TMI Blog2014 (7) TMI 1279X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed. - ITA No.609/LKW/2011 - - - Dated:- 25-7-2014 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER For the Appellant- Shri. Alok Mitra, D.R. For the Respondent- Shri. A. K. Gupta, FCA ORDER PER SUNIL KUMAR YADAV: This appeal is preferred by the Revenue against the order of the ld. CIT(A) deleting the addition made by the Assessing Officer under section 54F of the Income-tax Act, 1961 (hereinafter called in short the Act ) amounting to ₹ 55,10,506/- without appreciating the facts brought on record by the Assessing Officer during the course of assessment proceedings. 2. The facts in brief borne out from the record are that the assessee has filed return of income at ₹ 5,18,920/- showing income from house property, capital gains, remuneration and interest from M/s Zafar Alam International, a partnership firm, in which the assessee is a partner. During the impugned assessment year, assessee has sold a land at Noida for a total consideration of ₹ 70,99,200/- and had claimed exemption under section 54F of the Act in respect of long term capital gain arising therefrom amounting to ₹ 55,10,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to by the assessee and his finding are extracted hereunder:- 3. During the course of assessment the Ld. AO has interpreted the investment in the residential property should be made in India for the purposes of taking benefit of provisions of section 54F. It is most humbly submitted that in accordance with the rules of interpretation while interpreting a statute the Hon'ble Apex Court has given several land mark decisions and it has been held in: Federation Of Andhra Pradesh Chambers Of Commerce Industry Ors. Etc. Etc. V. State Of Andhra Pradesh Ors. Etc. Etc. 2001-(247)-ITR -0036 -SC It is trite law that a taxing statute has to be strictly construed and nothing can be read into it. In the classic passage from Cape Brandy Syndicate's case (supra), which was noticed in the judgment under appeal, it was said: In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can look fairly at the language used. Furthermore in another para it has been held that The wider meaning g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 345 (SC) There is no scope for importing into the statute words which are not there. Such importation would be, not to construe, but to amend the statute. Even if there be a casus omissus, the defect can be remedied only by Legislation and not by judicial interpretation. In the case of CIT vs. Sundaradevi (1957) (32 ITR 615) (SC), it was held by the Apex Court that unless there is an ambiguity, it would not be open to the Court to depart from the normal rule of construction which is that the intention of the legislature should be primarily to gather from the words which are used. It is only when the words used are ambiguous that they would stand to be examined and considered on surrounding circumstances and constitutionally proposed practices. Reiterating the same view, in the case of CIT vs. Shaan Finance (P.) Ltd. [1998] 231 ITR 308 (SC) it has been held that in interpreting a fiscal statute, the Court cannot proceed to make good the deficiencies if there be any. The Court must interpret the statute as it stands and in case of doubt, in a manner favourable to the taxpayer. Thus from all the judgments it is clear that nothing can be added or substituted in any section u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on no educational activity in India, the exemption did not apply to the University. In other words, the majority judges held that non-profit qualification has to be tested against Indian activities and it is in this context that remarks regarding in India are made in the judgment of the majority at page nos. 672 and 684. Moreover, it is important to note that, even after the Finance Act, 1998 w.e.f. 1.4.1999, the third proviso to Section 10(23C)(vi), which refers to monitoring conditions, confines the words application of income to the objects for which the Institution is established. The third proviso does not use the words in India in the matter of application or accumulation of income though in several other sections like Sections 10(20A), 10(22B) and 11(1)(a) etc.. Parliament has used words in India . Therefore, for this one more reason, we cannot read in the words in India into the third proviso. As stated. Parliament in its wisdom has stated in the third proviso that the educational institution has to apply its income wholly and exclusively to the objects for which it is established. Therefore, the plain words of the third proviso do not require application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave income in India though their applicability or application of funds could be out of India. The extracts of judgements are mentioned as under: In fact the above case fully supports the contention of the appellant and by virtue of this case only the stand of the appellant is fully justified. To elaborate the same it is submitted that In the case of Oxford University Press Vs.CIT [2001] 247 ITR 658 (SC), all the three judges held that it was impermissible to read in the words 'in India' into section 10(22) of the Act. The judgement further stated that By reason of s. 10(22), any income of a university or other educational institijtion, existing solely for educational purposes and not for purposes of profit, is not includible in its total income. A university is the creation of a charter or a statute. It is created exclusively for educational purposes, and not for profit. An educational institution, while it may impart education, may yet have a profit motive. Strictly speaking, therefore, the phrase existing solely for educational purposes and not for the purposes of profit in cl. (22) qualifies only the words other educational institution and