Opinion Of Eminent Legal Luminaries On Controversial Issues

If Stamp Duty Value S. 50C Is Invested In New House Is S. 54F Exemption Available?

QUERY: A flat was sold. The AO adopted stamp duty value. The assessee invested full stamp duty value in another flat. Whether the assessee is entitled for deduction under section 54F?
ANSWER: The Karnatka High Court in Gauli Mahadevappa v. ITO [356 ITR 90] has held that where capital gain is assessed on notional basis under section 50C, whatever amount is invested in new residential house within prescribed period under section 54F would get benefit of deduction irrespective of the fact that funds from other sources are utilised for new residential house.

Further, in Raj Babbar v. ITO [56 SOT 1], the Mumbai Tribunal has held that if investment in new asset was more than net consideration received as well as full value of consideration computed as per section 50C, the assessee would be entitled for deduction.

On the basis of above decisions, the assessees is entitled for the amount invested in another flat under section 54F of the Act.
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3 comments on “If Stamp Duty Value S. 50C Is Invested In New House Is S. 54F Exemption Available?
  1. Narayanan Mahalingam says:

    The above case by Karnataka High Court gives exemption u/s 54F for the full investment value made in a house property where investment in House includes funds from other sources over and above the stated consideration . But it doesnt exempt the full capital gains computed u/s 50C in this case. But there are cases decided by other ITAT Benches where it is held that where the stated consideration is fully invested in a new house, then full capital gains should be exempted u/s 54F as 50C cannot bind 54F. Can anyone enlighten the current status of the above decisions , whether further appeal made by Department in High Courts, their Status, or any decision on similar issues u/s 50C in favour of assessee.
    Wud be thankful for yr valued opinion on this.
    Regards
    M Narayanan

  2. Narayanan Mahalingam says:

    The above case by Karnataka High Court gives exemption u/s 54F for the full investment value made in a house property where investment in House includes funds from other sources over and above the actual consideration received. But it doesnt exempt the full capital gains computed u/s 50C based on the Guideline value in this case. But there are cases decided by other ITAT Benches where it is held that where the actual consideration received is fully invested in a new house ( not the full guideline value adopted), then full capital gains should be exempted u/s 54F as 50C cannot bind 54F. Can anyone enlighten the current status of the above decisions , whether further appeal made by Department in High Courts, their Status, or any decision on similar issues u/s 50C in favour of assessee.
    Wud be thankful for yr valued opinion on this.
    Regards
    M Narayanan

  3. CA NARENDRA SEKSARIA says:

    GOOGLE

    READ

    MADHUKAR KHARE PUNE ITAT-2013 AND

    NILA SHAH-ITAT MUM 2012

    M NATRAJ-ITAT CHHENNAI-2013

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