Boothapuri Venkatesh, Rep by PA Holder Mrs.B.Shanta, CHENNAI V. DDIT, CHENNAI

ITA 1830/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7830 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A S SRIRAMAN SHRI
• Section: 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 1830/MDS/2015 / ASSESSMENT YEAR : 2011-12. SHRI. BOOTHAPURI VENK A TESH, REPRESENTED BY PA HOLDER MRS. B. SHANTHA, NO.15B, BLOCK, SREYAS, ANNA NAGAR EAST, CHENNAI 600 102. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION II(1) CHENNAI. [PAN ACXPV 9611R ] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. A.S. SRIRAMAN, ADVOCATE $% ! ' # /RESPONDENT BY : SHRI. A.V.S REEKANTH, IRS, JCIT. & ' ' ( / DATE OF HEARING : 23 - 02 - 201 6 ) ' ' ( / DATE OF PRONOUNCEMENT : 04 - 03 - 201 6 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI IN ITA NO.8.CIT(A)-16/2014-15, DATED 20.05.2015 FOR THE AS SESSMENT YEAR 2011-12 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961. ITA NO.1830/MDS/2015. :- 2 -: 2. THE ONLY SUBSTANTIVE GROUND RAISED BY THE ASSESSEE WITH REGARD TO COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER ON THE INVESTMEN T IN RESIDENTIAL PROPERTY OUTSIDE INDIA. 3. THE BRIEF FACTS OF THE CASE THE ASSESSEE IS AN NON RESIDENT FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 WITH TOTAL INCOME OF ;2,62,12,453/-. AS PER SCRUTINY NORMS UNDER CAS S, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED BY ITO, INTERNATIONAL TAXATION I(1), CHENNAI ON 03.08. 2012. SUBSEQUENTLY, AFTER MODIFICATION OF THE JURISDICTIO N ANOTHER NOTICE U/S.143(2) R.W.S.129 OF THE ACT WAS ISSUED ON 07. 02.2013. IN COMPLIANCE TO THE NOTICE, THE LD. AUTHORISED REPRES ENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED THE I NFORMATION. THE ASSESSEE HAS DISCLOSED INCOME FROM CAPITAL GAINS A ND INCOME FROM OTHER SOURCES. ON VERIFICATION OF COMPUTATION OF INCOME, THE LD. ASSESSING OFFICER FOUND THE ASSESSEE HAS SOLD RESID ENTIAL HOUSE SITUATED AT ANNA NAGAR, CHENNAI FOR A CONSIDERATION OF ;4,75,00,000/- AND ASSESSEE HAS CLAIMED INDEXED COST OF ACQUISITIO N OF ;51,83,750/- AND WORKED OUT LONG TERM CAPITAL GAINS AT ;.4,23,16 ,250/- THE ASSESSEE HAS CLAIMED EXEMPTION N U/S.54 OF THE AC T ON PURCHASE OF RESIDENTIAL PROPERTY AT WEST PALM BEACH, FLORIDA, U SA $351305 EQUAL TO ;1,65,11,335/- AND FILED DETAILS AND DOCUMENTS P ERTAINING TO ITA NO.1830/MDS/2015. :- 3 -: PURCHASE AND SALE. THE ASSESSING OFFICER ALLEGED T HOUGH THE ASSESSEE HAS COMPLIED THE PROVISIONS OF SEC. 54 OF THE ACT B UT INVESTMENT IN RESIDENTIAL PROPERTY OUTSIDE INDIA IS NOT VALID. T HE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE PROVISIONS OF SE C.54 OF THE ACT REQUIRES ONLY PURCHASE OR CONSTRUCTION OF A RESIDEN TIAL PROPERTY AND WORDS INDIA OR OUTSIDE INDIA ARE NOT SPECIFI ED AND THERE IS NO BAR ON THE ASSESSEE TO BUY OR CONSTRUCT RESIDENTIAL HOU SE OUTSIDE INDIA. THE LD. ASSESSING OFFICER CONSIDERED THE DETAILED S UBMISSIONS OF THE ASSESSEE AND EXAMINED IN DEPTH THE PROVISIONS APPL ICABLE TO NONRESIDENT AND CAME TO A UNILATERAL CONCLUSION THA T THE WORD RESIDENTIAL HOUSE REFERRED IN SEC.54 OF THE ACT MEA NS A RESIDENTIAL HOUSE