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TMI Blog2014 (11) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... of a society or a charitable trust, which is registered under section 12A of the Act. In support of his contention, the ld. counsel for the assessee has placed reliance upon the order of the Tribunal in the case of ACIT vs. Shri. Dwarikadhish Temple Trust, Kanpur in I.T.A. No. 256 & 257/LKW/2011, in which the Tribunal has held that in case the income is to be computed as per sub-section (1A) of section 11 of the Act, if the net consideration for transfer of capital asset of a charitable trust is utilized for acquiring new capital asset, then the whole of the capital gain is exempt. It was further contended that the ld. CIT(A) has adjudicated the issue in the light of the relevant provisions of the Act and also various judicial pronouncements. Therefore, no interference is called for in the order of the ld. CIT(A). 3. The ld. D.R., on the other hand, has placed reliance upon the order of the Assessing Officer. 4. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the authorities below, we find that undisputedly the assessee is a charitable society and is registered under section 12A of the Act. The question of applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the above discussion, we find that no interference is called for in the order of CIT(A)." 5. We have also carefully examined the order of the ld. CIT(A) and we find that the ld. CIT(A) has also adjudicated the issue in the light of the legal provisions and various judicial pronouncements while holding that section 11(1A) of the Act which lays down a complete system of taxability of capital gains in respect of an institution approved by the CIT under section 12A of the Act is a complete code. The relevant observations of the ld. CIT(A) are extracted hereunder for the sake of reference:- "The only issue in the appeal is, therefore, whether while taking the Value of Sale of capital Asset being immoveable property in case of an institution registered u/s 12A whether the provisions of section 1(1A) will prevail or deeming provisions of section 50C will apply. During the course of appellate proceedings Rajiv Mehrotra FCA, counsel for the appellant appeared and argued the case. He also gave the following written submissions: "As regards why the deemed fair market value (Stamp duty value) of the fiats be not considered for the purposes of the calculation of capital gains, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. "cost of the transferred asset" means the aggregate of the cost of acquisition (as ascertained for the purposes of sections 48 and 49) of the capital asset which is the subject of the transfer and the cost of any improvement thereto within the meaning assigned to that expression in sub-clause (b) of clause (1) of section 55; It is apparent from the above that though, the cost of transferred assets is computed as per the provisions of section 48 and 49, determination of net consideration for the purposes of the said section has no reference to section 48 and 49. It is computed as defined in explanation to this section" He further argued that provision of section 11(1A) are specific provisions whereas provisions of section 50C are general provisions and further that provisions of Section 50C do not start with a nonobstante clause thus as per the rules of interpretation specific provision over ride the general provisions. The principle is Generalia Specialibus Non Derogant: General provisions must yield to the special provision Generally speaking, the sections in the Act do not overlap one another and each section deals only with the matter specified therein and goes no further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11(1)(a) are imposed, it would be clear that 'income' to be considered will be that which is arrived at in the context of what is available in the hands of the assessee subject to an adjustment of any expenses extraneous to the trust - CIT v. P.S.G. & Sons Charities 1996 Tax LR 477 (Mad.). See also - CIT v. Programme for Community Organisation [1997] 228 ITR 620 (Ker.). Deemed income (tax deducted at source) must be excluded - CBDT Circular P/LXX-6 dated 19-5-1968 makes it clear that the word 'income' in section 11 (1)(a) must be understood in a commercial sense. Thus, deemed income (i.e. tax deducted at Source) is not to be taken into account for determining the 'application' or 'accumulation' of income - CIT v. Jayashree Charity Trust [19861159ITR 280 (Cal.) The provisions of section 50C create a limited fiction to the effect that the full Value of consideration shall be substituted in the provisions of section 48 by the amount taken by the sub-registrar for registration purposes. In other words, the fiction contained in section 50C could be applied only for the purpose of computation of capital gains under section 48 and not beyond the said provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under section 54F full value of consideration shall be the value as specified in the sale deed for the purpose of computation of capital gains. Provision of section 50C cannot be applicable as it contains only deeming provision. Full value of sale consideration as mentioned in other provisions of the Act is not governed by the meaning of full value of consideration as contained in section 50C of the Act." Further, in a very recent decision of Shri Gouli Mahadevappa v. ITO [2011] 128 ITO 203, the Hon'ble ITAT, Bangalore Bench has held "Deeming fiction created by virtue of section 50C in determining the 'capital gain' cannot be extended to section 54F as section 54F is a complete code in itself. Thus, the capita! gains arising from transfer of any long term capital asset for purpose of section 54 F has to be worked out by applying section 48 without imposing section 50C into it." Thus by virtue of interpretation arising out of the above the question of applicability of Section 50C does not arise while working out the "net consideration" from sale of an immoveable asset and thus the action of the Ld AO is bad in law. SUM UP: 1. Heads of income under section 14 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the appellant stated that the provisions of section 50C are deeming provisions and misapplied the same in the instant case. 7. Even otherwise the language used in section 54F and 11(1A) regarding the meaning of "net consideration" is same and it has been held that it shall prevail over provisions oGBP section 50C. 8. Ld CIT (A) -2, Kanpur in the case of Dwarikadheesh Temple Trust has deleted the addition when the appellant had invested the net consideration actually received and not the deemed consideration arrived as per the provisions of section 50C.( Order enclosed) . Thus, the appellant has rightly computed income of the year and Sec. 50C of the Act has no application to the facts of the case. I have gone through the averments of the appellant. Section 11(1A), which lays down a complete system .of taxability of Capital Gains in respect of an institution approved by the CIT under section 12A, is a complete code. While computing the Capital Gains in this section the trust is not entitled to benefits like cost inflation indexation etc. as per section...... whereas while working out capital gain and applying the provisions of section 50C an assessee is entitled to such b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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