TMI Blog2019 (3) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,04,70,810/. The Assesse's share of such stamp valuation of the property at 25% comes to ₹ 76,17,702/. 4. During the course of scrutiny of assessee's return, the Assessing Officer determined the long term capital gain of ₹ 49,47,344/and accordingly passed the order of assessment on 29/12/2010. 5. The assessee filed Appeal against the order of Assessment, before CIT (Appeals). The Assessee contended that since the entire sale consideration of ₹ 25 lakhs was invested in the specified bond, the assessee must get full exemption from capital gain, irrespective of the computation of the deemed sale consideration under section 50C of the Act. CIT Appeals allowed the assessee's Appeal, upon which the revenue filed Appeal before the Tribunal. The Tribunal by the impugned judgment allowed the revenue's Appeal. The tribunal was of the opinion that for the purpose of exemption under section 54EC of the Act, deeming fiction contained in section 50C of the Act cannot be ignored. The assessee could claim exemption only in relation to the investment made in the specified bond and not qua the entire capital gain. 6. Learned Counsel for the Appellant rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in relation to investment made in the specified bond and not beyond. 8. Having heard learned Counsel for the parties, to test the correctness of the interpretation of the tribunal, we may refer to the relevant statutory provisions. Part E of the Chapter IV of the Act pertains to capital gains. Section 45 contained the said part is the charging provision for the capital gain arising from transfer of a capital asset. Subsection (1) of section 45 provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in section 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H be chargeable to income tax under the head Capital gains and shall be deemed to be the income of the previous year in which the transfer took place. Section 48 of the Act provides the mode of computation of capital gain. In terms of this provision, the income chargeable under the head Capital gains would be computed by deducting from the full value of consideration received or accruing as a result of the transfer of the capital any amounts towards expenditure incurred wholly and exclusively with such transfer and the cost of acquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer. . (2) Without prejudice to the provisions of subsection (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed [or assessable] by the stamp valuation authority under subsection (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed [or assessable] by the stamp valuation authority under subsection (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of subsections (2), (3), (4), (5) and (6) of section 16A, clause (i) of subsection (1) and sub::: sections (6) and (7) of section 23A, subsection (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain terms, the stamp valuation assessment by the stamp duty officer of the State Government would be deemed to be the sale consideration of capital asset, replacing the declared sale consideration, if it happens to be less than stamp duty valuation. For the purpose of charging capital gain in view of section 45, to be computed as provided in section 48, this deemed consideration would be applied. 12. We may refer to section 54EC which is an exemption of provision. SubSection (1) of section 54EC provides that where the capital gain arising from the transfer of a long-term capital asset being land or plot or both and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or part of the capital gains in specified asset, the capital gain shall be dealt with in accordance with clause (a) and (b) of subsection (1). As per clause (a) if the cost of the longterm 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. As per clause (b) if the cost of the longterm specified asset is less than the capital gain arising f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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