VARSHA GIRDHAR MOHNANI, MUMBAI V. ITO (IT) 4(1), MUMBAI

ITA 4592/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0659 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 27-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2013
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: KIRIT MEHTA
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI . . , , BEFORE : SHRI R.C.SHARMA, AM & SHRI VIJAY PAL RAO , JM ./ ITA NO. 4591 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 10 - 1 1 ) MR. GIRDHAR MOHANANI, 61 - A, MITTAL TOWER, NARIMAN POINT, MUMBAI - 400021 VS. ITO - (IT) - 4(1), MUMBAI ./ ./ PAN/GIR NO. : A FBPM 0004 L ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 4592/ MUM/20 13 ( / ASSESSMENT YEAR :2010 - 11 ) MRS. VARSHA GIRDHAR MOHANANI, 61 - A, MITTAL TOWER, NARIMAN POINT, MUMBAI - 400021 VS. ITO - (IT) - 4(1), MUMBAI ./ ./ PAN/GIR NO. : A PPPM 1126 H ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI KIRIT MEHTA /REVENUE BY : SHRI LOVE KUMAR / DATE OF HEARING : 27 / 0 4 /201 5 / DATE OF PR ONOUNCEMENT : 6/5 / 2015 / O R D E R PER R.C.SHARMA ( A .M.) : TH ESE ARE THE APPEALS FILED BY DIFFERENT ASSESSEES AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2010 - 2011, IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I. T.ACT . ITA NO S . 4591&4592/ 20 1 3 2 2. SIMILAR GROUNDS HAVE BEEN RAISED IN BOTH THE APPEALS, WHEREIN ASSESSEE IS AGGRIEVED FOR DECLINE OF CLAIM OF EXEMPTION U/S.54., 3. AT THE OUTSET, LD. AR PLACED ON RECORD ORDER OF THE TRIBUNAL IN CASE OF MRS.PREMA P. SHAH, 100 ITD 60, WHEREIN IT WA S HELD THAT EVEN IF HOUSE PROPERTY IS ACQUIRED IN A FOREIGN COUNTRY, SECTION 54 DOES NOT EXCLUDE RIGHT OF AN ASSESSEE TO CLAIM BENEFIT IN RESPECT OF SUCH PROPERTY IF ALL OTHER CONDITIONS LAID DOWN IN THAT SECTION ARE SATISFIED. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT DURING THE YEAR ASSESSEE HAS CLAIMED EXEMPTION U/S.54. OUT OF THE SALE CONSIDERATION OF RS.87,37,291/ - , ASSESSEE HAS DEPOSITED RS.50 LAKHS IN CAPITAL GAINS IN SCHEME ACCOUNT. SUBSEQUENTLY DEPOSIT WAS WITHDRAWN DURING THE ASSESSM ENT YEAR 2010 - 2011 UNDER CONSIDERATION AND WAS INVESTED IN A FLAT IN DUBAI. AS PER AO ASSESSEE WAS NOT ENTITLED FOR CLAIM OF EXEMPTION U/S.54 IN RESPECT OF INVESTMENT MADE IN HOUSE PROPERTY OUTSIDE INDIA. 5. IT WAS CONTENDED BY LD. DR THAT CIT(A) HAS ALRE ADY CONSIDERED THE DECISION IN THE CASE OF DR. GIRISH M. SHAH, MRS.PREMA P. SHAH, LEENA P. SHAH, WHEREIN IT WAS HELD THAT EXEMPTION IS PERMISSIBLE , EVEN IF INVESTMENT IN NEW RESIDENTIAL HOUSE IS MADE OUTSIDE INDIA . 6. ON THE OTHER HAND, LD. AR RELIED ON TH E DECISION OF BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF VINAY MISHRA, 141 ITD 301 , WHEREIN IT WAS HELD THAT PROVISIONS OF SECTION 54F DOES NOT SUGGEST THAT NEW RESIDENTIAL HOUSE ACQUIRED SHOULD BE SITUATED ONLY IN INDIA. ACCORDINGLY EXEMPT ION WAS GRAN TED IN RESPECT OF RESIDENTIAL HOUSE ACQUIRED OUTSIDE INDIA. IT WAS ITA NO S . 4591&4592/ 20 1 3 3 OBSERVED THAT ON A PLAIN READING OF PROVISIONS OF SECTION 54F ONE DOES NOT FIND ANYTHING THEREIN TO SUGGEST THAT THE NEW RESIDENTIAL HOUSE ACQUIRED SHOULD BE SITUATED IN INDIA. 