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II. Direct Tax Case Law:
Asstt.
CIT Vs. M/s The Upper India Chamber of Commerce, ITA No. 601/LKW/2011,
Assessment Year 2008-09, Date of Pronouncement: 05.11.2014, ITAT -
Lucknow
Whether the deeming fiction created by virtue of section 50C in determining capital gain can be extended to section 11(1A).
Held_NO
In
brief, the assessee trust register u/s 12A of the Income Tax Act, 1961
and invested net consideration form transfer of capital asset in
acquisition of new capital asset. However, the AO has made the addition
by applying provisions of section 50C of the Act. The Hon’ble ITAT
confirmed the order of CIT(A) wherein it was held that Section 11(1A) is
a complete code which lays down a complete system of taxability of
Capital Gains in respect of an institution registered u/s 12A.
Furthermore the section 11(1A) has specifically defined the meaning of
"net consideration" for the purposes of capital gains and so the same
shall prevail over the deemed sale consideration as provided u/s 50C.
The
provisions of section 50C create a limited fiction to the effect that
the full Value of consideration shall be substituted in the provisions
of section 48 by the amount taken by the sub-registrar for registration
purposes. The fiction contained in section 50C cannot be applied for the
purpose of section 11(1A). In view of this, what is relevant for the
purpose of section 11(1A) is the reinvestment of the net amount actually
realized and not any notional amount as may be adopted by virtue of
sec. 50C.Therefore, the appeal of revenue is dismissed.
Refer case: ACIT vs. Shri. Dwarikadhish Temple Trust, Kanpur in I.T.A. No. 256 & 257/LKW/2011
(Please click here for Judgment)
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