TMI Blog2023 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... in turn arises from the order of the penalty of levy by the ITO, Ward-2(3) on 22.09.2016 u/s 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act'). 2. The assessee has marched this appeal on the following grounds:- 1. That on the facts and in the circumstances of the case, the ld. Cit(A) erred in upholding the validity of order of imposition of penalty u/s 271(1)(c) of the Act. 2. That on the facts and in the circumstances of the case the ld. CIT(A) erred in sustaining the penalty of Rs. 4,17,900/- u/s 271(1)(c) of the Act. 3. That on the facts and in the circumstances of the case the ld. CIT(A) erred in not considering the application for adjournment filed before him. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 5. The petitioner prayers for justice relief. 3. During the course of hearing, the ld. AR of the assessee submitted that the penalty has been levied in respect of the deduction claimed u/s 54F of the Act was denied to the assessee and consequently thereto the income of long term capital gain was determined at Rs. 20,28,370/-. As the deduction was denied an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of investment made by the assessee has been enumerated as under :- Year Particulars Investment Total investment 31.03.2012 Purchase of plot 2,40,000/- 2,40,000/- 31.03.2013 Investment in Const. of New House 5,00,000/- 7,40,000/- 31.03.2014 Investment in Const. of New House 6,49,100/- 13,89,100/- 31.03.2015 Investment in Const. of New House 19,00,000/- 23,89,100/- It was submitted that the actual consideration received by the assessee was invested in purchase of plot and construction of residential house before due date of filing of return on 31.03.2014 as per provisions of section 139(4) of the IT Act. It was also submitted that the intention of the assessee was to construct residential house and accordingly the assessee had made investment of Rs. 23,89,100/- whereas he has received actual sale consideration of Rs. 11,60,000/- on tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to the transfer of a capital asset, means 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. After analyzing the provisions of section 54F(1) of the Act, we find that in Explanation to section 54F(1), it is that net consideration means the full value of 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. The meaning of full value of consideration in Explanation to s. 54F(1) will not be governed by meaning of words 'full value of consideration' as mentioned in s. 50C. The value adopted for stamp duty is to be considered as full value of consideration for the purpose of computing the capital gains under s. 48. Sec. 54F(1) says that capital gains is to be dealt with in accordance with the provisions of sub-ss. (a) and (b) of s. 54F(1)of the Act. In the instant case, the cost of new asset is not less than the net consideration thus the whole of the capital gains will not be charged even if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r s. 45. What is therefore, relevant is the investment of the net consideration in respect of the original asset which has been transferred and where the net consideration is fully invested in the new asset, the whole of the capital gains shall not be charged under s. 45. The net consideration for the purposes of s. 54F has been defined 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. Thus, the consideration which is actually received or accrued as a result of transfer has to be invested in the new asset. In the instant case, the consideration which accrued to the assessee as per the sale deed is Rs. 24,60,000 and the whole of the said consideration has been invested in the Capital Gains Accounts Scheme for purchase of the new house property which is again not disputed by the Revenue. The consideration as determined under s. 50C based on the stamp duty authority valuation is not a consideration which has been received by or has accrued to the assessee. Rather, it is a value which has been deemed as full value of consideration fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression full value means the whole price without any deduction, whatsoever, and it cannot refer to the adequacy of the price bargained for. Nor did it have any necessary references to the market value of the capital asset which is the subject-matter of the transfer. That the provision of section 50C of the Act creates a limited fiction to the effect that the full value of consideration shall be substituted for the purpose of s. 48 of the Act by the amount taken by the Registrar for registration purpose. Thus, the fiction under s. 50C of the Act is extended only to the aspect of computation of capital gains and the same does not extend to the charging section or the exemptions to the charging section. The legislature consciously intended to apply the fiction under s. 50C of the Act only to the expression used in s. 48 of the Act and not in any other place. The exemption ss. 54, 54B, 54D, 54EA, 54EB, 54F, 54G and 54H, are self-contained sections which also include the method of computation of the exemption. The manner in which the profits or gains arising out of the transfer of the capital asset are to be computed as mentioned in s. 48 which goes without saying that the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in view of provisions of s. 54EC. Therefore, assessee is entitled for deduction under s. 54F. The provisions of s. 50C are applicable for the purposes of s. 48 and for the purpose of s. 54F as held by the Tribunal in case of Gyan Chand Batra (supra). Findings of Tribunal have been reproduced somewhere above in this order which were taken in ITA No. 9/Jp/2010 for asst. yr. 2006-07. Similar view has been expressed by the Bangalore Bench of the Tribunal in case of Gouli Mahadevappa (supra). Since entire amount of sale consideration has been invested in Bonds, therefore, in our view provisions of s. 50C are not applicable as held by Jaipur Bench and Bangalore Bench. Respectfully following the decisions of the Tribunal, we hold that AO and learned CIT(A) were not justified in invoking provisions of s. 50C and alternatively the capital gain shown by assessee. Accordingly the addition made and sustained by the lower authorities is deleted. On the other hand, judgments referred to by ld. D/R in the case of Arpit Khairari vs. ITO, (2020) 116 taxmann.com 720 (Jaipur Trib.) and the judgment of Hon ble Punjab Haryana High Court in the case of Jagwinder Singh vs. CIT (2014) 50 taxmann. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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