DAVID CLEOPHAS PEREIRA, MUMBAI V. ITO (IT) 4(1), MUMBAI

ITA 3526/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2583 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Assessee Lawyers: VISHWAS V MEHENDALE
• Keywords: Capital asset; Retrospective amendment; Additional evidence
• Section: 54F; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH , MUMBAI BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA , ACCOUNTANT MEMBER . ITA. NO. 3526 / M UM /20 1 3 (ASSESSMENT YEAR: 2 00 8 - 0 9 ) DAVID CLEOPHAS PEREIRA 123 - A, BAZAR ROAD, BANDRA WEST, MUMBAI - 400050 APPELLANT VS. INCOME TAX OFFICER (INTERNATIONAL TAXATION) - 4(1) , SCINIDA HOUSE, BALLARD ESTATE , MUMBAI RESPONDENT PAN: ADRPP5495Q / BY APPELLANT : SHRI VISHWAS V. MEHENDALE , A.R. / BY RESPONDENT : SHRI CHANDRA VIJAY , D.R. / DATE OF HEARING : 2 4 . 0 9 .2015 / DATE OF PRONOUNCEMENT : 30 . 1 0 .201 5 ORDER PER SHAIL ENDRA KUMAR YADAV, J . M: ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 2 THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (APPEALS) - 1 1 , MUMBAI , DATED 2 8 . 0 2 . 20 1 3 FOR A.Y. 200 8 - 0 9 ON FOLLOWING GROUND S : 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, HON. CIT - A - 11, MUMBAI ERRED IN DISALLOWING APPELLANTS CLAIM FOR EXEMPTION U/S 54 OF THE ACT IN RESPECT OF THE RE - INVESTMENT OF THE PROCEEDS ON THE SALE OF ANCESTRAL HOUSE PROPERTY SITUATED IN INDIA IN RESIDENTIAL HOUSE SITUATED IN NEW ZEALAND . 2. ON THE FAC TS AND CIRCUMSTANCES OF THE CASE AND IN LAW, HON. CIT - A - 11, MUMBAI ERRED IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 2. ASSESSEE IS NRI STAYING IN NEW ZEALAND . DURING A .Y. 2007 - 08 RELEVANT TO PREVIOUS YEAR 2008 - 09, HE HAS SHOWN INCOME UN DER THE HEAD INCOME FROM SALARIES AMOUNTING TO RS.44,076/ - , INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AMOUNTING TO RS.39,377/ - AND INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AMOUNTING TO RS.17,132/ - AND LONG TERM CAPITAL GAIN ON SALE OF P ROPERTY WAS SHOWN AS NIL AFTER CLAIMING EXEMPTION U/S.54 OF THE ACT AMOUNTING TO RS.54,64,498/ - FOR PURCHASE OF NEW RESIDENTIAL HOUSE. DURING YEAR UNDER CONSIDERATION, ASSESSEE HAS SOLD A RESIDENTIAL PROPERTY SITUATED AT FLAT NO. D /4, 3RD FLOOR, MARIAN HO USE, PLOT NO. 159, 29TH ROAD, T.P.S. III , BANDRA (W), MUMBAI - 400050 TO MR. MELROY SAVIO PEREIRA AND MRS. CAROLYN ANN PAREIRA FOR A TOTAL CONSIDERATION OF RS. 70,00,000/ - , ON WHICH LONG TERM CAPITAL GAIN AMOUNTING TO RS . 47,79,852 / - HA D BEEN DERIVED AND CLA IMED EXEMPTION U/S. 54 OF THE ACT AMOUNTING TO ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 3 RS . 54,64,498/ - FOR INVESTMENT MADE FOR PURCHASE OF RESIDENTIAL HOUSE N O . 26, MACMURDO AVE, HAMILTON, NEW ZEALAND . ASSESSEE WAS ASKED BY CONCERNED ASSESSING OFFICER TO SHOW AS TO WHY ASSESSEE'S CLAIM OF EXEMPTIO N U / S. 54 OF THE ACT AMOUNTING TO RS . 54,64,498/ - BEING INVESTMENT MADE FOR PURCHASE OF RESIDENTIAL HOUSE IN NEW ZEALAND SHOULD NOT BE DISALLOWED. THE STAND OF LEARNED AUTHORIZED REPRESENTATIVE OF ASSESSEE HAS BEEN THAT ASSESSEE HAS COMPLIED WITH PROVISION S SECTION 54 SINCE HE HAS INVESTED IN RESIDENTIAL HOUSE IN TERMS OF PROVISIONS OF SECTION 54. ASSESSING OFFICER OBSERVED THAT IN VIEW OF FACTS THAT ASSESSEES INCOME FROM ABROAD WAS NOT TAXABLE IN INDIA, THE INVESTMENT MADE BY ASSESSEE FOR PURCHASE OF HOU SE ABROAD WAS NOT EXEMPTED U/S.54 OF THE ACT, HENCE ASSESSEES CLAIM OF EXEMPTION U/S.54 OF THE ACT AMOUNTING TO RS.54,64,498/ - WAS DISALLOWED BY ASSESSING OFFICER. 3. IN APPELLATE PROCEEDINGS, IT WAS OBSERVED THAT ASSESSEE CLAIMED TO HAVE PURCHASE PROP ERTY AT 26, MAC M URDO , AVE NUE, HAMILTON AS DISCUSSED ABOVE. THE SAID AGREEMENT FOR PURCHASE OF SAID PROPERTY FOR A CONSIDERATION OF $ 340,000. HOWEVER, SUBSEQUENTLY, THE SAID AGREEMENT WAS CANCELLED . ACCORDINGLY, SAME WAS NOT PURCHASED. SUBSEQUENTLY, LEARN ED AUTHORIZED REPRESENTATIVE FILED ANOTHER DOCUMENT FOR PURCHASE OF A PROPERTY AT 85, ROSTREVOR STREET, HAMILTON BY AUCTION ON 30 . 4 . 