fiction on FVC given in section SOC cannot be extended to section 54F (para 8.19) as the same is an exemption provisions and is a complete code in itself and it does not override others CIT v. ACE Builders (P.) Ltd. [2006] 2 .....

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