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Jagdish C. Dhabalia vs. ITO (Bombay High Court)

DATE: March 12, 2019 (Date of pronouncement)
DATE: April 13, 2019 (Date of publication)
AY: 2008-09
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S. 50C Capital Gains: The assessee cannot avoid the impact of s. 50C by claiming that his s. 54EC investment is large enough to cover the deemed consideration based on stamp duty valuation. Such interpretation renders s. 50C redundant

The deeming fiction under section 50C of the Act, must be given its full effect and the Court should not allow to boggle the mind while giving full effect to such fiction. We are not opposing the proposition canvassed by the Counsel of the Assessee that deeming fiction must be applied in relation to the situation for which it is created. However, while giving full effect to the deeming fiction contained under section 50C of the Act for the purpose of computation of the capital gain under section 48, for which section 50C is specifically enacted, the automatic fallout thereof would be that the computation of the assessee’s capital gain and consequently the computation of exemption under section 54EC, shall have to be worked out on the basis of substituted deemed sale consideration of transfer of capital asset in terms of section 50C of the Act