Deeming fiction of sec. 50C won’t apply while claiming relief under sec. 54F: ITAT Reiterared
a) Assessee had sold property which was used by him for commercial purposes and on which depreciation was also claimed. The property was held for a period of more than 36 months before being sold.
b) Assessee had purchased a new residential flat from the consideration received from sale of the above property. He claimed deduction under section 54F on the capital gains arising from the sale of aforesaid property.
c) Assessing Officer (AO) treated the aforesaid property as short-term capital assets within the deeming provision of section 50 and held that the assessee was not entitled for deduction under section 54F as the deduction was available only on the long-term capital gains.
d) CIT(A) reversed order of AO. Aggrieved-revenue filed the instant appeal before the Tribunal.
The Tribunal held in favour of assessee as under:
1) Section 50 creates a deeming fiction by modifying provisions of sections 48 and 49 for the purposes of computation of capital gains chargeable to tax under section 45 with respect to the depreciable assets forming part of block of assets.
2) There is nothing in section 50 which could suggest that deeming fiction is to be extended beyond what is stated in provisions of section 50 and it can’t be extended to deduction allowable to the assessee under section 54F which is an independent section operating in altogether different field.
3) Therefore, the assessee was entitled for deduction under section 54F on the capital gains arising on the sale of depreciable assets being commercial property. –  98 taxmann.com 305 (Mumbai – Trib.)