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Income Tax Appellate Tribunal, CHANDIGARH BENCH ‘B’, CHANDIGARH
Before: SHRI SANJAY GARG & SMT.ANNAPURNA GUPTA
आदेश/ORDER
Per Annapurna Gupta, Accountant Member: The present appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-2,Chandigarh(in short referred to as CIT(A)) u/s 250(6) of the Income Tax Act,1961,(hereinafter referred to as “Act’),dated 04-07-2019,relating to assessment Year(A.Y) 2015-16.
The grounds raised by the assessee read as under:
That on the facts, circumstances and legal position of the case, the Worthy CIT(A) in Appeal No. 10345/2/17-18 has erred in passing that order in contravention of the provisions of S. 250(6) of the Income Tax Act, 1961.
That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in adopting the sale consideration of LOI of plots sold at Rs. 250 Lacs u/s 50C as against actual realized consideration of Rs. 114 Lacs even when s. 50C do not apply to LOI which is only a right to own a property and is not an immovable property per- se and more-so when the Ld. AO lacked powers to assess the sale consideration u/s 50C himself as he could have only referred the matter to DVO.
That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in adopting the indexed purchase price of LOI of plots sold by the appellant at Rs. 22,95,243/- even when said LOI having been taken over in exchange of a non- capital asset and the value on the date of exchange should have been adopted.
That on law, facts and circumstances and legal position of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in restricting the benefit of deduction u/s 54F to Rs. 91,04,757/-even when the whole of actual consideration having been invested, the whole of assessed capital gains deserves to be allowed as deduction u/s 54F as in this section, actual consideration is applicable and not the deemed consideration computed u/s 50C.
That on law, facts and circumstances and legal position of the case, the Worthy CIT(A) has erred in confirming the action of Ld. A.O. in denying the benefit of deduction u/s 54F in respect of amount expended towards further construction of house purchased.
That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
At the outset it was pointed out by the Ld. Counsel for the assessee that the grounds raised in the appeal all related to the issue of capital gains earned by the assessee.
The facts relating to the case ,as brought out in para 7.1 of the CIT(A)’s order, are that the assessee purchased land measuring 8 kanal 2 marla for a consideration of Rs. 11,00,000/- in F.Y-2005-06. The said land was acquired by GMADA under compulsory acquisition. In lieu of this acquisition, the appellant was, by virtue of land pooling scheme of GMADA alloted three residential plots measuring 500 sq yards, 300 sq yards and 200 yards and one site of SCF in Sector 88-89, Mohali. During the year under consideration assessee sold all the three
residential plots, value of which was taken as Rs. 1,14,00,000/- in accordance to provisions of section 50C of the Act. The LTCG was calculated at Rs. 91,04,757/- after deducting the indexed cost of Rs. 22,95,243/-. The assessee claimed that the capital gain was invested by him in a residential house and claimed deduction of the same u/s 54 of the Act and consequently arriving at 'Nil' LTCG. The computation of the same ,it was pointed out from the CIT(A)’s order was as under:
“ Sale of land on 23.12.2014 Value u/s 50C Rs. 1,14,00,000/- Sale consideration received Rs. 1,14,00,000/- Sale consideration Rs. 1,14,00,000/- Less: Transfer Expenses Nil Indexed Cost F.Y. 2005-06 1,14,00,000 * 497/1024 Rs. 22,95,243/- Rs. 22,95,243/- Deduction u/s 54 Rs. 91,04,757/- Investment in house property u/s 54 = Rs. 96,50,000/- Long Term Capital Gain = Nil. “
That the AO took the value of the plots at Rs.2.50 crores,as per section 50C of the Act,as against 1.14 crs shown by the assessee, on the basis of information called for u/s 133(6) of the Act from the Estate Officer GMADA, who submitted as under:
Size of Plot Transfer fees charged Total price as per transfer fees 200 sq yards 1,25,000/- 50,00,000/- 300 sq yards 1,87,500/- 75,00,000/- 500 sq yards 3,12,500/- 1,25,00,000/- Total 2,50,00,000/-
