INCOME TAX ACT, 1961

Section 54F

Capital gains - Deduction under section 54F - Computation - Net consideration whether to be actual or deemed consideration

Assessee-individual in her return declared long-term capital gain arising from the sale of property and the same was claimed to be exempt under section 54F. AO alleged that exemption under section 54F in respect of land purchased for construction of residential house was not available to assessee. AO held that purchase of land was not coming under the purview of 'construction of house property'. AO also disallowed the deduction towards cost of construction of residential house property holding that even though the relevant evidence in the form of bills for construction of house was furnished by assessee, no evidence was produced by him to show that the construction of house was completed within the time stipulated in section 54F. Held: Assessee had filed additional evidence in the form of completion certificate for the residential house property constructed by the assessee issued by the concerned Gram Panchayat to support and substantiate the claim. Thus, the issue was restored to the file of AO for deciding the claim of the assessee for deduction under section 54F in respect of cost of construction of residential house property afresh in the light of the additional evidence filed by the assessee. Further, additional ground claiming that for computing the deduction under section 54F, the actual net consideration received in respect of the original asset should be taken into consideration and not the deemed consideration as adopted by invoking the provisions of section 50C. Keeping in view the decision of the Supreme Court in the case of National Thermal Power Co. Limited, AO was directed to consider the claim of the assessee while re-computing the deduction allowed to the assessee under section 54F.

Followed:National Thermal Power Company Ltd. v. CIT (1998) 229 ITR 383 (SC) : 1998 TaxPub(DT) 0342 (SC)

REFERRED :

FAVOUR : In assessee's favour by way of remand

A.Y. :

INCOME TAX ACT, 1961

Section 147

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