Selected Propositions on Section 50C: Deemed consideration

Selected Propositions on Section 50C: Deemed consideration

Principles for interpreting section 50C; Section 43CA; Section 56 etc

i) Hon’ble Bom HC ruling in the case of ACE Builders 281 ITR 210 wherein their lordships have declined to extend the fiction created under section 50 of the Act deeming gains arising on sale of depreciable assets as Short Term in nature to section 54E (as it stood the relevant time – providing exemption on sale of Long Term Capital Assets) and hence allowed exemption under section 54E of the Act. (Also Gau HC in Assam Petroleum Industries 262 ITR 587 has concluded so)

ii) SC rulings in the case of Ishikawajima Harima Heavy Industries 288 ITR 408 (FOLLOWED BY MUM ITAT IN 19 SOT 509) wherein their lordships restricted the scope of deeming fiction under section 9(1)(vii) of the Act reading therein “condition of rendition” apart from “utilization” and holding that presence of business connection is must in every transaction (i.e no force of attraction in the Act) and reaffirmed the principle that deeming fictions needs to be construed strictly and in light of other provisions of the Act by referring to Maruti Udyog SC ruling 2 SCC 638.

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