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TMI Blog2013 (10) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... for construction of residential house at Gangavathi and sought exemption from the payment of capital gains tax under section 54F of the Income-tax Act, 1961 (for short "the IT Act"). The assessing authority found that under section 50C of the Income-tax Act, the value of the property is Rs. 36,00,000. The cost price of site paid by the assessee at Rs. 1,93,506 was deducted and the net income chargeable to tax under capital gains was assessed at Rs. 34,06,494. Further, the assessing authority had given the deduction of Rs. 20,00,000 towards investment in construction of residential house at Gangavathi and assessed the long-term capital gains at Rs. 14,06,494 and the tax payable is assessed at Rs. 4,96,989. The assessee filed an appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction placed thereon, would require the consideration as per section 50C of the Act to be taken to work out the amount of exemption of the capital gains in other words whether it is correct to hold that the operation of the legal fiction under section 50C of the Act has to be restricted only for the purpose of section 48 of the Act as wrongly interpreted by the Income-tax Appellate Tribunal and not to be applied for the entire Chapter VI-E relating to taxation of capital gains, especially to section 45 of the Income-tax Act ? (d) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in rejecting the contention that the term 'capital gain' in section 54F has to be arrived at by impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal preferred by the petitioner having regard to the subject matter of "lis" before the Tribunal based upon the respective position and the stand of each of the parties to the appeal, did not entail such consideration and evaluation as pursued by the Tribunal and the lower authorities ?" After considering the arguments of the appellant and the Revenue, the following substantial questions of law would arise for consideration in this appeal : "1. Whether the registration value fixed by the State authorities under the Stamp Act would constitute full consideration value for the purpose of levy of long-term capital gains ? 2. Whether the assessee is entitled to contend that the sale consideration shown in the sale deed is the fair market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such reference is made, the provisions of sub-sections (2) (3), (4) (5) and (6) of section 16A, clause (1) of sub-section (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 necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation 1.-For the purposes of this section, 'Valuation Officer' shall have the same meaning as in the in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.-For the purposes of this section, the expression 'assessable' means the price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair market value of the property, keeping in view all the relevant consideration including the registration value fixed by the State. Sub-section (3) provides that if the fair market value fixed by the Valuation Officer is in excess of the registration value, then the registration value should be considered for levy of the capital gains tax. If the Valuation Officer finds that the value of the property is less than the registration value, then, accordingly, the assessing authority should levy capital gains tax on the basis of market value stated by the Valuation Officer. In the instant case, it is to be noticed that the assessee has not availed of the opportunity to question the correctness of the registration value fixed by the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in new residential house within the prescribed period, under section 54F of Income-tax Act the entire amount invested, should get the benefit of deduction irrespective of the fact that the funds from other sources are utilized for new residential house. In that context, whatever the total amount actually invested by the assessee for construction of house at Gangavathi should be deducted irrespective of the fact that part of the funds invested are from different sources and not from the capital gains. In that view of the matter, the amount assessable towards net capital gain should be Rs. 10,06,494. The counsel for the appellant submits that the levy of interest is harsh. The provisions of section 50C of the Income-tax Act was the latest in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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