2019 (4) TMI 1956 - AT - Income Tax

Exemption u/s 54F in respect of investment in Residential Property outside the country - DR contention that the section does not allow the claim of investment outside the country and should be restricted in India - HELD THAT - We are of the opinion that the CIT(A) has dealt on the amended provisions to sec. 54 and 54F of the Act which are effective from 1/4/2015 relevant to asst. year 2015-16. Whereas the present case pertains to asst. year 2013-14 and the earlier provision are applicable further the ld DR has argued supporting the orders of the AO. Accordingly we are not inclined to interfere with the order of the CIT(A) who has passed reasoned order and upheld the same and dismiss grounds of appeal of the Revenue.

Summary

Issues:
1. Eligibility of exemption u/s 54F for investment in residential property outside India.

Analysis:

Issue 1: Eligibility of exemption u/s 54F for investment in residential property outside India

The Revenue appealed against the order of CIT(A) challenging the eligibility of exemption u/s 54F for an investment made in a residential property outside India. The Revenue contended that the exemption should be restricted to investments made within India. However, the CIT(A) allowed the appeal of the assessee, stating that the provisions of the Finance Act and the amendments to sec. 54 and 54F effective from asst. year 2015-16 were not applicable to the case, which pertained to the asst. year 2013-14. The CIT(A) relied on judicial decisions and upheld the assessee's claim for exemption u/s 54F.

In support of the decision, the CIT(A) referred to various judicial precedents, including the rulings in Vinay Mishra v ACIT, Leena Jugalkishor Shah v ACIT, Mrs. Prema P Shah v ITO, ITO(Intl. Taxn.) v Dr. Sh M Shah, ACIT v Iqbal Jafar, and N. Ranganathan vs ITO. These rulings established that before the amendment, the benefit of section 54F could extend to a residential house purchased outside India. The CIT(A) also highlighted that the subsequent amendments in sections 54 and 54F did not apply to assessment years before 2015-16, as the amendments were effective from 01.04.2015.

The ITAT, after considering the submissions of both parties, found that the CIT(A) had provided a reasoned order based on the applicable provisions and judicial precedents. The Tribunal noted that the Revenue failed to present any new evidence to challenge the CIT(A)'s findings. Consequently, the ITAT upheld the decision of the CIT(A) and dismissed the grounds of appeal raised by the Revenue.

Therefore, the ITAT concluded that the assessee was entitled to the exemption claimed under section 54F of the Income-tax Act, 1961 for the investment made in a residential property outside India for the relevant assessment year. The appeal filed by the Revenue was subsequently dismissed, and the cross-objection filed by the assessee was deemed infructuous and dismissed as well.