Further since GMADA had acquired 5000 sq. yards of land and had given in return 3 residential plots measuring in all 1000 sq. yards, the AO apportioned the cost of original 5000 sq.yard land over 1000sq.yard and further allowed
deduction u/s 54F to the extent originally claimed by the assessee. The capital gain chargeable to tax was accordingly computed at Rs.1,54,39,951/- as under;
Sale consideration as calculated in para 5 above = Rs. 2,50,00,000/- Less: Indexed cost of acquisition as calculated in para 6 above. = Rs. 4,59,049/- LTCG = Rs. 2,45,40,951/- Less: Deduction u/s 54F (8350000 + 751500) = Rs. 91,01,000/- Taxable LTCG = Rs. 1,54,39,951/-
Before the Ld.CIT(A) the assessee argued that the provisions of section 50C of the Act were not applicable in the present case at all since the same applied only to transfer of land or building while the assessee had transferred neither, but only Letter of Intent, which it had been given by GMADA in lieu of land acquired from him. That no plot of land had actually been given to the assessee. That Letter of Intent could not be equated with land .The assessee also contested the apportionment of cost of land of 5000sq. yards acquired by GMADA to the area actually sold of 1000 sq yards and also the restriction of exemption u/s 54F of the Act to the amount actually invested by the assessee. The claim of the assessee being that on investment of entire sale consideration received ,the entire capital gain is to be exempted ,even if increased on account of substitution of actual consideration received with stamp duty value. The Ld.CIT(A) allowed assesses claim of cost of acquisition w.r.t 5000sq. yards of land, while he rejected the rest of the claims of the assessee. Aggrieved by the same the assessee has come in appeal before us.
Ground No.1 & 6 are general in nature and need no adjudication.
Ground No.2 is against the applicability of section 50C of the Act to the facts of the present case. The contention of the Ld. Counsel being that since the assessee had transferred neither land or building but only Letter of Intents (LOI),section 50C was not applicable. It was pointed out that in lieu of the land acquired by GMADA ,Letter of Intents for three plots measuring 200,300,& 500 sq.
yards in sector 88/89 had been issued to the assessee. That LOI’s are different from ownership of land vis a vis risks ,rewards ,costs and uncertainty and cannot be equated with it. That they are only a right to plot at some future date with its own risks and rewards . That no stamp duty is payable on transfer of LOI and therefore also 50C of the Act ,which substitutes the sale consideration with the stamp duty value, cannot be invoked. Our attention was drawn to the submissions made in this regard before the Ld.CIT(A) reproduced at para 7.2 of the order as under:
7.2 During appellate proceedings AR of the assessee filed written submissions, relevant portion of which is as follows:
"The appellant owned a piece of agricultural land at Sohana. The said agricultural land was acquired by GMADA under compulsory acquisition. In lieu of this acquisition, the appellant was issued Letter of Intents (LOI by Virtue of which appellant was entitled to certain plots. During the year under reference, the appellant sold these LOIs at realized consideration of Rs. 114 Lacs and computed his LTCG at Rs. 91.05 Lacs. He invested this entire amount in purchase/construction of a residential house and claimed exemption u/s 54F.The Ld. AO, in his impugned assessment order applied the provisions of S. 50C and adopted the deemed consideration of the sate, of LOIs at Rs. 250 Laos and calculated long term capital gain as Rs 245.41 lacs. It is submitted that the provisions of S. 50C are not applicable in the case of appellant and the Ld. AC has wrongly invoked the provision of section 50C to calculate the deemed value of Letter of Intents. It is clear from the plain reading of S. 50C that it is applicable only on the transfer of capital asset, being land or building or both. The appellant has transferred, neither land nor building during the AY under reference. The appellant has transferred LOIs which are neither land nor building. Since S. 50C is applicable only in case of land or building and not on LOIs, invoking S. 50C in the case of appellant is bad in law.
