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TMI Blog2024 (8) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... invested towards purchase/construction of the new asset, i.e. residential house which would form the basis for quantification of the deduction u/s. 54F of the Act. The term net consideration does not make any reference to the deemed sale consideration of the property, i.e. the value adopted or assessed or assessable by any authority of State government for the purpose of payment of stamp duty in respect of such transfer, as provided in Section 50C. Accordingly, AR's contention that now when the assessee had invested his actual share of sale consideration towards construction of new asset, i.e. residential house, he should be allowed deduction u/s. 54F of the Act in respect of the entire LTCG, merits acceptance. Although we principally concur with the aforesaid contention of the Ld. AR, but as claim of deduction u/s. 54F of the Act is subject to satisfaction of certain conditions contemplated in the said statutory provision, therefore, the A.O is directed to re-compute the LTCG which is liable to be brought to tax in the hands of the assessee after reworking out the deduction u/s. 54F of the Act in terms of our aforesaid observations. Thus, the Ground of appeal No.1 raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings have been initiated based on non-existing or incorrect facts and therefore, void-ab-inito. It is prayed that the reassessment proceedings initiated against the assessee for alleged escapement of income from capital gain may kindly be held to be illegal as the transfer of capital asset had taken place in the F.Y.2005-06 relevant to A.Y. 2006-07 and consequential enhancement of Rs. 5,33,251/- confirmed by the Learned CIT (Appeal) may kindly be directed to be deleted. 2. Succinctly stated, the assessee had filed his return of income for the A.Y.2008-09 on 31.03.2009, declaring an income of Rs. 90,000/-. Thereafter, the case of the assessee was reopened u/s. 147 of the Act. Notice u/s. 148 of the Act dated 27.03.2015 was issued by the A.O. In compliance, the assessee submitted that his original return of income may be considered as a return filed in response to notice u/s. 148 of the Act. 3. During the course of the assessment proceedings, the A.O observed that the assessee along with his five other family members had during the subject year sold an immovable property situated at Labhandi, Raipur for a consideration of Rs. 1,30,50,000/-. The assessee who had 1/6th share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) did not find favour with the same. It was observed by him that as per Section 54F of the Act, it was only the actual investment in purchase/construction of property that would be eligible for deduction u/s. 54F of the Act, therefore, the assessee could not have been given benefit of amount of investment which was not actually made by him. The CIT(Appeals) rejected the contentions advanced by the assessee as regards the claim of deduction u/s. 54F of the Act. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: 5. Decision As mentioned in the facts of the case, the assessment was completed considering the market value of the concerned property at Rs. 5,75,11,000/- under the provisions of sec. 50C of the Act, whereas sale consideration of the said property was Rs. 1,30,50,000/-. The above valuation of property for stamp duty purpose was subject matter of a series of litigation. Till the passing of the Assessment order, final order for valuation of the property was pending before the Court of Collector of Stamps, Raipur. In absence of this final valuation order, the Assessing Officer consciously adopted the valuation last adopted by the sub-re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of Section 50C of the Act? 9. Before proceeding any further, we deem it fit to cull out Section 54F of the Act, which reads as under: 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly f ..... 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