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2005 (11) TMI 182 - AT - Income TaxCapital Gains - whether the exemption contemplated u/s 54(1) could be extended to a property purchased in a foreign country after selling the property situated in India - HELD THAT:- It is not disputed that the assessee is a non-resident Indian. For a non-resident Indian, Chapter XII-A applies, being special provisions relating to certain incomes of non-resident Indians. The c long-term capital gains, as far as a non-resident Indian, is defined in Chapter XII-A, section 115C(d), which has been reproduced hereinabove in Para 8. It is defined as income chargeable under the head "Capital gains" relating to a capital asset, being a foreign exchange asset which is not a short-term capital asset. The "foreign exchange asset" is again defined u/s 115C(b), which reads:- "foreign exchange asset" means any specified asset which the assessee has acquired or purchased with, or subscribed to in, convertible foreign exchange". Again the "specified asset" is defined u/s 115C(f). The property sold by the assessee does not fill within any of the definition given in section 115C(f). In short, we are of the considered view, for the reasons stated hereinabove, the assessee is entitled to the benefit u/s 54 of the Act. It does not exclude the right of the assessee to claim property purchased in a foreign country, if all other conditions laid down in the section are satisfied, merely because the property acquired is in a foreign country. Coming to the direction of the CIT(A), regarding applicability of provisions of section 115D pertaining to special provisions relating to certain incomes of non-residents, we are of the view, it is not applicable. The "long-term capital gains" is defined as a capital gain relating to a capital asset, being a foreign exchange asset. In the case of the assessee, there is no doubt that this is not a foreign exchange asset. As such, the provision of section 115D is not applicable. Thus, the appeal by the assessee with regard to remaining 50 per cent of the share is to be accepted. In the result, appeals of the assessee stand allowed.
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