It is further submitted that the provisions of S. 50C are applicable only in case where the consideration is less than the value adopted or assessed or assessable by any authority of a State Government (hereinafter in this section re erred to as the "stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer. Thus it is clear that only the valuation adopted for the purpose of payment of stamp duty can be considered for the purposes of this section. However, the Ld. AO has adopted the value as specified in the scheme rate on which payment of 2.5% was charged on the Sale of plots by GMADA. This fee of 2.5% is charged by GMADA for the transfer of LOIs as per the provisions of the LOls and not as per any stamp duty Act Since S.50C specifically provides for valuation adopted for the purpose of payment of stamp duty, the valuation adopted for the purpose of calculation of a fee is bad in law. Reliance is placed on following judgments:
(i) Asst. Commissioner of Income Tax vs. M's Munsons Textiles (ITAT Mumbai) (ITA No. 6320/M/2010) (ii) Sh. Anil Jain vs. DCIT (ITAT Delhi) (ITA No. 3777/Del/2013)
Further the appellant was issued Letter of Intent (LOI) by GAMADA in lieu of compulsory acquisition of the agricultural land. The appellant had transferred these LOI during the AY in question. These LOIs only provide a right to residential plot. The LOIS cannot be equated to the plot or land. This is clear from the terms and conditions of the LOI.
Some of the key extracts of the LOI are given below for reference:
"....Now in pursuance of this scheme, this is to inform you that you have been allotted Residential Plot measuring1, 500 Sq. Yard in Sector 88/89, SAS Nagar which would be subject to the following conditions: 1. As the basis of allotment is Revenue Record of Rights, if at a later stage it is found that the land owned/offered by you is less or some third party dispute/court case is pending with regard to the land or that you are not entitled/competent to make the offer, the LOI shall be deemed to have been cancelled.
The Letter of Intent is transferable, by way of sale, gift or otherwise with the prior permission of Estate Officer, GMADA, S.A.S. Nagar subject to payment of 2.5% of the price of the plot at scheme rate and Rs 2500/-for Residential and Rs 5000/for Commercial as processing fee.
Possession of plot shall be handed over, to the allottee after completion of development works. "
It would be clear from the above points that there is certain amount of risk and costs involved with LOI which is usually not associated with land/plot: ! a. LOIs do not enable the buyer to immediately enjoy the benefits of ownership of land. For example, a buyer can construct a house on a piece of land and enjoy the benefits of the same. However, this is not at all possible in case of LOIs. Unless specific plots are allotted by GMADA, the buyer cannot enjoy the benefits of land.
b. In case of purchase of land, a buyer is usually aware of the exact location of the land and accordingly he makes a decision to purchase does not confer rights to any specific piece of land and the buyer is not aware as to which plot will be allotted to him ultimately. c. The attempt by the assessee to back track from its original claims u/s 54 by canvassing during the appellate proceedings that it had claimed deduction u/s 54F, is not borne from/ corroborated by its claims made in the computation upon which the AO had moved ahead. It is relevant to point out, from the assessment order, what had been claimed by the assessee in its calculations: The assessee has calculated the capital gain on the sale of the above three plots as under:
“ Sale of land on 23.12.2014 Value u/s 50C Rs. 1,14,00,000/- Sale consideration received Rs. 1,14,00,000/- Sale consideration Rs. 1,14,00,000/- Less: Transfer Expenses Nil Indexed Cost F.Y. 2005-06 1,14,00,000 * 497/1024 Rs. 22,95,243/- Rs. 22,95,243/- Deduction u/s 54 Rs. 91,04,757/- Investment in house property u/s 54 = Rs. 96,50,000/- Long Term Capital Gain = Nil. “
d. The LOIs provided by GMADA, can be cancelled at any point of time, in case of any issue found with regard to the ownership of agricultural land in lieu of which LOIs are issued.
e. LOIs are not freely transferrable as in the case of land. LOIs can be transferred only with the prior permission of Estate Officer, GMADA, &A.S. Nagar.
f. A certain fee is required to be paid to GMADA for the transfer of LOIs. Also, when the actual possession of the plot will be handed over to the allottee is uncertain as the LOI only provides that it will be handed over after completion of development works for which no timelines are defined in the LOI. Neither LOI provides for any recourse in case of undue delays in completion of development activities.
