| Question And Answer | |
|---|---|
| Subject: | Capital Gain Deduction u/s 54F of I.T.Act 1961 |
| Category: | Income-Tax |
| Querist: | CA Ashok Kumar Goyal |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Capital Gains, full consideration, Section 54F deduction, stamp value |
| Date: | February 19, 2022 |
For the purpose of deduction u/s 54F of Income Tax Act whether the words ‘full value of consideration’ contained in section 50C will be applicable or the actual sale consideration value as specified in the sale deed will be applicable.
There are diverging views on the issue.
The Hon’ble High Court of Karnataka in the case of Gouli Mahadevappa v. ITO [2013] 356 ITR 90 (Kan) (HC) held that where capital gain is assessed on notional basis under section 50C of the Act, whatever amount is invested in new residential house within prescribed period under section 54F of the Act, entire amount so invested would get benefit of deduction irrespective of fact that funds from other sources are also utilized for new residential house.
Au contraire, the Hon’ble Income-tax Appellate Tribunal – Delhi Bench in the case of Sunil Miglani v. DCIT [2020] 115taxmann.com 91 (Delhi – Trib.) held that while computing exemption under section 54F of the Act actual sale consideration received was to be taken into account and not stamp duty valuation under section 50C of the Act.
Similarly, the Hon’ble Income-tax Appellate Tribunal – Jaipur Bench in the case of ITO v. Raj Kumar Parashar [2017] 86 taxmann.com 78 (Jaipur – Trib.) wherein it was held that provisions of section 50C(1) of the Act are not applicable to section 54F of the Act for the purpose of determining the meaning of ‘full value of consideration’.
Therefore, the issue is a debatable one. The jurisdictional judicial pronouncement will be binding on the assessee and ex abundanti cautela, the assessee should follow the same.
There are diverging views on the issue.
Sec 50C is a deeming section and “it” for a specific & very limited purpose, substitutes meaning of “consideration” referred in section 48.
While there is no such reference in or for, section 54F, either in sec 50C or in sec 48. Also section 54F say “Net Consideration” and not ‘deemed consideration.
Therefore, Investment of actual sale consideration is only requirement of sec 54F.
WHEN A HIGH COURT HAS GIVEN THE DECISION , HOW TRIBUNAL JUDGEMENTS ARE TO BE CONSIDERED. UNTIL ANY OTHER HIGH COURT DECIDE OTHERWISE, OPINION OF KARNATAKA HIGH COURT WILL PREVAIL. QUESTION OF JURISDICTION WILL NOT ARISE.
OPINION ON THE ISSUE MAY DIFFER, BUT UNTIL ANY OTHER HIGH COURT OR SUPREME COURT PASS ANY ORDER ON THE ISSUE, NOTIONAL VALUE U/S 50C WILL BE CONSIDERED FOR 54F.