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2005 (11) TMI 386 - AT - Income TaxExemption u/s 54F - Capital gains - non-resident - whether benefit of section 54F is available to a residential house purchased out of India - HELD THAT:- We noticed that originally the income-tax was first introduced in India in 1860. After independence the Income-tax Bill, 1961 came out of the legislative anvil and the Income-tax Act, 1961, received the assent of the President on 13th September, 1961 and came into force from 1st April, 1962. This Act was made applicable to the whole of India. Since this Act applicable in India, therefore, the provisions of this Act are applicable in India and same are required to be read accordingly. Thus section 54F is also required to read accordingly, the words ‘purchase/construction of a residential house’ on plain and simple reading means, the purchase/construction of a residential house must be in India and not outside India. Following the decision in the case of Padmasundara Rao [2002 (3) TMI 44 - SUPREME COURT] and K.P. Varghese v. ITO [1981 (9) TMI 1 - SUPREME COURT], we find that a residential house purchased/constructed must be in India and not outside India, in USA. This interpretation is strongly supported by the marginal note to section 54F. Section 54F inserted by the Finance Act, 1982, with effect from 1-4-2003. It has been explained in Circular No. 346,- Explanatory notes on the provisions of Finance Act, 1982 in para 20.2 "with a view to encouraging house construction, the Finance Act, 1982, has inserted a new section 54F.". Thus, we hold that benefit u/s 54F is not allowable for a residential house purchased/constructed outside India. In the result, the appeal is dismissed.
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