TMI Blog2021 (9) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT(A) on the issue and we uphold the same. The grounds raised by the Department are dismissed. Disallowance of expenses claimed by the assessee towards cost of improvement - HELD THAT:- Costs incurred towards stamp duty and registration of the gift in the name of the assessee was an essential pre-condition for the purpose of obtaining the legal title of the property and its further sale - charges incurred for conversion of leasehold to freehold also had to be incurred for the purpose of enhancing the sales consideration value of the property sold and, therefore, it can be safely concluded that the impugned expenditure was a legitimate cost of improvement. We are of the considered opinion that cost of improvement is of wide amplitude and it would take into its fold all kinds of expenses incurred for the improvement of the impugned property. Therefore, we set aside the order of the Ld. CIT(A) on the issue and direct the Assessing Officer to allow the claim of assessee - I.T.A No.7195/Del/2017 C.O. No.21/Del/2018 Arising out of I.T.A No.7195/Del/2017 - - - Dated:- 27-9-2021 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Ld. CIT(A) in allowing the assessee s claim of exemption u/s 54 of the Act whereas the assessee, in her Cross Objection, has challenged the upholding of disallowance of cost of improvement. The respective grounds taken by both the parties are as under: Grounds of appeal filed by the Department:- (i) Whether on the facts and in the circumstances of the case, the CIT(A) has erred in allowing the deduction u/s 54 of the Act for purchase of property abroad, ignoring the fact that the Income Tax Act is applicable in India only and the intention of the legislature in introducing section 54 of the Act was to boost the Indian economy by promoting investment in housing sector. (ii) Whether on the facts and circumstances of the case, the CIT(A) has erred in allowing the deduction u/s 54 of the Act for purchase of property abroad ignoring the fact that insertion of word 'in India' in section 54 by the Finance Act, 2014 was only clarificatory in nature to remove the confusion created by some judicial pronouncements. (iii) The appellant prays for leave to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal. Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted by the Ld. AR that the assessee had paid stamp duty charges of ₹ 5,60,000/- and Professional Expenses of ₹ 2,00,000/- towards execution and registration of the property in her name and also another 50,000/- were paid to an Advocate for conversion of the property from leasehold to freehold and for registration of conveyance deed. It was submitted that this expenditure was very much a part of the cost of improvement. The Ld. AR highlighted that the genuineness of the impugned expenditure has not been doubted by the Lower Authorities. It was reiterated that since these expenses were incurred in connection with the house property sold and pertained to obtaining lawful position of the property, the same should be allowed. 6.0 Per contra, the Ld. Sr. Departmental Representative (DR) relied on the concurrent orders of the Assessing Officer and the Ld. CIT(A) and submitted that the incurring of this expenditure had not resulted in any addition to the value of the property and as such the same should not be allowed as cost of improvement. 7.0 We have heard the rival submissions and have also perused the material on record. As far as the Department s appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Act, it can be remedied only by the legislation and not by judicial interpretation It was further held that In the present case the assessee has purchased there sidentialhouse in U.S.A. out of the sale proceeds of the plot in India and thus she has fulfilled the conditions of section 54F of the Income-tax Act before its amendment by the Finance (No.2) Act. Moreover, when the language of a taxing provision is ambiguous or capable ofmore meanings than one, then the court has to adopt the interpretation which favours the assessee. Section 54F of the Act before its amendment was clear that the assessee should investment in a residential house. The language of section is clear and ambiguous. Therefore, we cannot import into the statute the words 'in India' as interpreted by the authorities. Thus, taking into consideration the above facts, we are of the opinion that benefit of section 54F before its amendment can he extended to aresidential house purchased outside India. In that view of the matter, the appeal is allowed. The order of the Tribunal is set aside. We answer the question in favour of the assessee and against the revenue XXXX 4.5.1 The claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, I propose to exempt from tax long-term capital gains arising from the transfer of other assets where the net consideration is invested by the taxpayer in a residential house. 4.5.3 It cannot be disputed that the intent of the above speech and the state sections were legislated to grant benefit for house property purchase in India. The construction of housing and the shortage of housing mentioned by the Finance Minister in his speech is and has to be construed to be within the geographical limits of India. So the sections and then intention certainly meant that the deduction would be eligible for investment in house property in India. 4.5.4 However, the plain reading of the section as it is under the statute, does not mention so. In a number of decisions, the Supreme Court has held that words cannot be read into the statute when the wording per se is clear. Here, the wording of the statute is absolutely clear. In the present case, even though the intention of the legislature was to grant benefit to investment in residential houses in India, the statute did not say so. In view of this position of the statute, the amendment was brought through the Finance Act 2014 to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 (Approx.), aggregating to GBP 28,64,974.34. The said consideration was paid out of remittances made by the respondent from India and the sale consideration received by him in respect of the aforesaid Indian asset. The authority arrived at its conclusion with regard to the respondent being entitled to exemption under Section 54 of the Act by placing reliance on the decision of the Gujarat High Court in Leena JugalKishor Shah Vs. Assistant Commissioner of IncomeTax, (2017) 392 ITR 18 (Guj.). The authority has noted that the Revenue has not assailed the said decision before the Supreme Court. 3. Reference has also been made to the Circular No. 01/2015 containing explanatory notes to the provisions of the Finance (No. 2) Act, 2014 whereby Section 54 of the Act was amended to specifically include the word in India in respect of the residential house acquired out of the long term capital gain earned by the assessee. The said explanatory note in terms provides that the said amendment would take effect from 01.04.2015 and would, accordingly, apply for the assessment year 2015-16 and subsequent assessment years. Thus, the said amendment is prospective and would not apply in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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