LOI bears risks, rewards, costs and uncertainty which are quite different from those associated with the ownership land. Thus LOI cannot be equated with land. LOI is only a right to plot at some future date with its own risks and rewards which are quite different from a ready plot. Hence, equating LOI, which is merely right to plot, with land and applying the provisions of S. 50C is not appropriate.
For the above proposition we rely on ratio of following judgments: (i) Atul G. Puranik, Mumbai vs TTO (TTA No3051/ Mum/ 2010 (ii) ITO vs. Shri Yasin Moosa Godil (ITA No. 2519/Ahd/2009) (in) ACIT Vs. M/s Munsons Textiles (ITAT Mumbai) (ITA No. 320) (iv) Sh. Anil jain vs DOT {TTAT Delhi) (TTA No. 3777/Del/ 2013)
In view of above facts, circumstances legal position and submission, i is prayed that this ground of the appellant may kingly be allowed, Hie impugned assessment may please be quashed and the addition made may please be ordered to be deleted."
Ld. DR on the other hand heavily relied on the order of the Ld.CIT(A) pointing out therefrom that the assessee itself had adopted value u/s 50C in its computation of income and repeatedly claimed during assessment proceedings to have sold plot of land. That in any case LOI’s could be equated
with allotment of plot and the same being transferable, the assessee infact had got title to property on issue of LOI. Our attention was drawn to the findings of the Ld.CIT(A) at para 7.3.1 of the order as under:
7.3.1 Notwithstanding the above the subsequent claims, that the assessee's case is covered by section 54 F, are entertained! given that the AO had also adjudicated the same claims. After a careful consideration of the case records what emerges clearly is the fact that the assessee had arrived at the capital gains by apportioning a value itself under section 50C of the Act. There are no cogent grounds thereafter to attempt controverting the valuation adopted by the assessee officer under the same section. The plea of the assessee that 50C calculation was necessitated by a column required to be filled in also not tenable. There is no specified proforma for depicting "computation of income". Prima facie, it has been held above that the assessee's case doesn't get covered u/s 54. It may be the case that the assessee had deliberately made the claim in the hope that the invocation of 50C is not resorted to and if it is then the possibility of claims (now made during appellate proceedings) that 50C is not made out could be exercised. Be that as it may, the claims that the sale of LOIs of GMADA do not qualify as sale for the purpose needs to be rejected. Firstly, as has been detailed above, the assessee cannot back track on his own reliance on submissions vis-a-vis valuation as per 50C to arrive at the capital gains and consequently seek deduction. Secondly, it's also revealed from the correspondences during the assessment proceeding that right through the assessee has self-confessedly treated them as plot of land. Submissions dated 23.12.2014 and 02.12.2014 during the course of assessment proceedings are pointers to the fact that claims of sale of plots had been made. It can be definitely culled out from the assessee's own submissions w.r.t LOI that the same amounted to allotment of plots (in this case 3 residential plots of different sizes apart from a commercial property). Thirdly, subsequent agreements to sale also clearly depict the transactions to be those of sale of plots of land. The same clearly also evidence transfer' of a capital asset that triggers initiation of 50C proceedings. Fourthly, the quoted Letter of Intent clearly conveys allotment of three residential plots. The same not only conveys the plot sizes but also the sectors (in this case sector 88/89) where the plots are situated. The said Letter of Intent also vests authority to sell the plots albeit at a charge and on attaining permission that is more often than not a matter of routine. GMADA's letter addressed to the assessee conveys the following: "....Now in pursuance of this scheme, this is to inform you that you have been allotted Residential Plot measuring 500 Sq. Yard in Sector 88/89, SAS Nagar which would be subject to the following conditions:
Various other facets of the LOI also are pointers to the fact that plots had been allotted.
