Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Exemption u/s 54 f

CA.AZAD JAIN (CA) (201 Points)

05 November 2013

If suppose actual sale consideration is 1500000 and sale consideration U/s 50 C is 5000000 then what amount should be invested for claiming full exemption u/s 54 F.

Reply
Follow
Share

1 Replies

CA Rakesh T (Chartered Accountant) (590 Points)
Replied 05 November 2013

Ok .. In other words, the question is whether the consideration defined in 50C can be taken as a consideration defined in 54F ?

I am sure you have read the relavant sections , so I wont delve into it too much , though I might quote the language wherever necessary.

Short answer is , definition of consideration under both sections are different, and as far as calculation of investment is concerned, you can simply read the section 54F and follow its instructions, its pretty straight forward.

But if we understand sec 50C ( which is what is creating the trouble) intuitively , some of the takeways are as follows:

1. The title of the section is "Special provision .... in certain cases", therfore we can infer that the intention of the law maker is only for specific case, the case is obviously defined in the section itself , which is Stamp Duty liability. It will be very imaginative on AO side to stretch the section too much especially when its adorned with qualifying words like "Special" and "Certain Cases".

2. Sec 50C does not define consideration , it simply redirects it to the general definition of consideration under sec 48, whereas, sec 54F take the pain to define what is net consideration, which appears to be an effort on the law makers side to ensure that you stick with sec 54F and not wander around :-)

3. Section 54F also takes the pain to calculate Capital Gains, whereas Sec 50C ( obviously) excludes it. I think Sec 50C is very exclusive section and should be interpreted only in that manner, unless there are cases which anyone can cite.

Sec 50C cases , decided by Appelate authority, High Court and even Supreme court, they all have one very common and specific observation , that Sec 50C created a "Legal Fiction" and its not necessary that its consideration is true to the market.

I am not a tax practioner and you should take proper advice wherever appropriate.

Hope it helps.