2009. HOWEVER, CIT(A) FOUND THAT THIS DOC UMENT WA S ONLY A DESCRIPTION OF THE PROPERTY AND NOTICE OF AUCTION. IT WA S NOT A PU RCHASE AGREEMENT OR TRANSFER DOCUMENT OF THE PROPERTY IN ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 4 ANY MANNER. ASSESSEE HAD FILED A 'SEARCH COPY' APPARENTLY ISSUED BY REGISTRAR GENERAL OF LAND BUT UNSIGNED AND DATED 26.02.1993 REGARDING A PROPERTY LOCAT E D IN SOUTH AUCKLAND WHICH IS MORTGAGED TO A NZ N ATIONAL BANK AND ASSESSEE I S STATED TO BE THE PROPRIETOR. ACCORDING TO CIT(A), IT DID NOT CONSTITUTE ANY TRANSFER AGREEMENT . ASSESSEE FILED SETTLEMENT STATEMENT APPARENTLY ISSUED BY SOLICITORS M / S O'SHEAS OF HAMILTON REGARDING PURCHASE OF A PROPERTY AT 100, HOUCHENS ROAD, HAMILTON. THEREFORE, CIT(A) OBSERVED THAT THIS STATEMENT WA S NEITHER IN CONNECTION WITH PROPERTY FOR WHICH AUCTION WAS CONDUCTED AS PER THE SAID NOTICE NOR FOR PROPERTY AS PER THE 'SEARCH COPY'. NONE OF THESE DOCUMENT S CONSTITUTE SUF FICIENT EVIDENCE TO HOLD THAT ASSESSEE HAS PURCHASED ANY RESIDENTIAL HOUSE FROM SALE PROCEED OF HOUSE SOLD AND THAT IT DOES NOT HAVE ANY OTHER RESIDENTIAL HOUSE WHEN THE HOUSE IN INDIA WAS SOLD. THE STAND OF ASSESSEE VIDE ITS LETTER DATED 10.10.2011 HAS BE EN THAT THE PROPERTY ORIGINALLY AGREED TO BE PURCHASE HAS NOT BEEN PURCHASED BUT SECOND PROPERTY WAS PURCHASED. HENCE DEDUCTION U/S 54 IS ADMISSIBLE. ACCORDING TO CIT(A), ASSESSEE COULD NOT EXPLAIN AS TO WHY AND UNDER WHAT CIRCUMSTANCES, THE RESIDENTIAL HOUSE AT 26, MACMURDO AVENUE, HAMILTON, NEW ZEALAND WAS STATED TO HAVE BEEN PURCHASED AND DEDUCTION U/S 54 WAS CLAIMED THOUGH IT WAS NEVER PURCHASED. FRESH DOCUMENT FILED DURING APPELLATE PROCEEDINGS ON BEHALF OF ASSESSEE, WAS FORWARDED TO ASSESSING OFFI CER FOR VERIFICATION ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 5 AND ENQUIRY BY WAY OF REMAND. REMAND REPORT HAS BEEN RECEIVED VIDE LETTER DATED 28.12.2012 WHICH READS AS UNDER: KINDLY REFER TO THE ABOVE. 2. THE REPORT CALLED FOR IS AS UNDER : THE ASSESSEE VIDE SUBMISSION DATED 25.10.2011 HA S FILED CERTAIN ADDITIONAL EVIDENCES UNDER RULE 46A OF THE I. T. RULE 1962. THE ASSESSEE HAS CLAIMED THAT THE ABOVE DOCUMENTS WERE NOT REQUIRED FOR SUBMISSION DURING SCRUTINY PROCEEDING AND BECAUSE THE SAME HAVE BEEN REQUIREMENT DURING THE APPELLATE PROCEE DINGS (PARA 7 OF THE AR'S SUBMISSION ). TH E ASSESSEE VIDE LETTER DATED 25 - 10 - 2011 SUBMITTED BEFORE YOUR HONOUR, VIDE PARA 2 & 3, BROUGHT A NEW FACT THAT THE SELLER WAS NOT ABLE TO FINALIZE THE SALE AS HE WAS NOT ABLE TO FIND A SUITABLE ALTERNATE NEW PROPER TY FOR HIMSELF AND THEREFORE, AS PER THE ADVICE OF THE SOLICITORS, THE APPELLANT CANCELLED THE PREVIOUS PURCHASE AGREEMENT AGAINST THE REFUND OF THE DOWN PAYMENT OF NZ$ 1,75,000 / - . THE SELLER REFUNDED THE SAID AMOUNT ON 9TH JANUARY, 2009. AND FINALLY, ON 3 0TH APRIL, 2009, THE APPELLANT GOT AN OPPORTUNITY TO BUY ANOTHER HOUSE THROUGH, 'AUCTION SALE BY MONARCH REAL ESTATE, WHEREIN APPELLANT MADE AN AGREEMENT TO PURCHASE THE SAID NEW HOUSE AT 100 HOUCHENS ROAD, HAMILTON FOR NZ$ 7,47,500 / - . 3. IN THIS REGARD IT IS SUBMITTED THAT THE ABOVE DOCUMENTS SHOULD NOT BE ADMITTED AS SAME WERE NOT PRODUCED BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE HAS FAILED TO EXPLAIN HOW THE SAME, WILL FALL UNDER THE CIRCUMSTANCES MENTIONED IN RULE 46A (1). THUS THE ABOVE DETAILS / DOCUMENTS DESERVE REJECTION. IT IS RELEVANT TO MOTION THAT THE ISSUE OF DEDUCTION U/S. 54C WAS RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED SUBM ISSION VIDE LETTER DATED 19TH OCTOBER, 2010, RELEVANT PORTION OF THE SAME IS REPRODUCED AS 'UNDER: ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 6 ' 5 . 0 SALE OF IMMOVABLE PROPERTY: 5. 1 DURING THE YEAR THE ASSESS E HAS SOLD HIS RESIDENTIAL FLAT NO . D/ 4 , 3 RD FLOOR, MARIAN HOUSE, 29 TH ROAD, PLOT NO. 159 , TPS I II , BANDRA WEST, MUMBAI - 4000 50 FOR A CONSIDERATION OF RS. 70 LACS. A COPY OF AGREEMENT FOR SALE DATED 1 8 TH FEBRUARY, 2008 REGISTERED ON THE SAME DATE V IDE DOCUMENT NO. 1466 OF 2008 IS ENCLOSED (ANN. 3). THE SAID FLAT WAS PURCHAS ED BY HIM VIDE AGREE MENT DATED 7 TH AUGUST, 2001. A C O PY OF THE SAID AGREEMENT IS ENCLOSED (ANN .4 ) 5.2 A STATEMENT SHOWING T H E LO N G TERM CAPITAL GAINS ON SALE OF THE SAID F LA T AT MAR IAN HOUSE IS ENCLOSED (ANN. 5). 5.3 A COPY OF THE ORDER U/ S. 197 IS ENCL O S ED (ANN. 6). 5. 4 THE ASSESSEE HAS CLAIMED A DEDUCTION U/S.54 IN RESPECT OF THE I NVESTMENT IN RESIDENTIAL HOUSE NO.26, MACMURDO AVE, HAMILTON NEW ZEALAND. THE PAYMENT FOR THE SAID HOUSE IS MADE AS UNDER: DATE AMOUNT IN NZ$ CONVERSION RATE AMOUNT IN RS. 25 TH JULY, 2008 175000 31.2257 54,64,498/ - 5.5. THE ASSESSEE HAS COMPLIED WITH THE SEC. 54 SINCE HE HAS INVESTED IN THE RESIDENTIAL HOUSE IN TERMS OF THE SAID SECTION. A COPY OF THE DOCUMENT DATED 25 TH JULY, 2008 FOR PURCHASE OF THE HOUSE AT NEW ZEALAN D IS ENCLOSED ( ANN. 7)' IT IS TO BE NOTED THAT THIS LETTER WAS FILED ON 19.10.2010 AND THE FACT OF CANCELLATION OF FIRST AGREEMENT AND PURCHASE OF NEW HOUSE WAS NOT DISCLOSED BEFORE THE A.O. THOUGH THE NEW HOUSE WAS ALREADY BEEN PURCHASED ON 30.04.2009. THUS THE ASSESSEE HAS DELIBERATELY CONCEALED THIS FACT DURING THE COURSE OF ASSESSMENT PROCEEDING AND THUS THE SAME SHOULD NOT BE ALLOW TO FILE AT THE APPELLATE STAGE . 