The Letter of Intent is transferable, by way of sale, gift or otherwise with the prior permission of Estate Officer, GMADA, S.A.S. Nagar subject to payment of 2.5% of the price of the plot at scheme rate and Rs 2500/-for Residential and Rs 5000/for Commercial as processing fee. 6, Possession of plot shall be handed over to the allottee after completion of development works."
Fifthly, it has been held by the Mumbai High Court in the case of PCIT vs. Vembee Vaidyanathan that the allottee gets title to; property on issue of allotment letter. Taking delivery of possession remains only a formality. Accordingly, the date of allotment is the date on which the purchaser of a residential unit can be stated to have acquired the property. The next issue raised by the assessee, vis-a-vis the non-applicability of the provisions of section 50C based on the payment of 2.5% of the price of plot at scheme rate, at the time of transfer of LOI also would not find favour. The provisions of section 50C are clearly invocable when the consideration received was less than the value adopted or assessed or assessable by any authority of State Government (hereinafter referred to as "Stamp Valuation Authority"). The import of the key word 'assessable' cant be lost. The assessee has not canvassed the fact that the price of the plots at scheme rates and which have been certified by the Estate Officer shall not be assessable as such by the Stamp Valuation Authority. It's not pressed how the scheme rate prices are different from the assessable value by the Stamp Valuation Authority and if yes by what amount. It’s also pertinent to point out that no request was made by the assessee to refer the matter for valuation to arrive at the fair Market Value during the course of assessment. - From the above it is quite clear that the transactions involved sale of plots of land on which section 50C was invocable to arrive at the correct amount of capital gains. The assessing Officer has correctly arrived at the sale consideration of the plot at Rs. 2.50 crores. GoA no. 2 is dismissed.
We have heard the rival contentions. The issue to be adjudicated is the applicability of the provisions of section 50C of the Act to the facts of the present case, substituting the sale consideration received with the stamp duty value/transfer value of the asset sold for the purposes of computing capital gain earned.
8.1 What is undisputed is the fact that the asset transferred was Letter of Intent(LOI) relating to allotment of three plots of land in sector 88/89 measuring 500 sq yards,300 sq. yards &,200 sq.yards, issued to the assessee by GMADA on compulsory acquisition of his land measuring 5000 sq.yards, under the Land Pooling Policy of the Government of Punjab. That on transfer of the said LOI’s
transfer fee was charged by GMADA @ 2.5% of the price of the plot at scheme rate as per clause 3 of the LOI,as under:
S,N, Size of the Plot Transfer fee charged Total price as per transfer fee 1 200 square yard Rs. 1,25,000/- Rs. 50-00 lac 2 300 square yard Rs. 1,87,500/- Rs. 75-00 lac 3 500 square yard Rs. 3,12,500/- Rs. 125-00 lac Total Rs. 2.5 Crores
That the above price as per transfer fees charged ,of 2.5 crores ,was substituted for the actual sale consideration received of 1.14 crores by the Revenue ,by invoking the provisions of section 50C of the Act. The contention of the assessee is that LOI’s do not qualify as land and or building to which only the provisions of section 50C are applicable .
8.2 For a better understanding ,it is relevant to reproduce the provisions of section 50C of the Act which are as under
50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereinafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. 8.3 As is evident from a bare reading of the above, section 50C deems the stamp duty valuation of asset, being land /building ,to be the consideration for transfer of the same ,for the purposes of computing capital gains, in the situation where such valuation exceeds the actual consideration received. Two major and relevant takeaways are that it is a deeming provision and applicable to transfer of land and /or building. Being a deeming provision ,it is settled law, it can be applied only in the situation specifically given and cannot go beyond the explicit mandate of the section. What is to be adjudicated therefore is whether LOI qualifies as Land and/or Building in terms of the said section.