WITHIN THE TERRITORY OF INDIA, SINCE THERE IS NO EXPLANATION OF INVESTMENT AT ABROAD. THE INDIAN LEGISLATIVE GOVE RNS THE INDIA TERRITORY AND FUNCTIONS FOR DEVELOPMENT OF THE INDI AN ECONOMY, SOCIAL STRUCTURE PROVIDES SUCH DEDUCTION TO A PERSON ONLY TO HAVE FURTHER DEVELOPMENTS IN INDIA AND NOT OTHER PARTS OF WORLD . CONSIDERING THIS OBSERVATIONS AND PRESUMPTIONS, THE LD. ASSESSING OF FICER HAS DENIED THE CLAIM UNDER PROVISIONS OF SEC.54 OF THE ACT TO THE ASSESSEE AND BROUGHT LONG TERM CAPITAL GAINS TO TAX ;4,23,16,25 0/- AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FI LED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) ITA NO.1830/MDS/2015. :- 4 -: 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE REITERATED HIS SUBMISSIONS MADE BEFO RE THE ASSESSING OFFICER AND RELIED ON THE JUDICIAL DECISIONS AND P ROVISIONS OF SEC.54 OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) OBSERVED THE FINDINGS OF THE ASSESSING OFFICER AT PAGE NO.3 & 4 OF THE ORDER. THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE DECISI ON OF MUMBAI TRIBUNAL OF MRS. PREMA SHAH VS. ITO (2006) 100 ITD 60 (MUM) AND FURTHER ARGUED THAT THE FINANCE ACT, 2014 AMENDED THE PROVISIONS OF SECS.54/54F OF THE ACT. THE CLAIM OF DEDUCTION IS ALLOWED ONLY IF THE PROPERTY IS PURCHASED WITHIN INDIA AND AMENDMENT I S PROSPECTIVE AND EFFECTIVE FROM ASSESSMENT YEAR 2015-16 ONWARDS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) EMPHASIZED ON THE FINDINGS OF THE ASSESSING OFFICER AND LEGISLATURE INTENT AND FI NANCE MINISTER SPEECH ALSO MADE A DETAILED OBSERVATIONS ON THE APP LICABILITY AND DISTINGUISHED THE DECISION OF MUMBAI TRIBUNAL AND CONCURRED WITH THE FINDINGS OF THE ASSESSING OFFICER BY CONFIRMING THE ASSESSING OFFICER ORDER AND DISMISSED THE APPEAL OF THE ASSESSEE. AG GRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE ASSAILED AN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITER ATED HIS SUBMISSIONS MADE BEFORE ASSESSING OFFICER AND COMMI SSIONER OF INCOME TAX (APPEALS) ON LAW AND PROVISIONS AND ALS O SUBSTANTIATED ITA NO.1830/MDS/2015. :- 5 -: HIS ARGUMENTS ON THE GROUND THAT THE ASSESSEE IS AN NON RESIDENT INDIAN CLAIMING EXEMPTION U/S.54 OF THE ACT BY REI NVESTING IN RESIDENTIAL PROPERTY OUTSIDE INDIA AND THE PROVISIO NS ARE NOT RESTRICTING SUCH RE-INVESTMENT AS REFERRED IN SEC.54 OF THE ACT AND ALSO THE AMENDMENT OF RESTRICTION IN SEC.54 AND 54F ARE EFFE CTIVE FROM ASSESSMENT YEAR 2015-16 IN RESPECT OF PURCHASE OF P ROPERTY WITHIN INDIA AND SUBSTANTIATED HIS ARGUMENTS WITH THE DE CISION OF MUMBAI TRIBUNAL IN MRS. PREMA P. SHAH (2006) 282 ITR (AT) 211 MUMBAI AND ALSO DECISION OF BANGALORE TRIBUNAL IN VINAY MISHRA VS. ACIT IN ITA NO.895/BANG/2012 AND MUMBAI TRIBUNAL DECISION IN ITO VS. DR. GIRISH M. SHAH IN ITA NO.3582/MUM/2009 AND FURTHER RELIED ON THE LEGISLATURE INTENT OF ALLOWING EXEMPTION AND PRAYED FOR ALLOWING THE APPEAL. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES ORDERS AND OBJECT ED TO THE SUBMISSIONS OF THE LD. AUTHORISED REPRESENTATIVE. 