4. ON MERITS ALSO THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 54C FOR A PROPERTY P URCHASED OUTSIDE INDIA. THE RELIANCE IS PLACED ON THE DECISION OF THE ITAT AHMEDABAD BENCH D IN THE CASE OF LEENA J SHAH VS ASSISTANT COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), BARODA ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 7 REPORTED IN [2006] 6 SOT 721 (AHD), WHERE IT WAS HELD THAT THE EXEMPTION I S NOT AVAILABLE FOR PURCHASE OF PROPERTY LOCATED ABROAD. THE HON'BLE ITAT FURTHER STATED THAT A RESIDENTIAL HOUSE PURCHASED/ CONSTRUCTED MUST BE IN INDIA AND NOT OUTSIDE INDIA, IN USA. THIS INTERPRETATION IS STRONGLY SUPPORTED BY THE MARGINAL NOTE TO SECTI ON 54F. SECTION 54F INSERTED BY THE FINANCE ACT, 1982, WITH EFFECT FROM 1 - 4 - 2003. IT HAS BEEN EXPLAINED IN CIRCULAR NO. 346, DATED 30 - 6 - 1982 - EXPLANATORY NOTES ON THE PROVISIONS OF FINANCE ACT, 1982 IN PARA 20.2 WITH A VIEW TO ENCOURAGING HOUSE CONSTR UCTION, THE FINANCE ACT, 1982, HAS INSERTED A NEW SECTION 54F. (138 ITR (ST.) 10). 5. FURTHER, THE ASSESS EE VI DE LETTER DATED 25 - 10 - 2011 SUBMITTED BEFORE YOUR HONOUR, VIDE PARA 2 & 3, BROUGHT A N EW FACT THAT THE SEL LER WAS NOT ABLE TO FINALIZE THE SALE A S HE WAS NOT ABLE TO FIND A SUITABLE ALTERNATE NEW PROPERTY FOR HIMSELF AND THEREFORE, AS PER THE ADVICE OF THE SOLICITORS, THE APPELLANT CANCELLED THE PREVIOUS PURCHASE AGREEMENT AGAINST THE REF U ND OF THE DOWN PAYMENT OF NZ$ 1,75,000 / - . THE SELLER REFUNDE D THE SAID AMOUNT ON 9 TH J ANUARY, 2009. AND FINALLY, ON 30 TH APRIL, 2009, THE APPELLANT GOT AN OPPORTUNITY TO BUY ANOTHER HOUSE THROUGH, 'AUCTION SALE BY MONARCH REAL ESTATE, WHEREIN APPELLANT MADE AN AGREEMENT TO PURCHASE THE SAID NEW HOUSE AT 100 HOUCHE NS ROAD, HAMILTON FOR NZ $ 7,47,500 / - . IT MEANS THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 54(2) OF THE 1. T. ACT BY CANCELLING THE AGREEMENT, WHIC H READS AS UNDER: 'THE AMOUNT OF CAPITAL GAIN WHICH IS NOT APPROPRIATED BY THE ASSE S SEE, TOWARDS THE PURCHASE O F THE NEW ASSET MADE WIT H IN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NO T UTILIZED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE D A TE OF FURNISHING OF RETURN OF INCOME UNDER SECTI O N 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING S U CH RETURN [ SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLIC A BLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 1 39 ] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILIZED IN ACCORDANCE WITH, ANY SCHEME WHICH THE ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 8 CENTRAL GO V ERNMEN T MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, FRAME IN THIS BEH A LF AND SUCH RETU RN S HALL BE ACCOMPANIED BY PR OOF OF SUCH DEPOSIT AND FOR THE PURPOSES OF SUB - SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILIZED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE N EW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET: PROVI DED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB - SE CTION IS NOT UTILIZED WHOLLY PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (1), THEN, - (I) THE AMO U NT NOT SO UTILIZED SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND (II) THE ASSESSEE S HA LL BE ENTITLED TO WITHDRAW SUCH AMO UNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 6. IN VIEW OF T HE ABOVE FACTS, THE FOLLOWING POINTS EMERGES: A) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CONCEALED THE INFORMATION THAT THE FIRST AGREEMENT ENTERED INTO BY THE ASSESSEE HAS BEEN CANCELLED AND ANOTHER AGREEMENT HAS BEEN ENTERED IN TO B Y HIM FOR PURCHASE OF HOUSE AT 100 HOUCHENS ROAD, HAMIL T ON FOR NZ$ 7,47,500 / - THROUGH 'ACTION SALE BY MONAR CH REAL ESTATE' , MERELY FOR AVAILING THE EXEMPTION U / S. 54. B) I AM OF THE VI EW THAT BY ENTERING INTO ANO T HER AGREEMENT, THE ASSESSEE HAS VIOLATED TH E PROVISIONS OF SECTION 45 AND HENCE THE ASSESSEE IS NOT ENTITLED F OR EXEMPTION U/S.54 OF THE I. T. C) AS PER THE PROVISIONS OF SECTION 54, IF THE AMOUNT DEPOSITED UNDER THIS SUB - SECTION IS NOT UTILIZED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (1), T HEN , - (I) THE AMOUNT NOT SO UTILIZED SHALL BE CHARGED UNDER SECTION 45 AS THE I NCO ME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES. IN THE INSTANCE CASE, THE ASSESSEE HA S SOLD THE HOUSE WITHIN THE PERIOD OF 3 YEARS AND HENCE IS ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 9 NOT ELIGIBLE FOR EX EMPTION U/ S. 54. 