8.4 The LOI’s were issued under the Land Pooling Policy of the Government of Punjab. The notification giving effect to the same was also placed before us at Paper Book page no.106-115.We have gone through the same and the relevant contents throwing light on the operation of the policy is that the compensation for land acquired is by way of“developed“(emphasis provided by us)residential/commercial land. Clause (a) of the notification states so as under:
Punjab Cabinet in its meeting held on 21.08.2008 decided to frame the Land Pooling Policy as under: (a) The compensation per acre of land offered for land pooling shall be as below: (i) Half of developed residential land (ii) Half of developed commercial land The plots are to be allotted through operation of draw of lots as stated in clause (7) as under:
The Residential & Commercial plots to the land owner(s) shall be allotted through open draw of lots under this policy. Where the land owner is to be allotted two or more plots of the same size he shall have the option to club these plots. In this case the allotment of first plot shall be through draw of lots and the rest of the plots shall be clubbed as per availability in the layout plan. For these plots the continuity factor shall be applied. Copies of the LOI’s were also filed before us at P.B page No.27-32 and the contents of one of them are reproduced hereunder for reference :
Sub: Issue of Letter of Intent for the allotment of Residential Plot measuring 500 Sq, Yard through Land Pooling [Reference No: LP/88/89-0030/500] at SAS Nagar. This is in reference to the acquisition of land for Urban Estate Sector 88/89, wherein you, being one of such land owners whose land fell under the said acquisition, had opted under the said Land Pooling Scheme. Now, in pursuance of this scheme, this is to inform you that you have been allotted Residential Plot measuring 500 Sq. Yard in Sector 88/89, SAS Nagar which would be subject to the following conditions:- 1. As the basis of allotment is Revenue Record of Rights, if at a later stage it is found that the and owned/offered oy you Is less or some third party dispute/court case is pending with regard to the land or that you are not entitled/competent to make the offer, the LOl shall be deemed to have been cancelled. 2. The allotment is subject to the provisions of Punjab Regional and Town Planning and Development Act 1995, read with the Rules, Regulations and policies framed thereunder
from time to time. 3. The Letter of Intent is transferable by way of sale, gift or otherwise with the prior permission of Estate Officer, GMADA, S.A.S. Nagar subject to payment of 2.5% of the price of the plot at scheme rate and Rs 2500/- for Residential and Rs. 5000/- for Commercial as processing
The plot shall be used only for the indicated purpose(s). In case of breach of such conditions GMADA shall have the right to resume the plot under the provisions of Punjab Regional and Town Planning and Development Act 1995. 5. ……….. 6. Possession of plot shall be handed over to the allottee after completion of developed works. 7. Any change in address must be notified by registered A.D. to Estate Officer, GMADA, SAS. Nagar or through, e-mail; eo@qmada.gov;in or website of GMADA www.gmada.gov.in 8. Subject to the provisions of the Act all the disputes and/or differences which may arise in any manner touching or concerning this allotment shall be referred to the Sole Arbitrator, Chief Administrator, Greater Mohaii Area Development Authority (GMADA) or any person appointed/nominated by him in this behalf. The award of such Arbitrator shall be final and binding on the parties. Arbitration shall be governed by the Arbitration and conciliation Act, 1996, as amended from time to time. 9. While corresponding with GMADA, applicant is required to quote the Reference No. as, cited above in the subject.
10- For special LOI's Only
The special LOI pertains to fractional share resulting from land Pooling Scheme and the same can be consolidated for residential/SCO/Booth/Small Booth subject to the condition that the aggregate of special LOi's equalises with the size of the respective plot of available size. Consequently the Special LOi's will have to be returned In original for the issue of fresh LOI.
