TMI Blog1999 (7) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... (2): First Rs. 15,000 @ 100% 15000 Bal. 62,78,546 @ 60% 37,631,128 Rs. 3,76,46,128 2. Deductions corresponding to investment of Rs. 2,50,00,000 being made is envisaged by section 54E on or before stipulated time (evidence thereof will be furnished soon after the investment is made): 2,50,00,000 X 6,27,33,546 ------------------------------------------ 6,47,94,047 Rs 2,42,04,980 3. Rs. 50,00,000 is made as envisaged by section 54F in capital gain deposit A/c No. 1875 with Bank of India, New Cloth Market, Ahmedabad on 27-8-1992 : 50,00,000 X 6,27,33,546 ---------------------------------------- 6,47,94,047 Rs. 48,40,996 ---------------------------- Rs. 6,66,92,104 Deductions restricted to ... Rs. 6,27,33,546 -------------------------- Chargeable Capital Gain ... Rs. Nil" 4. In ITA No. 2920/Ahd./1993, the assessee filed her return on 31-8-1992 declaring total income of Rs. 7,89,960. The Long Term Capital Gain was computed at NIL figure in the following manner : "Full value of consideration Rs. 4,22,11,586 Less: 1. Cost of acquisition 1,91,102 2. Expenses related to the said transfer 12,60,953 Rs. 14,52,055 Rs. 4,07,59,531 Less: Other deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons filed by the assessees it was contended that the language of section 48(2) is very clear and the deduction u/s 48(2) has to be allowed on the amount of capital gains, without deducting therefrom the deductions admissible under sections 54E and 54F. In any case, it was contended that the view taken by the Assessing Officer was such which cannot come within the purview of section 143(1)(a) as prima facie adjustments being a debatable issue. In support of their contention, the assessees enclosed an opinion of eminent jurist Late Shri S.P. Mehta to the effect that deduction under section 48(2) has to be allowed on the total amount of capital gains and not on the amount of capital gains net of deductions under sections 54E and 54F. The Assessing Officer however rejected the applications filed by the assessees under section 154 and after referring to the Board's Circular No. 495, dated 22-7-1987 held that the deduction under section 48(2) has to be allowed after providing for exemptions specified in sections 54E and 54F etc. 7. Against the orders of the Assessing Officer dismissing the applications filed by the assessees under section 154, the assessees preferred appeals to the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is merely of a clarificatory nature and has not changed the law. Three different concepts of capital gain are to be borne in mind : (a) the actual capital gain, arrived at by deducting from the full value of the consideration the cost of acquisition and improvement and the expenditure on the transfer under section 48(1)(a); (b) the statutory capital gain, arrived at by deducting from the actual capital gain the exempted amount under sections 53, 54, 54B, 54D, 54E, 54F or 54G; and (c) the taxable capital gain, arrived at by reducing the statutory capital gain by the standard deductions under section 48(1)(b), read with section 48(2). Thus,deduction under sections 53 to 54G must first be made to arrive at the statutory capital gain, and only thereafter would arise the question of making standard deduction under section 48(1)(b), read with sections 48(2) to arrive at the taxable capital gain." Reliance was also placed on Taxman's Direct Taxes Ready Reckoner, 1992-93 pages A-86 A-87. It was further submitted that the Hon'ble Kerala High Court in the case of CIT v. V. V. George [1997] 227 ITR 893/93 Taxman 257 has also accepted the interpretation put by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel has filed a copy of Tribunal's order Mumbai Bench "A" in ITA No. 1323/Bom./91 in the case of M/s. Hotel Dinesh, Mumbai wherein the view adopted by the assessee as supported by the opinion of Shri S.P. Mehta was preferred. Accordingly, it was submitted that which of the two computations, one adopted by the Assessing Officer or the one adopted by the assessee is correct, is a highly debatable issue and as such outside the ambit of section 143(1)(a) which deals with only prima facie adjustments. Accordingly it was submitted that the order of the CIT(A) cancelling the intimation passed by the Assessing Officer under section 143(1)(a) is quite in order and there is no merit in the appeals filed by the Revenue which should be dismissed. 10. We have considered the rival submissions and have also gone through the orders passed by the Assessing Officer under section 143(1)(a) as well as CIT(A). The Board's Instruction No. 875 relied upon by the Assessing Officer stipulates that deductions under section 48(2) are to be given after providing for exemption under sections 54E and 54F etc. According to the Assessing Officer, sections 54E and 54F provide for exemption which must be co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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