ITAT: Section 54 relief still possible when tax uses higher stamp duty value

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that homeowners can still claim capital gains tax exemption under Section 54 even when the tax department uses the higher stamp duty value to compute gains under Section 50C.

The two provisions operate independently, the tribunal said in a recent order. Section 50C lets the department swap the stamp duty value for the actual sale price when calculating capital gains. That swap does not automatically kill the Section 54 exemption if the taxpayer reinvests the proceeds in another house and meets the conditions.

The case centered on Himanshu Jain, who sold a residential property in Ghaziabad for ₹1.10 crore in the 2023-24 assessment year. The stamp duty value was ₹1.962 crore. Invoking Section 50C, the Assessing Officer treated the higher figure as the deemed sale consideration and added ₹86.20 lakh to the long-term capital gains computation.

Jain argued the property sold below the circle rate because his employer transferred him from Ghaziabad to Pune and he needed a quick sale. Tax authorities rejected that. Section 50C has no distress-sale exception.

After the sale, Jain booked a flat in Pune for roughly ₹1.92 crore. He put the entire Ghaziabad proceeds into it and financed the gap with a home loan. He later said he had not claimed the Section 54 deduction in his original return because of bad advice. He argued the exemption should still apply.