Note :- GMADA shall not be liable to consolidate the special LCI's into one LOI for any particular size in case plots of such size are not available for allotment.
8.5 On going through the contents of the above, we find, that the LOI’s did not confer ownership of specific developed plot of land. They only state allotment of 500 /300/200 sq. yards of residential plot in sector 88/89 without mentioning specific plot number. The specific allotment is to be done by draw of lots as stated in the land pooling policy of the government. Point No.6 of the LOI states that possession shall be handed over after completion of development
work. Thus, pending completion of the development of plots to be given in exchange of land acquired, LOI’s were issued expressing intent to hand over developed plots on completion of development. The LOI’s therefore confer only a right to own developed land of specific area, to be developed and also to be identified at a future point in time . They do not confer owner ship of specific land in present. Strictly speaking therefore LOI’s cannot be equated with land.
8.6 The argument of the Revenue that LOI is equivalent to allotment of land is we hold without any merits, Since allotment confers rights to a specific land/building ,while in the present case it is not so and the allotment in fact will occur after the land is developed and by draw of lots.
8.7 In view of the above we hold that the LOI is only a right to possess plot of land and not land itself and therefore the provisions of section 50C of the Act are not applicable in the present case.
Ground of appeal No.2 raised by the assessee therefore is allowed
No arguments were made vis a vis ground no 3 raised and the same is therefore dismissed.
Ground no 4 raised before us relates to the restriction of exemption u/s 54F of the Act on account of investment of the capital gain earned in a new residential property ,to the extent of the amount actually invested ,even when the entire consideration received stood invested in the new asset and the quantum of capital gain stood increased on account of substitution of the actual consideration with the stamp duty/transfer value of the land ,as per section 50 C of the Act .
The facts relating to the issue are that the capital gain of the assessee was assessed at a higher amount by the AO at Rs.2,45,40,951/- ,as against
Rs.91,04,757/-,by substituting the sale consideration with the stamp duty value of the asset as per section 50 C of the Act and thereafter the exemption u/s 54F claimed by the assessee on account of investment in new asset was allowed to the extent of the amount actually so invested being Rs.91,.01,000/-.Before the Ld.CIT(A) the assessee pleaded that since the entire amount of sale consideration received of Rs.1.14 crores stood invested in new asset ,he was entitled to deduction of entire capital gain, even if increased by virtue of invoking section 50C of the Act, u/s 54F of the Act. The said pleading was categorically dismissed by the Ld.CIT(A).
The said ground ,we find, is of no relevance since we have held above at para of our order that the provisions of section 50C are not applicable in the present case. The capital gains therefore remain at that returned by the assessee and there remains no question of allowing any increased deduction/exemption u/s 54F of the Act ,except to the extent actually invested in new asset and allowable as per law.
Be that as it may,the issue stands covered in favour of the assessee by the consistent decisions of the ITAT in the following cases as cited by the Ld.Counsel for the assessee before us:
Gyan Chand Batra vs ITO (2010) 133 TTJ 482(Jp) Nandlal Sharma vs ITO (2015) 122 DTR 404(Jp) ITO vs Sh Raj Kumar Parashar ITA No.11/Jp/2016 dt:28/09/2017.
The Ld.DR was unable to distinguish the said cases nor was any contrary decision of the High court/Supreme court brought to our notice.
This ground of appeal is therefore allowed in above terms.
No arguments were raised vis avis ground no 5 raised by the assessee. The same therefore stands dismissed.
In effect the appeal of the assessee stands partly allowed.
Sd/- Sd/- संजय गग� अ�नपूणा� गु�ता (SANJAY GARG) (ANNAPURNA GUPTA) �याय�क सद�य/Judicial Member लेखा सद�य/Accountant Member �दनांक /Dated: 18/01/2021 AG आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :
अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File