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Determination of Long term capital gain—In the instant case, first issue is whether the assessee is entitled to exemption u/s 54F of the Act for investment made in one more residential house property. The undisputed fact is that the assessee had inherited one residential house prior to the sale of these two plots of land which had resulted in the assessee earning capital gain. Held that—As per the provision of Section 54F of the Act, the assessee is entitled to exemption for investment made in a second residential house property from out of the long term capital gains. Merely because the assessee has invested in more than one house property, he cannot be denied rightful exemption on an investment made on the second house property. The assessee claims that the amount of 40 Lakh/- investment by him for the purchase of the residential plot by way of advances to M/s Amit Enterprises should be considered for exemption u/s 54F of the Act, as investment in a second house property. We find force in these arguments. Hence we direct the Assessing Officer accordingly. Next issue is whether the deeming provisions of Section 50C of the Act can be applied to Section 54F of the Act—held that—We find that the Visakhapatnam Bench of the Tribunal in the case of DCIT vs. Dr. Chalasani Mallikarjuna Rao [2016] [ITAT VISAKHAPATNAM] as held the assessee has invested net sale consideration for construction of new residential house property. Though, the full value of consideration as defined u/s. 50C of the Act is more than the net sale consideration as referred in section 54F(1) of the Act, once the net sale consideration has been fully applied under the provisions of section 54 of the Act, then the deeming consideration as defined u/s. 50C cannot be brought into the provisions of section 54F of the Act. Therefore, we are of the view that the assessee is eligible for exemption u/s. 54 of the Act, therefore, the whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value as per the provision of section 50C of the Act. Therefore, we direct the A.O. to allow the exemption u/s. 54 - thus we direct the Assessing Officer to re-compute the capital gains.

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Section 45, 50C, 54F of Income Tax Act, 1961—Determination of Long term capital gain—In the instant case, first issue is whether the assessee is entitled to exemption u/s 54F of the Act for investment made in one more residential house property. The undisputed fact is that the assessee had inherited one residential house prior to the sale of these two plots of land which had resulted in the assessee earning capital gain.

Held that—As per the provision of Section 54F of the Act, the assessee is entitled to exemption for investment made in a second residential house property from out of the long term capital gains. Merely because the assessee has invested in more than one house property, he cannot be denied rightful exemption on an investment made on the second house property. The assessee claims that the amount of 40 Lakh/- investment by him for the purchase of the residential plot by way of advances to M/s Amit Enterprises should be considered for exemption u/s 54F of the Act, as investment in a second house property. We find force in these arguments. Hence we direct the Assessing Officer accordingly.

Next issue is whether the deeming provisions of Section 50C of the Act can be applied to Section 54F of the Act—held that—We find that the Visakhapatnam Bench of the Tribunal in the case of DCIT vs. Dr. Chalasani Mallikarjuna Rao [2016] [ITAT VISAKHAPATNAM] as held the assessee has invested net sale consideration for construction of new residential house property. Though, the full value of consideration as defined u/s. 50C of the Act is more than the net sale consideration as referred in section 54F(1) of the Act, once the net sale consideration has been fully applied under the provisions of section 54 of the Act, then the deeming consideration as defined u/s. 50C cannot be brought into the provisions of section 54F of the Act. Therefore, we are of the view that the assessee is eligible for exemption u/s. 54 of the Act, therefore, the whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value as per the provision of section 50C of the Act. Therefore, we direct the A.O. to allow the exemption u/s. 54 - thus we direct the Assessing Officer to re-compute the capital gains.[SMT. NILANJANA CHAKRABORTI VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-22, KOLKATA] [2018] [7] [ITCD Online] [26] [ITAT KOLKATA]