7. IN VIEW OF THE ABOVE ARID CONSIDERING THE FACTS, THE ASSESSEE IS NOT ENTITLED TO AVAIL EXEMPTION UFS.54 OF TH E LT. ACT. SUBSEQUENTLY, LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS FILED A WRITTEN SUBMISSION VIDE LETTER DT. 05.02. 2013 WHICH READS AS UNDER: 'THE ABO V E APPEAL HAD BEEN FIXED FOR TODAY'S HEARING. IN THIS CONNECTION, WE HA V E BEEN C OPY OF THE REMAND REPORT DATED 20 - 12 - 2012 OF THE LD. ITO (IT) - 4(1), MUMBAI (THE A O' ). WE HA V E PERUSED THE SAME AND ALSO DISCUSSED THE SAME WITH THE APPELLANT AND AS ADVISED BY OUR ABOVE CLIENT WE HAVE TO MAKE FURTHER SUBMISSIONS AS UNDER; 1. THE BASIC FACTS OF THIS CASE ARE ALREADY SUBMITTED BEFORE YOUR HONOUR VIDE OU R LETTER D A TED 10 - 10 - 2011 AND 25 - 10 - 2011. DURING THE SAID PROCEEDINGS, WE HAD FURNISHED THE FRESH EVIDENCE AND REQUESTED YOUR HONOUR TO INVITE THE REMAND REPORT OF THE LD. AO AS THE SAID DOCUMENTS W ERE NOT FURNISHED AND HENCE NOT AVAILABLE BEFORE THE LD. AO DURING THE SCRUTINY ASSESSMENT. 2. IT WAS SUBMITTED THAT, DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, APPELLANT WAS NEVER ASKED TO FURNISH ANY DETAILS OF THE N EW HOUSE PURCHASED IN NEW ZEALAND. TH E SAID ISSUE WAS DISCUSSED F OR THE FIRST TIME DURING THE APPELLATE PROCEEDINGS AND THERE FORE, APPELLANT WANTED TO CLARIFY THE FACT REGARDING THE PURCHASE O F THE SECOND NEW HOUSE AGAINST CANCELLATION OF THE FIRST NEW HOUSE. APPELLANT ALSO F URN ISHED THE RELE VANT DOCUMENTARY EVIDENCE TO SUPPORT THAT THE S AID DECISION TO CANCEL THE FIRST NE W HOUSE WAS NOT AS PER H IS WISH. IT WAS EXPLAI NED WITH PROOF THAT THE SAID DECISION WAS REQUIRED TO BE TAKEN BE CAUSE, IT WAS THE SELLER'S FAILURE TO DELIVER THE VACANT POSSES SION OF THE SAID HOUSE. ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 10 THEREFORE, AFTER DUE CONSULTATION WITH HIS SOLICITORS, THE APPELLAN T CANCELLED HIS AGREEMENT TO PURCHASE T H E FIRST NEW HOUSE AND DECIDED TO PURCHASE THE SECOND NEW HOUSE IN AUCTIO N . ALL THE FACTS AND EXPLANATIONS REGARDING THE N EW D OCUMENTS ARE ALREADY STATED IN THE SAID PREVIOUS LETTERS, THE S AME ARE NOT REPEATED HERE. 3. IN THE REMAND REPORT THE L D. AO HAS SAID EVERYTHING ABOUT WH Y THE ADDITIONAL EVIDENCE SHOULD NOT BE ADMITTED. HE HAS NOT STATED ANYTHI N G ABOUT VERIFYING THE F AC TS ABOUT THE PURCHASE OF THE SECOND NEW HOUSE AGAINST CANCELLATION OF THE FIRST NEW HOUSE. HIS CONTENTIONS CAN BE SUMMARIZED AS UNDER; A. APPELLANT'S SUBMISSION DA TED 19 - 10 - 2010 DOES NOT MENTION ANYTHING ABOUT THE PURCHASE OF SECOND NEW HOUSE EVEN THOUGH IT WAS WITHIN THE KNOWLEDGE OF THE APPELLANT THAT HE HAD CANCELLED THIS PURCHASE OF THE FIRST NEW HOUSE AND PURCHASED SECOND NEW HOUSE ON THE DATE OF MAKING THE SUBMISSION, HENCE, THIS FACT WAS DELIBERATELY NOT DISCLOSED TO THE L D. AO. IN THIS RESPECT, APPEL LANT HAS TO SUBMIT THAT, DURING THE SCRUTINY ASSESSMENT PROCEEDINGS , APPELLANT WAS NEVER ASKED TO FURNISH ANY DETAILS OF THE NET HOUSE PURCHASED IN NEW ZEALAND. IN FACT, AS PER THE ASSESSMENT ORDER, ALL THE DISCUSSION WAS CENTERED ON RESOLVING THE QUESTIO N WHETHER APPELLANT SHOULD BE ELIGIBLE TO THE EXEMPTION U/S. 54 OF THE ACT IN RESPECT OF TILE NET HOUSE BECAUSE IT WAS PURCHASED IN NEW ZEALAND. PARA 3 OF THE ASSESSMENT ORDER MENTIONS THAT, 'THE ASSESSEES REPRESENTATIVE VIDE ORDER SHEET NOTINGS DATED 19 - 10 - 2010 WAS ASKED TO SHOW CAUSE AS TO WHY THE ASSESSEE'S CLAIM OF EXEMPTION U/S.54 OF THE ACT AMOUNTING TO RS. 54,64,498/ - BEING INVESTMENT MADE FOR PURCHASE OF RESIDENTIAL HOUSE IN NEW ZEALAND SHOULD NOT BE ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 11 DISALLOWED . IN VIEW OF THE FACT THAT THE ASSES SEE'S INCOME FROM ABROAD IS NOT TAXABLE IN INDIA, THE INVESTMENT MADE BY THE ASSESSEE FOR PURCHASE OF HOUSE ABROAD IS NOT EXEMPT U/S 54 OF THE I.T. ACT, THE ASSESSEE'S CLAIM EXEMPTION U/S. 54 OF THE I.T. ACT, THE ASSESSEE'S CLAIM OF EXEMPTION U/S. 54 OF THE I.T. ACT, THE ASSESSEE'S CLAIM OF EXEMPTION U/S.54 OF THE I.T. ACT, 1961 AMOUNTING TO RS.54,64,498/ - IS DISALLOWED'. THIS CLEARLY SHOWS THAT, APPELLANT WAS NOT REQUIRED TO GIVE ANY DETAILS OF THE NEW HOUSE. B. LD. AO HAS OBJECTED TO APPELLANT'S CLAIM U/ S 54 BY RE LY ING ON THE DECISION OF HON. AHD. ITAT IN CASE OF LEENA J. SHAH - 6 SOT 721. LD. AO HAS ALSO REFERRED TO THE MARGI NAL NOTE TO S.54F AND CONTENTS OF CIRCULAR 346 DATED 30 - 061982 WHEREIN IT IS STATED TH A T THE SAID EXEMPTION WAS INTRODUCED ' W ITH A VIEW TO ENCOURAGING HOUSE CONSTRUCTION'. IN THIS