not the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion' to claim the said benefit need not be so. Let me also examine the contention of Mr. Verma from another angle. The acceptance of the contention of learned counsel would mean that 'a university' to claim the benefit of exemption under s. 10(22) ought to be established, constituted or set up in India. The words 'constituted in India', 'set up in India' and 'established in India' have been used in cls. (20A), (22B) and (23) of s. 10. The relevant portions of these provisions read as under: 10(20A) any income of an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; 10(22B) any income of such news agency set up in India solely for collection and distribution of news as the Central Government may, by notification in the Official Gazette, specify in this behalf: Provided that the news agency applies its income or accumulates it for application solely for collection and distribution of news and does not distribute its income in any manner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents the Hon'ble Apex court categorically stated that had the intention of legislature been that the Investment had to be made In India then these words would have formed part of the section as the same form part of sections 10(20A), 10(22B) and 11(1 )(a) etc.. Thus had the parliament intended that the Investment in residential property would be eligible only if the same has been made in India it would have clearly laid down the same as laid down in sections 10(20A), 10(20B), 1(1)(a) etc. The Act has not used the words In India in respect of Investment of sales consideration under section 54F and as laid down in the above cases and rules of interpretation it is impermissible to read the words In India into this section also. Thus the investment in a residential house whether made in India or out of India is eligible for exemption u/s 54F. Now coming to another cardinal principal of interpretation of a statute in respect of a benefit to be given the Courts have unanimously held that while granting a benefit liberal construction should be adopted In CIT vs. Naga Hills Tea Co. Ltd. 89 ITR 236, 240 (SC) and CIT vs. Contr ED vs. Kanakasabai 89 ITR 251, 257(5C) it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery Factory [159 ITR 85] I have gone through the averments made by the appellant and also through the order of the AO. The AO has no where denied that the Act does not use the words In India under section 54F but has deemed the same into the provision on the basis of intention of the legislature. The appellant on the other hand has categorically stated that while interpreting the statutes one has to be very strict and no word can be added unless, there is any ambiguity. As regards the provisions of section 54F are concerned they are workable and operative as such and from the plain language it is very clear that an assessee is entitled to benefit u/s 54F if he fulfils the conditions laid down in that section irrespective of the fact that whether the property is purchased in India or out of India. Furthermore the Hon'ble Supreme Court has, in several cases, laid down the principles of interpretation of statutes and how a beneficial provision should be interpreted. (Few case laws have been relied upon by the appellant in his submission, discussed above). In fact in the case of American Hotel lodging Association Educational Institute vs.CBDT (2008) 170 Taxman 306. a similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) CIT vs. Bansal Credits Ltd. Ors, 259 ITR 69. (2) CIT vs. T. V. Sundaram Iyyengar, 101 ITR 764 (3) Smt. Tarulata Shyam vs. CIT, 108 ITR 345 (4) CIT vs. Sundaradevi, 32 ITR 615 8. The ld. counsel for the assessee has also placed reliance upon the judgment of the Hon'ble Apex court in the case of Bajaj Tempo Ltd. vs. CIT, 196 ITR 188, in which it has been held that a provision in a taxing statute granting incentives for promoting growth and development should be construed liberally. He has also placed reliance upon the order of the Tribunal in the case of Mrs. Prema P. Shah vs. Income Tax Officer, 100 ITD 60 and Income Tax Officer (Intl. Taxation), Mumbai vs. Dr. Girish M. Shah, Mumbai in I.T.A No.3582/Mum/2009, in which it has been held that assessee is entitled for deduction under section 54F of the Act even if the assessee acquires property outside India. In another order of the Tribunal in the case of Vinay Mishra vs. ACIT in I.T.A. No.895/Bang/2012 reported in 30 taxmann.com 341, the Tribunal has held the words in India cannot be read into section 54F when Parliament in its legislative wisdom has deliberately not used the words in India in section 54F of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty in U.S.A. 14. Similarly in the case of Mrs. Prema P. Shah vs. Income Tax Officer (supra), the Tribunal has again held that the assessee was entitled to the benefit under section 54 of the Act, which 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 was in a foreign country. 15. Again in the case of Income Tax Officer (Intl. Taxation), Mumbai vs. Dr. Girish M. Shah, Mumbai (supra), the Mumbai Bench of the Tribunal has taken a similar view by holding that the assessee is entitled for exemption under section 54F of the Act for purchase of house property outside India i.e. in Canada. 16. Having carefully examined various judicial pronouncements and the order of the ld. CIT(A), we find that except in the case of Leena J. Shah vs. ACIT (2206) 006 SOT 721 (Ahd-Trib), the Tribunal has taken a consistent view that the words in India cannot be inserted in section 54F of the Act and as per plain reading of section 54F of the Act, the sale proceeds of capital asset shall be invested in residential house in India or outside India. We, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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