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, THERE WAS NO REASON TO SHOW THAT EXEMPT ION WILL NOT BE APPLICABLE IN RESPECT OF HOUSE ACQUIRED OUTSIDE INDIA . SIMILARLY, THE CHENNAI BENCH OF THE TRIBUNAL IN CASE OF N.RANGANATHAN, 33 ITR( A T) 444 HELD THAT THE PROFIT ON SALE OF PROPERTY USED FOR RESIDENTIAL HOUSE (FOREIGN HOUSE PROPERTY) ACQUIRED OUTSIDE INDIA IS ELIGIBLE FOR EXEMPTION U/S.54. HOWEVER, NO CONTRA RY DECISION OF TRIBUNAL OR HONBLE HIGH COURT WAS BROUGHT TO OUR NOTICE SUGGESTING THAT EXEMPTION WILL NOT BE AVAILABLE IN CASE RESIDENTIAL HOUSE IS ACQUIRED OUTSIDE INDIA. 7. THE FINANCE (NO.2) BILL, 2014 BROUGHT AN AMENDMENT IN SECTION 54, WHEREIN SUB - S ECTION (1), FOR THE WORDS CONSTRUCTED , A RESIDENTIAL HOUSE , THE WORDS CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA HAS TO BE SUBSTITUTED W.E.F. 1 ST DAY OF APRIL, 2015. THUS, IT IS CLEAR FROM THE AMENDMENT SO BROUGHT FOR CLAIMING EXEMPTION U/S.54, THAT N EW RESIDENTIAL HOUSE SHOULD TO BE CONSTRUCTED IN INDIA ONLY W.E.F. ASSESSMENT YEAR 2015 - 2016 .. HOWEVER, THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2010 - 2011 I.E. MUCH PRIOR TO THE AMENDMENT SO BROUGHT IN FINANCE (NO.2) BILL, 2014. THERE IS NO REASON TO DEC LINE EXEMPTION U/S.54 DURING THE A.Y.2010 - 11 UNDER CONSIDERATION . ITA NO S . 4591&4592/ 20 1 3 4 8. THE PROVISIONS CONTAINED IN SUB - SECTION (1) OF SECTION 54 OF THE INCOME - TAX ACT, BEFORE ITS AMENDMENT BY THE ACT, INTER ALIA, PROVIDED THAT WHERE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG - TERM CAPITAL ASSET, BEING BUILDINGS OR LANDS APPURTENANT THERETO, AND BEING A RESIDENTIAL HOUSE, AND THE ASSESSEE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER, PURCHASES, OR WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER CONSTRUCTS, A RESIDENTIAL HOUSE, THEN, THE AMOUNT OF CAPITAL GAINS TO THE EXTENT INVESTED IN THE NEW RESIDENTIAL HOUSE IS NOT CHARGEABLE TO TAX UNDER SE CTION 45 OF THE INCOME - TAX ACT. 9 . IN VIEW OF THE ABOVE, WE HOLD THAT DURING THE YEAR UNDE R CONSIDERATION, ASSESSEE WAS ENTITLED FOR EXEMPTION U/S.54 EVEN IF INVESTMENT WAS MADE IN RESIDENTIAL HOUSE SITUATED OUTSIDE INDIA, PROVIDE D THAT ASSESSEE HAS TO COMP LY WITH OTHER CONDITIONS OF SECTION 54. SINCE THE AO HAS OUT - RIGHTLY DECLINED EXEMPTION ON THIS PLEA WITHOUT EXAMINING THE OTHER CONDITIONS OF SEC.54 SO AS TO MAKE ASSESSEE ELIGIBLE, WE ACCORDINGLY RESTORE THE APPEAL TO THE FILE OF THE AO FOR VERIFYING OTHER CONDITIONS TO BE FULFILLED FOR GRANT OF EXEMPTION U/S.54 IN BOTH THE APPEALS OF THE A SSESSEES. THE AO IS ALSO AT A LIBERTY TO VERIFY ACTUAL ACQUISITION OF HOUSE PROPERTY OUTSIDE INDIA, IN TERMS OF TRANSFER DEEDS SO EXECUTED IN FAVOUR OF ASSESSEE. WE DIRECT ACCORDINGLY. 10 . IN THE RESULT, APPEAL S OF BOTH THE ASSESSEE S ARE ALLOWED FOR STATI STICAL PURPOSES . ITA NO S . 4591&4592/ 20 1 3 5 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06/05/ 201 5 . SD/ - SD/ - ( ) ( VIJAY PAL RAO ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 06/05 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4 . / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//