RESPECT, WE HAVE ALREADY FURNISHED A COPY OF HON. MUMBAI ITAT IN CASE OF MRS. PREMA P. SHAH 100 ITD 60, WHEREIN HON. ITAT HAS DECIDED VARIOUS ISSUES FROM PURCHASE OF LEASEHOLD PROPERTY IN FOREIGN COUNT RY TO USE OF BORROWED FUNDS FOR THE PURCHASE OF NEW HOUSE. THE SAID DECISION IS FROM HON. MUMBAI ITAT, WHICH IS BINDING ON ALL THE LOWER APPELLATE AUTHORITIES IN MUMBAI AND MAHARASHTRA. HENCE, THE SAID DECISION HAS TO BE FOLLOWED IN APPELLANTS CASE. SEC ONDLY, WIT H DUE RESPECT, IT IS SUBMITTED THAT, IN APPELLANT'S CASE, THE EXEMPTION IS C LAIMED U/ S 54 AND NOT U/ S 54F. IT NEED NOT BE EXPLAINED THAT THE EXEMPTION U / S 54F IS IN RESPECT OF THE PURCHASE OF A NEW HOUSE AGAINST THE SALE PROCEEDS OF ANY ASSET OTH ER THAN A R E SIDENTIAL ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 12 HOUSE. THEREFORE, IT IS OBVIOUS THAT, THERE WILL BE SUCH A PRE - REQUISITE. IN THE SAID CITED DECISION OF AHD . IT AT, THE APPELLANT HAD SOL D PLOT OF LAND AND PURCHASED NE W HOUSE IN USA. IN THIS CONNECTION , IT MAY BE WORTHWHILE TO NOTE T HE LANGUAGE OF T H E SAID CIRCULAR, 'PARA 20.2 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 FROM THE TRANSFER OF ANY LONG TERM CAPITAL ASSET, OTHER THAN A RE SIDENTIAL HOUSE , AND THE ASSESSEE PURCHASES WITHIN ONE YEAR BEFORE OR AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE OR CONSTRUCTS WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER, A RESIDENTIAL HOUSE, THE CAPITAL GAIN ARISING FROM THE TRANSFER W ILL BE TREATED IN A CONCESSIONAL MANNER AS UNDER:' IN APPELLANT'S CASE, THERE IS NO DISPUTE THAT HE H A D SOLD HIS HOUSE IN INDIA. THEREFORE, THE NEW PURCHASE WAS AGAI N ST THE SALE OF OLD HOUSE. HENCE, HE IS ELIGIBLE FOR AN EXEMPTION U / S 54 AND NOT U/ S 54F. IN THE SAID CIRCUMSTANCES , THE SAID MARGINAL NOTE AND THE CIRCULAR CANNOT BE MADE APPLICABLE TO APPELLANT'S CASE . C. LD. A O HAS ALSO MENTIONED THAT, AS THE APPELLANT HAD CANCELLED HIS PREVIOUS DEAL FOR PURCHASE OF NEW HOUSE AND PURCHASED ANOT HER NEW HOUSE, HE HAS NOT COMPLIED WITH THE PRO V ISIONS OF S .54(2) OF THE ACT. IN HIS SUPPORT, THE LD. ASSESSING OFFICER HAS REFERRED TO THE LANGUAGE O F THE SAID SECTION. IN THIS RESPECT WE HAVE TO SUBMIT THAT, APPELLANT'S DECISION TO CANCEL THE OLD AGREEMENT AND PURC HASE OF SECOND NEW HOUSE PROVES HIS INTENTION ABOUT PURCHASING NEW HOUSE. HE HAD CANCELLED THE OLD AGREEMENT ONLY BECAUSE THE SELLER WAS NOT DELIVERING THE SAID FIRST NEW HOUSE. THE SAID DECISION WAS TAKEN AFTER CONSULTING THE SOLICITORS. IN NEW ZEALAND, A LL THE ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 13 TRANSACTIONS OF PURCHASE AND SALE ARE MADE THROUGH THE SOLI CI TORS AND THE AMOUNTS ARE DEPOSITED IN T H E 'IN TRUS T ACCOUNT'. SAME IS CONFIRMED BY SOLICITORS. THE DATE OF ORIGIN AL SALE WAS ON 18 . 02 . 2008. APPELLANT'S AGREEMENT F OR PURCHASE O F FIRST NEW HOU SE WAS O N 25 - 07 - 2008. T H E SAME WAS CANCELLED ON 09 - 01 - 2009. T HE SECOND NEW HOUSE WAS PURCHASED ON 30 - 04 - 2009. THUS, THE PURCHASE OF THE NEW HOUSE IS WI THIN TWO YEARS. THE PURCHASE WAS COMPLETE ON 29 - 05 - 2009 WHEN APPELL A NT PAID THE BALANCE MONEY. IN THE CIRCUMSTANCES, APPE LL ANT HAS FULFILLED ALL THE CONDITIONS U/S 54(2) OF THE ACT. IN THIS CONNECTION, APPELLANT PLACES RELIANCE ON THE DECISION OF HON. MUMBAI ITAT IN CASE OF MUKESH G. DESAI HUF 2008 24 SOT 312, WHEREIN, IT WAS HELD AS UNDER; 'THE SEQU ENCE OF EVENTS IN THE INSTANT CASE REVEALED THAT THE ASSESSEE'S INTENTION TO INVEST THE CAPITAL GAINS IN THE RESIDENTIAL HOUSE TO AVAIL OF THE EXEMPTION UNDER SECTION 54 WAS BEYOND ANY DOUBT. THE ASSESSING OFFICER HAD NOT BROUGHT ANYTHING ON RECORD TO DERI VE ANY MALA FIDE INTENTION IN THE ASSESSEE'S DECISION TO PAY THE CAPITAL GAINS TO 'D' AS PER THE AGREEMENT AND IN RECEIVING THE REFUND OF THE SAME OWING TO THE POSSIBLE THREAT TO THE PROPOSED ROW HOUSE. THE ASSESSING OFFICER HAD NOT ESTABLISHED THAT THE AG REEMENT DATED 26 - 8 - 1996 AND THE AGREEMENT FOR CANCELLATION WERE BOGUS. THEREFORE, THE CANCELLATION OF THE AGREEMENT BY THE ASSESSEE WOULD FALL WITHIN THE AMBIT OF THE DOCTRINE OF CAVEAT EMPTOR ( I.E., BUYERS BEWARE) AND SURRENDER OF ROW HOUSE WAS LEGALLY JU STIFIED. THE ASSESSEE WAS NOT EXPECTED TO PROCEED TO BUY A DEFECTIVE RESIDENTIAL HOUSE (NEW ASSET), WHICH WA S PRONE TO DEMOLITION BY THE MUNICIPAL A6THORITIES IN ORDER TO QUALITY FOR EXEMPTION UNDER SECTION 54F. THEREFORE, THE DECISION OF THE LOWER AUTHO RITIES IN TREATING THE ROW HOUSE AS THE NEW ASSET WAS MISPLACED. [ PARA 12] ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 14 SUB - SECTION (3) OF SECTION 54F STIPULATES THAT THE 'NEW ASSET' PURCHASED OR CONSTRUCTED MUST NOT BE TRANSFERRED WITHIN THE LOCK IN PERIOD OF 3 YEARS FROM THE DATE OF SUCH PURCHASE OR CONSTRUCTION OF 'NEW ASSET'. THE ASSESSING OFFICER DENIED THE CLAIM OF EXEMPTION UNDER SECTION 54F FOR THE REASON OF VIOLATION OF SAID CONDITION, CONSIDERING THE ROW HOUSE AS THE 'NEW ASSET'. THE ASSESSEE DID NOT ACTUALLY PURCHASE THE 'NEW ASSET' AND, THEREFORE, THE REFUND RECEIVED BY THE ASSESSEE FROM 'D' IN RESPECT OF THE SURRENDER OF THE ROW HOUSE WAS NOT RELATABLE TO ANY TRANSFER OF THE NEW ASSET. RESULTANTLY, THE VIOLATION OF SAID CONDITION IN SUB - SECTION (3) OF SECTION 54F DID NOT ARISE. (PARA 13 ] SUB - SECTION (4) OF SECTION 54F PROVIDES FOR DEPOSITING THE UN UTILIZED CAPITAL GAINS IN THE BANK AS PER THE PRESCRIBED CAPITAL GAIN SCHEME AND MANNER OF TAXING SUCH GAINS IF NOT UTILIZED BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SEC TION 139. IN THE INSTANT CASE, THE CAPITAL GAIN WAS GIVEN TO THE SELLER OF THE 'ROW HOUSE'. THEREFORE, THE SAME WAS NOT IN THE POSSESSION OF THE ASSESSEE FROM AUGUST, 1996 TO JUNE, 1997. THERE WAS NO MALA FIDE INTENTION MADE O UT BY THE ASSESSING OFFICER OF THE SAID TRANSACTION OF GIVING THE CAPITAL GAIN TO THE SELLER OF THE 'ROW HOUSE'. THE ASSESSEE HAD SUCCESSFULLY INVESTED IN CONSTRUCTION OF 'NEW ASSET' BEFORE MARCH 1998. SINCE THE ASSESSEE HAD ALREADY PARTED WITH THE CAPITAL GAIN BEFORE THE DUE DATE FOR FILING THE RETURN IN CONNECTION WITH THE 'ROW HOUSE' ACQUISITION, THERE WAS NO WAY IN WHICH THE ASSESSEE WOULD HAVE COMPLIED WITH THE CONDITION OF DEPOSITING IT IN THE BANK AS PER SUB - SECTION (4) OF SECTION 54F. THEREFORE, THERE WAS NO VIOLATION OF THE CO NDITION OF SUB - SECTION (4) OF SECTION 54F BY THE ASSESSEE. [PARA 14] THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 15 THE COMPANY 'S' WHICH WAS ENGAGED IN THE CONSTRUCTION OF BUILDING CALLED 'ABHIJIT'. THE ASSESSEE PAID RS. 30. 50 L AKHS ON 28 - 3 - 1998 AND PU RCHASED THE 'BLOCK OF SHARES' OF THE COMPANY 'S' AND GOT THEM TRANSFERRED TO HIS NAME UNDER RESPECTIVE AGREEMENTS TO SELL SHARES FROM THE RESPECTI VE SHA REHOLDERS OF ' S ' AND BECAME ENTITLED TO AN ALLOTMENT OF A FLAT OF THE PROPOSED UNDER CONSTRUCTION BUILDI NG. THE SAID BUILDING WAS CONSTRUCTED AND THE ASSESSEE GOT OCCUPANCY CERTIFICATE FROM THE MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) ON 4 - 1 2 - 1998. THE ASSESSEE GAVE POSSESSION LETTER DATED 5 - 12 - 1998 TO THE BUILDER. ON EXAMINATION OF THE ABOVE FACTS IGNORING THE EVENTS INVOLVING THE SURRENDERED ROW HOUSE, THE ASSESSEE'S INVESTMENT OF CAPITAL GAIN ON 28 - 3 - 1998 IN THE PURCHASE OF BLOCK OF SHARES OF COMPANY 'S', WHICH, IN TURN, GOT HIM ENTITLED TO A FLAT IN THE ABHIJIT BUILDING, WAS WITHIN THE PERIOD OF THREE YEARS. AFTER ALL THE PURCHASE OF BLOCK OF SHARES OF COMPANY 'S' AND PROCURING THE ENTITLEMENT TO A FLAT WERE THE COMPOSITE TRANSACTIONS WHICH WERE INTERLINKED. THEREFORE, THE INVESTMENT IN BLOCK OF SHARES OF THE COMPANY 'S' WAS THE INVESTMENT OF CA PITAL GAIN IN THE FLAT. [ PARA 15 ] THEREFORE, THE ASSESSEE HAD NOT VIOLATED THE PROVISIONS OF SUB - SECTIONS (3) AND (4) OF SECTION 54F RELATING TO TRANSFER OF NEW ASSET DURING LOCK IN PERIOD AND DEPOSITING THE CAPITAL GAINS BEFORE THE DUE DATE FOR FILING T HE RETURN OF INCOME. FURTHER, THE INVESTMENT IN THE FLAT AT 'ABHIJIT' BUILDING WAS THE CASE OF CONSTRUCTION AND, THEREFORE, 3 YEARS TIME - LIMITATION WAS APPLICABLE. ACCORDINGLY, THE ASSESSEE HAD COMPLIED WITH THE CONDITION OF 3 YEARS SPECIFIED IN SUB - SECTIO N (1) OF SECTION 54F. THEREFORE, THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 54F AS CLAIMED. [PARA 17] ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 16 IT IS SUBMITTED THAT, IN THE SAID DECISION, THE RELEVANT SECTION IS 54F. HOWEVER, THERE ARE SIMILAR PROVISIONS IN BOTH THE SECTIONS 54 AND 54F. HENCE, THE RATIO OF THE SAID DECISION IS SQUARELY APPLICABLE TO APPELLANT'S CASE. 4. LD. AO HAS NOT STATED ANYTHING FURTHER OR ANYTHING ADVERSE ABOUT THE FACTUAL ASPECTS OF DATES OF PURCHASE / CANCELLATION / NEW PURCHASE AND CORRESPONDING RECEIPTS / PAY MENTS THEREOF. IN THE CIRCUMSTANCES, IT SHOULD BE PRESUMED THAT, THERE IS NO DISPUTE REGARDING THE VALIDITY OF ALL THE DOCUMENTS. WE HOPE THE AFORESAID SUBMISSIONS WILL SUITABLY ANSWER THE OBJECTIONS RAISED BY THE L D. AO IN THE REMAND REPORT AND ADEQUATE LY SUPPORT APPELLANT'S CONTENTIONS AND FIND FAVOUR OF YOUR HONOUR. IN CASE YOUR HONOUR NEEDS ANY FURTHER DETAILS / SUBMISSIONS, PLEASE DO LET US KNOW. 4. HAVING CONSIDERED THE REMAND REPORT AND WRITTEN SUBMISSIONS OF LEARNED AUTHORIZED REPRESENTATIVE, C IT(A) OBSERVED THAT PROPERTY AT 26, MACMURDO AVE, HAMILTON, NEW ZEALAND WAS NEVER PURCHASED BY ASSESSEE THOUGH AS PER DOCUMENTS ORIGINALLY FILED DURING APPEAL IN SUPPORT OF DEDUCTION U/S.54 WHERE IN, IT WAS STATED THAT THIS PROPERTY WAS PURCHASED. ACCORDI NG TO CIT(A), ASSESSEE FAILED TO DISCHARGE HIS OBLIGATION FOR CLAIMING DEDUCTION. CIT(A) AFTER TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES AND ITS LEGAL SCRUTINY, DISMISSED THE APPEAL OF ASSESSEE. 5 . BEFORE US, LEARNED AUTHORIZED REPRESENTATIVE DREW OUR ATTENTION TO THE WRITTEN SUBMISSION DATED 10.10.2011 FILED BEFORE CONCERNED CIT(A) PLACED ON PAGE NOS. 1 & 2 OF PAPER BOOK ALONG WITH CERTIFICATE FROM ASSESSEES SOLICITORS IN NEW ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 17 ZEALAND REGARDING PURCHASE OF PROPERTIES AND PAYMENTS THEREOF ALON G WITH PROOF OF PAYMENTS AND SEARCH REPORT ETC., WHICH IS PLACED ON RECORD ON PAGE NOS. 3 TO 6 OF PAPER BOOK. ASSESSEE HAS PLACED PURCHASE AGREEMENT OF SECOND PROPERTY ON PAGE NOS. 7 TO 14 OF PAPER BOOK INTER ALIA FILED ASSESSEES BANK STATEMENT DISCLOSIN G VARIOUS PAYMENTS/RECEIPTS FOR PURCHASE/CANCELLATION AND RE - PURCHASE OF PROPERTY IN NEW ZEALAND AS A PPEARING ON PAGE NOS. 15 TO 20 OF PAPER BOOK FILED BY ASSESSEE. HE ALSO FILED DETAILS OF SALE OF PROPERTY AT BANDRA, MUMBAI. HE ALSO FILED ASSESSEES REMI TTANCE OF SALE PROCEEDS OF HOUSE PROPERTY AND BANK BALANCE IN INDIA TO NEW ZEALAND AND BANK STATEMENT DISCLOSING THE SAID REMITTANCE AND ASSESSEES CORRESPONDENCE WITH HIS BANK IN INDIA. HE ALSO FILED ASSESSEES LOAN AGREEMENT IN NEW ZEALAND AS PLACED ON PAGE 62 TO 72 OF PAPER BOOK FILED BY ASSESSEE. ALL THESE DOCUMENTS CLAIMED TO BE FIL ED BEFORE CIT(A) WHICH HAS NOT BEEN DISPUTE ON BEHALF OF REVENUE. I N THIS BACKGROUND, HE SUBMITTED THAT UNDISPUTEDLY, ASSESSEE HAS PURCHASED PROPERTY AT NO.26, MACMURDO A VE, HAMILTON AT NEW ZEALAND WHICH IS DULY CERTIFIED BY CONCERNED SOLICITORS OF ASSESSEE AT NEW ZEALAND AS DISCUSSED ABOVE. IN COMMON WEALTH LAWS SOLICITORS ARE COMPETENT TO CERTIFY SUCH TRANSACTION. ASSESSEE HAS ALSO RELIED ON THE DECISION OF CHENNAI C B ENCH IN CASE OF N. RANGANATHAN VS. ITO [2014] 51 TAXMANN.COM 56 (CHENNAI TRIB.), WHEREIN PROFIT ON SALE OF PROPERTY USED FOR RESIDENTIAL HOUSE (FOREIGN HOUSE PROPERTY). I T WAS HELD THAT AS PER ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 18 PROVISIONS OF SECTION 54, CLAIM FOR DEDUCTION CANNOT BE REJEC TED ON GROUNDS THAT NEW HOUSE WAS PURCHASED IN A FOREIGN COUNTRY, IN CURRENCY OF SAID COUNTRY AND PURCHASE AMOUNT WAS MORE THAN SALE PROCEEDS OF INDIAN HOUSE PROPERTY. THIS WAS D ECIDED IN FAVOUR OF ASSESSEE. LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THA T ITAT, LUCKNOW A BENCH IN CASE OF ACIT VS. IQBAL JAFAR [2014] 52 TAXMANN.COM 189 (LUCKNOW TRIB.), WHEREIN EXEMPTION IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE (INVESTMENT OUTSIDE INDIA), ASSESSEE WAS HELD TO BE ENTITLED FOR DEDUCTION U/S.54F IN RESPE CT OF PURCH A SE OF RESIDENTIAL HOUSE OUT OF INDIA AS ALL OTHER CONDITIONS PROVIDED IN THAT SECTION HAD BEEN FULLY COMP LIED WITH BY ASSESSEE COMPANY. THE SAID AMENDMENT WHEREBY IN INDIA WAS INSERTED IN THE PROVISION 54 OF INCOME TAX ACT BY FINANCE NO.2 ACT ,2014 WITH EFFECT FROM 01/04/2015 WHICH IS PERSPECTIVE ONE. SO, THE CLAIM OF ASSESSEE SHOULD BE ALLOWED. IN VIEW OF ABOVE FACTUAL AND LEGAL DISCUSSION, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT CLAIM OF ASSESSEE EXEMPTION U/S.54 , AS PRAYED ALLOWED . ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE IS NOT ENTITLED FOR EXEMPTION FOR ALLEGED PURCHASE OF PROPERTY IN NEW ZEALAND AND LEARNED DEPARTMENTAL REPRESENTATIVE ALSO SUBMI TTED THAT IT IS NOT CLEAR WHETHER ASSESSEE HAS PURCHASED PROPERTY AT ALL NEW ZEALAND WHICH ENTITLED HIM FOR CLAIMING EXEMPTION U/S.54 ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 19 OF THE ACT. ACCORDINGLY, ORDERS OF AUTHORITIES BELOW SHOULD BE CONFIRMED. 6 . AFTER GOING THROUGH RIVAL SUBMISSIONS AND M ATERIAL ON RECORD, WE FIND THAT ASSESSEE IS NON RESIDENTIAL INDIAN IN NEW ZEALAND. HE HAS UNDISPUTEDLY SOLD HIS PROPERTY AT BANDRA AS MENTIONED ABOVE FOR CONSIDERATION OF RS.70LACS AND CLAIMED EXEMPTION U/S.54 OF THE ACT AMOUNTING TO RS.54,64,498/ - FOR IN VESTMENT MADE FOR PURCHASE OF RESIDENTIAL HOUSE AT NO.26, MACMURDO AVE, HAMILTON, NEW ZEALAND . REVENUE AUTHORITIES BELOW HAVE DOUBTED THE PURCHASE A RESIDENTIAL HOUSE AT HAMILTON, NEW ZEALAND AND ALSO TAKEN A LEGAL GROUND FOR NOT ALLOWING EXEMPTION U/S.54 FOR PURCHASE OF PROPERTY ABROAD. DURING REMAND PROCEEDINGS, ASSESSEE FURNISHED FRESH EVIDENCE AND REQUESTED CIT(A) TO INVITE REMAND REPORT OF CONCERNED ASSESSING OFFICER, AS SAID DOCUMENTS WERE NOT FURNISHED E ARLIER, HENCE NOT AVAILABLE FOR CONSUMPTION O F CONCERNED ASSESSING OFFICER DURING SCRUTINY ASSESSMENT. ASSESSEE CLARIFIED THE FACTS REGARDING PURCHASE OF SECOND NEW HOUSE AGAINST CANCELLATION OF FIRST NEW HOUSE AT NEW ZEALAND. ASSESSEE FURNISHED RELEVANT DOCUMENTARY EVIDENCES TO SUPPORT THAT THE SA ID DECISION TO CANCEL THE FIRST N EW H OUSE WAS NOT AS PER HIS WISH. IT WAS EXPLAINED WITH PROOF THAT THE SAID DECISION WAS REQUIRED TO BE TAKEN BECAUSE IT WAS THE SELLER'S FAILURE TO DELIVER THE VACANT POSSESSION OF THE SAID H OUSE. THEREFORE, AFTER DUE CONS ULTATION WITH HIS SOLICITORS, ASSESSEE CANCELLED HIS ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 20 A GREEMENT TO P URCHASE THE F IRST N EW H OUSE AND DECIDED TO PURCHASE THE S ECOND N EW H OUSE IN AUCTION. ASSESSEE CANNOT PENALIZED TO CANCEL ORIGINAL AGREEMENT WHICH WAS ATTRIBUTABLE TO ORIGINAL SELLER S INABI LITY TO EXECUTE THE SAME. ALL THE FACTS AND EXPLANATIONS REGARDING N EW D OCUMENTS WE RE ALREADY STATED IN LETTERS FILED BEFORE REVENUE AUTHORITIES. IN REMAND PROCEEDING, ASSESSING OFFICER HAS OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCE WITH REGARD TO PURCH ASE OF SECOND HOUSE. HE HAS NOT STATED ANYTHING ABOUT VERIFICATION THE F ACTS ABOUT THE PURCHASE OF S ECOND N EW H OUSE AGAINST CANCELLATION OF F IRST N EW H OUSE. THE SOLICITOR OF THE ASSESSEE HAS CONFIRMED THE FACT OF DATE OF ORIGINAL SALE WAS ON 18.02.2008. ASSESSEES A GREEMENT FOR PURCHASE OF F IRST N EW H OUSE WAS ON 25. 07 . 2008. SAME WAS CANCELLED ON 09. 01 . 2009. S ECOND N EW HOUSE WAS PURCHASED ON 30. 04 . 2009. THUS, PURCHASE OF THE N EW H OUSE WA S WITHIN TWO YEARS. THE PURCHASE WAS COMPLETE D ON 29 - 05 - 2009 WHEN ASS ESSEE PAID THE BALANCE MONEY. THUS , ASSESSEE FULFILLED ALL THE CONDITIONS U/S 54(2) OF THE ACT. IN CASE, ASSESSING OFFICER OR CIT(A) HAD ANY DOUBT AT ANY STAGE, THEY COULD HAVE SOUGHT CLARIFIC ATION FROM CONCERNED SOLICITOR OR IN ANY LEGAL MANNER AVAILABLE TO THEM AS PER LAW. NO SUCH EFFORT HAS BEEN MADE BY LOWER REVENUE AUTHORITIES. THUS, THE POSITION EMERGED THAT ASSESSEE AFTER SELLING THE PROPERTY AT BANDRA HAS PURCHASED NEW PROPERTY AT NEW ZEALAND AFTER CANCELLATION OF FIRST PROPERTY AS DISC USSED ABOVE. IT IS ALSO SUPPORTED BY THE REPORT OF SOLICITOR AS WELL AND THE ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 21 TRANSACTIONS SUBSEQUENT LY TOOK PLACE AT NEW ZEALAND WAS WITHIN STIPULATED TIME FOR CLAIMING EXEMPTION UNDER THE PROVISION S OF SECTION 54 OF THE ACT. TH US, ISSUE BEFORE US BY REVENUE REGARDIN G PURCHASE OF HOUSE IN NEW ZEALAND AND ALLOWABILITY OF EXEMPTION FOR PURCHASE OF PROPERTY ABROAD. WE FIND THAT ITAT CHENNAI C BENCH IN CASE OF N. RANGANATHAN VS. ITO (SUPRA) HAS HELD THAT ASSESSEE CAN CLAIM DEDUCTION WITH REGARDS TO PURCHASE OF NEW HOUS E IN FOREIGN COUNTRY IF OTHER CONDITIONS ARE FULFILLED. SIMILAR VIEW HAS BEEN TAKEN BY LUCKNOW BENCH IN CASE OF ACIT VS. IQBAL JAFAR (SUPRA) , IT HAS BEEN HELD THAT ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S.54F IN RESPECT OF PURCHASE OF RESIDENTIAL HOUSE OUT OF INDIA AS ALL CONDITIONS PROVIDED IN THAT SECTION HA D BEEN FULLY COMPLIED WITH BY ASSESSEE. EVEN, IN CASE BEFORE US, ALL CONDITIONS HAVE BEEN COMPLIED WITH BY ASSESSEE, IN TERMS OF SALE AND PURCHASE ALONG WITH DATES. SO, ASSESSEE IS ENTITLED FOR C LAIMING DEDUCTION. THE RATIO OF DECISIONS RELIED BY CIT(A) HAVE BEEN TAKEN CARE IN ABOVE TWO DECISIONS, REGARDING INSERTION OF INDIA IN THE PROVISIONS OF 54 OF ACT BY FINANCE NO. (2) ACT ,2014 W.E.F 01/04/2015. THERE IS NOTHING ON RECORD TO SUGGEST THAT S AID AMENDMENT OF INSERTING IN INDIA UNDER THE PROVISIONS OF 54 H AS RETROSPECTIVE EFFECT. PRACTICALLY, ASSESSEE CANNOT BE PUT TO ADVANCE POSITION BY SUBSEQUENT AMENDMENT. THUS, THE CLAIM OF ASSESSEE IS ALLOWED. ASSESSING OFFICER IS DIRECTED ACCORDINGLY . ITA NO .3526 / MUM /1 3 A.Y. 0 8 - 09 [ DAVID CLEOPHAS PEREIRA VS. ITO(IT) ] PAGE 22 7 . AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 30TH DAY OF OCTO BER , 201 5 . SD/ - SD/ - ( ASHWANI TANEJA ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED 30 / 1 0 /2015 S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1 . / REVENUE 2 . / ASSESSEE 3 . / CONCERNED CIT 4 . - / CIT (A) 5 . , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. BY ORDER / , / , ,