7. WE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND ALSO JUDICIAL DE CISIONS CITED AND PROVISIONS OF LAW AND LEGISLATURE INTENT IN APPLICA BILITY OF PROVISIONS OF SEC.54 OF THE ACT. THE ASSESSEE IS A NON RESIDENT INDIAN AND FILING INCOME TAX RETURN IN INDIA AND THE ASSESSEE HAS SOL D A RESIDENTIAL ITA NO.1830/MDS/2015. :- 6 -: PROPERTY AND CLAIMED EXEMPTION U/S.54 OF THE ACT AN D REINVESTED THE LONG TERM CAPITAL GAINS IN ANOTHER RESIDENTIAL PROP ERTY. THE ASSESSEE HAS COMPLIED WITH REQUISITE CONDITIONS FOR CLAIMING DEDUCTION U/S.54 WHICH THE ASSESSING OFFICER AND COMMISSIONER OF INC OME TAX (APPEALS) HAS NOT DISPUTED EXCEPT ON THE REINVESTME NT IN RESIDENTIAL HOUSE. IN THE PRESENT CASE, THE ASSESSEE HAS INVE STED IN PURCHASE OF RESIDENTIAL HOUSE IN USA AS HE IS AN NON-RESIDENT. THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO THE PROVISIONS OF SEC.54 OF THE ACT WERE THERE IS NO RESTRICTIVE CLAUSE OR BARRING THE ASSESSEE FROM PURCHASING PROPERTY OUTSIDE INDIA AND ALSO THE AMEN DMENT TO SEC.54 MADE IN FINANCE ACT, 2014 WERE THE PURCHASE OF PROP ERTY SHOULD BE WITHIN INDIA IS APPLICABLE FROM THE ASSESSMENT YEAR 2015-16. WE FIND THE CURRENT ASSESSMENT YEAR IS BEFORE AMENDMENT OF PROVISIONS AND THE FACTS OF THE CASE ARE SUPPORTED BY THE CO-ORDIN ATE BENCH DECISION IN THE CASE OF N. RANGANATHAN VS. ITO IN ITA NO.863/MDS/2014, DATE D 26 TH JULY, 2014 OBSERVED AT PARA NO.7 AS UNDER:- 7. WE HAVE HEARD THE REVENUE AND PERUSED THE CASE FILE. THE CIT(A) HAS DISALLOWED THE ASSESSEES CLAI M OF DEDUCTION U/S. 54 FOR THE REASON THAT HE HAD PURCHA SED HIS NEW HOUSE IN SINGAPORE; PAID HIS CONSIDERATION IN FOREIGN CURRENCY, THE SAID AMOUNT TURNED OUT TO BE MORE THAN SALE CONSIDERATION REALIZED FROM SALE OF CHENNAI HOUSE AND HIS ACCOUNTS STATEMENT DID NOT PROVIDE EXACT INFORMATION ABOUT FLOW OF MONEY. SO F AR AS, THE FIRST REASON IS CONCERNED, WE FIND THAT IN A RECENT DECISION OF VINAY MISHRA VS. ACIT (2012) 20 ITR 129 (BANGALORE) HAS SUMMARIZED ALL CASE LAW; BOTH IN FAVOUR AND AGAINST THE REVENUE IN HOLDING T HAT ITA NO.1830/MDS/2015. :- 7 -: A SEC.54 CLAIM CANNOT BE REJECTED MERELY FOR THE REASON THAT THE NEW HOUSE PURCHASED IS IN A FOREIGN COUNTRY. WE FIND THAT ALL CASE LAWS RELIED UPON BY THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE BEEN TAKEN CARE OF BY THE LEARNED CO-ORDINATE BENCH. ON BEING GRANT OPPORTUNITY, THE REVENUE HAS FAILED TO DRAW ANY DISTINGUISHING FEATURES THEREIN. SO, THE CIT(A) FIRST REASON IS NOT SUSTAINABLE IN THE EYES OF LAW. CONSIDERING THE LEGISLATURE INTENT AND RATIO OF JUD ICIAL DECISION ON CLAIMING DEDUCTION U/SEC. 54 OF THE ACT FOR REINVES TMENT IN PURCHASE OF NEW RESIDENTIAL PROPERTY IN FOREIGN COUNTRY IS ALLOWED. THEREFORE, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTIO N TO THE ASSESSEE FOR REINVESTMENT IN RESIDENTIAL PROPERTY AT USA. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON FRIDAY, THE 4TH DAY OF MARCH , 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) # $% / ACCOUNTANT MEMBER ( & . ' ( ) (G. PAVAN KUMAR) ) $% / JUDICIAL MEMBER *& / CHENNAI + / DATED:04TH MARCH, 2016 KV , ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 4. 1' / CIT 2. $% ! / RESPONDENT 5. /2 3 $'4 / DR 3. 1' () / CIT(A) 6. 3 7 8 & / GF ITA NO.1830/MDS/2015. :- 8 -: