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TMI Blog2018 (11) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of DCIT vs. Dr. Chalasani Mallikarjuna Rao [2016 (10) TMI 1032 - ITAT VISAKHAPATNAM] as held the assessee has invested net sale consideration for construction of new residential house property. Though, the full value of consideration as defined u/s. 50C of the Act is more than the net sale consideration as referred in section 54F(1) of the Act, once the net sale consideration has been fully applied under the provisions of section 54 of the Act, then the deeming consideration as defined u/s. 50C cannot be brought into the provisions of section 54F of the Act. Therefore, we are of the view that the assessee is eligible for exemption u/s. 54 of the Act, therefore, the whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value as per the provision of section 50C of the Act. Therefore, we direct the A.O. to allow the exemption u/s. 54 - thus we direct the Assessing Officer to re-compute the capital gains - ITA No. 2440/Kol/2017 - - - Dated:- 9-11-2018 - Sri J. Sudhakar Reddy, Accountant Member And Sri S.S. Viswanethra Ravi, Judicial Member For The Assessee : Shri Manish Tiwari, A/R For The Revenue : Shri Robin Choudhur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this section. Hence the benefit u/s -54F is disallowed. Penalty proceeding u/s.271(1)(C) is initiated for furnishing inaccurate particulars of income. 2.1. On appeal, the ld. First Appellate Authority confirmed the denial of exemption u/s 54F of the Act. 3. The ld. Counsel for the assessee submits that the assessee earned long term capital gain on sale of two plots of land. The total long term capital gain earned is ₹ 1,80,92,965/-. The assessee had made invested in REC Bonds of ₹ 50,00,000/- within the period allowed in law and claimed exemption u/s 54EC of the Act. This issue is not in dispute. He submitted that the assessee has advanced, for the purchase of two residential flats ₹ 20,00,000/- to M/s Exclusive Home Pvt. Ltd. and ₹ 40,00,000/- to M/s Amit Enterprises totaling to ₹ 60,00,000/- and that the assessee had further spent for construction of a residential house in Shantiniketan, an amount of ₹ 12,50,000/-. Before us, the ld. Counsel for the assessee submitted that, the ld. Assessing Officer be directed to grant benefit of Section 54F at least in the case of one house property i.e. for ₹ 40 Lakhs/- paid to M/s. Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, we find that the Visakhapatnam Bench of the Tribunal in the case of DCIT vs. Dr. Chalasani Mallikarjuna Rao [2016] 75 taxmann.com 270, held as follows:- 12. The question is whether the assessee needs to invest the net sale consideration as a result of transfer or the full value of consideration as defined u/s. 50C of the Act. The full value of consideration as defined u/s. 50C of the Act is a deeming consideration which is applicable for the purpose of computation of capital gain under the provisions of section 48 of the Act. The net sale consideration as a result of transfer of capital asset is a consideration received or accrued as a result of transfer. There is difference between net sale consideration and full value consideration. In our considered view, if the assessee invests net sale consideration for the purpose of purchase/construction of new residential house property, then he is eligible for exemption u/s. 54 of the Act, even though the full value of consideration is more than the net sale consideration as a result of transfer. Deeming fiction as provided u/s. 50C of the Act in respect of the words full value of consideration is to be applied only to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 o 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-cls. (a) and (b) of s. 54F(1). 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 the capital gains has been computed by adopting the value adopted by stamp registration authority. It is clearly mentioned in s. 54F(4) also that net consideration which is not appropriated towards the purchase of new asset the same is to be taxed in case such net consideration not appropriated is not deposited in the capital gain account. It is not necessary that the new asset should be got registered before filing of the return. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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