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TMI Blog2012 (12) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... use irrespective of the location of that residential house. (iv) Though he is a non-resident, he is liable to Income Tax in India in respect of his capital gains and is therefore eligible for exemption on satisfaction of other conditions of section 54F like any other resident. (v) Section 5 of the Income Tax Act, does not in any manner provide that a non-resident will be denied exemption in respect of an activity outside India more so when such an activity has the effect of saving tax on income that is earned in India and is liable to tax in India. (vi) Once the Income Tax Act, 1961 assumes the power to tax the Income of a non- resident, it also allows such a person all the benefits that flow from the provisions of the Act unless specifically prohibited. (vii) Section 54F, being an incentive provision granting a benefit should be construed liberally in favour of the appellant. (c) Your appellant prays that the exemption u/s 54F of Rs. 8,89,54,754/- be granted in full. II. INTEREST U/s. 234A of Rs. 16,88,705 and u/s 234B of Rs. 69,65,909 (a) The ld. CIT (A) erred in law and on facts in confirming the action of the Ld. A.O. levying interest u/s 234A of Rs. 16,88,705/- and u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. Finally, he held that the capital gains arising out of transfer of plots was not eligible for deduction u/s.54 of the Act, as the sale proceeds had been invested in a property outside India. 4. Before us, Authorised Representative (AR) submitted that as per the provisions of the section 54 (F) it was not mandatory to invest in India, that permission from FEMA authorities were taken for investing the money in USA, that in Memoranda explaining the amendments and the circular issued by the Board in this regard there was no mention that the property should have been acquired in India, that requirements of Section 54 (F) were identical to the provisions of Section 54, that decisions delivered by the ITAT, Mumbai in two cases have decided the issue in favour of the assessee with regard to Section 54,that wherever legislature wanted location of an activity, same has been specifically mentioned in the Act, that in Section 11 words 'in India' have been mentioned. He referred to cases 253 ITR749 (Gujrat) 100 ITD1Special Bench, ITAT, Delhi (129ITD45)he also referred to page Nos.36 and 50of the Paper Book. He emphasised that precedent set by the decision of benches of Mumbai Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the application of the Act. In other words if activity of purchasing a residential house had no co-relation to the geographical boundaries of India, exemption has to be denied. Here we would like to quote provisions of Sec.54F-especially the sub-section 3. Section reads as under: Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.--(1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset),the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,-- XXXXXXXXXXXXXXXXXXXXXX (2) Where the assessee purchases, within the period of two years after the date of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason behind the policy of encouraging construction activities. By no stretch of imagination, it can be held that by amending various provisions of the Act Parliament wanted to encouraging construction activities in USA. Notes on clauses and memorandum explaining the newly introduced sections of the Budget clearly mention that the purpose to introduce the Section 54 F was to encourage construction activities. Here, we would like to reproduce the memorandum and explanatory notes and circular issued by the CBDT related with section 54F. Memorandum explaining the provisions of Finance Act, 1982 reads as under: "With a view to encouraging house construction, it is proposed to provide that where any ....................... the proposed provision will become effective from 01-04-1985 and will accordingly applied to Assessment Year 1983-84 and subsequent year". Vide its Circular 348 dt. 30-06-1982, Board had clarified the position with regard to the introduction of Section 54 of the Act.It reads as under: "With a view to encouraging house construction, the Finance Act 1982 has inserted a new section 54F to provide that where any capital gain arises........" As per the settled princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealt this issue and have referred to circular issued by the CBDT with reference to the purposes of introducing the section 54 F. 5.4. AR of the assessee had referred to importance of precedents while discussing the decisions of the Mumbai Tribunal. As per his opinion judgments delivered by the Mumbai Benches of Tribunal should get preference over the decision of Ahemdabad case of Leena J Shah(supra). There is no doubt that precedents play an important role in the field of administration of law and they are of binding nature. A few of the general principles with regard to precedents enumerated by the Hon'ble jurisdictional HC (206 ITR727) are under: (a) X X X X X X (b) X X X X X X (c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court,may be summed up as follows: (i) A single judge of a High Court is bound by the decision of another single judge or a Division Bench of the same High Court. It would be judicial impropriety to ignore that decision. Judicial comity demands that a binding decision to which his attention had been drawn should neither be ignored nor overlooked. (ii) A Division Bench of a High Court sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee is non-resident Indian and the issue is with regard to the deduction u/s. 54 of the Act...............Therefore, the decision relied on by the Revenue is not applicable to the facts of the present case." From the above decision, it is clear that while deciding the case of Girish M. Shah, Tribunal had differentiated between the provisions of Section 54 and Section 54F. Issue before the Tribunal in that case was regarding exemption to be allowed u/s. 54 and not u/s. 54F of the Act. Tribunal decided the issue in favour of the assessee following the decision of Prema P.Shah (supra) as in that case also issue to be decided was of availability of exemption under Section 54. Following the same analogy, we want to follow the decision of the Ahmedabad, ITAT delivered in the case of Leena J.Shah-because it deals with Section 54F of the Act. In our opinion by not referring the case of Girish M Shah for constitution of a special bench; Mumbai Tribunal had accepted the principle that provisions of section 54 were different form section 54 F of the Act. In these circumstances precedent also suggest that the case of Leena J Shah (supra), and not that of Girish M Shah ,should be f ..... 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