Smt. Preethi Prasad, Bangalore V. CIT, Bangalore

ITA 472/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95218 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 09-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2014
• Court: TRIBUNAL
• Department Lawyers: G R REDDY
• Keywords: Capital asset; Opportunity of being heard; Cost of acquisition; Assessment record
• Section: 143(3); 54F; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.472 /BANG/2014 (ASST. YEAR 2009-2010) SMT. PREETHI PRASAD, 423, 19 TH CROSS, 1 ST & 3 RD BLOCK (EAST), JAYANAGAR, BANGALORE. . APPELLANT VS. THE COMMISSIONER OF INCOME-TAX, BANGALORE-II, BANGALORE. . RESPONDENT APPELLANT BY : SHRI NARENDRA SHARMA, ADVOCATE RESPONDENT BY : SHRI GR REDDY, CIT DATE OF HEARING : 09-9-2015 DATE OF PRONOUNCEMENT : 16-9-2015 O R D E R PER SHRI VIJAYPAL RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE REVISION ORDER DATED 7/3/2014 OF COMMISSIONER OF INCOME-TAX U/S 263 FOR THE ASST. YEAR 2009-10. ITA NO.472/B/14 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: I) THE ORDER OF THE LEARNED CIT, BLORE-II (CIT), IN S O FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LA W, EQUITY, FACTS, WEIGHT OF EVIDENCE, PROBABILITIES AN D CIRCUMSTANCES OF THE CASE. II) THE LEARNED CIT IS NOT JUSTIFIED IN INVOKING THE PROVISION U/S 263 AND HOLDING THAT THE ORDER PASSED BY THE AO U/S 143(3) DT 24.10.2011 AS ERRONEOUS AND PREJUDICIAL TO REVENUE IGNORING THE FACT THAT T HE AO HAD APPLIED HIS MIND ON THE ISSUE AND HAD TAKEN THE VIEW ACCEPTING AND FOLLOWING JUDICIAL DISCIPLIN E. THEREFORE, THE ORDER U/S 263 DOES NOT SURVIVE AND DESERVES TO BE CANCELLED. III) THE LEARNED CIT IS NOT JUSTIFIED IN INVOKING THE PROVISION U/S 263 AND PASSING ORDER U/S 263 OF THE INCOME-TAX ACT, 1961 HOLDING THAT AO PASSED AN ORDER WITHOUT APPLICATION OF MIND, FOR THE FOLLOWIN G REASONS. A. ONCE THE AO HAS APPLIED HIS MIND AND PASSED AN ORDER U/S 143(3) AFTER FULLY ENQUIRING INTO THE SUBJECT, THE ORDER CANNOT BE SAID TO BE ERRONEOUS. IN THIS REGARD, RELIANCE IS PLACED IN THE CASE OF INFOSYS BPO LTD., BANGALORE VS. CIT, ITA NO.222BANG/2011. B. THE LEARNED CIT FAILED TO APPRECIATE THAT THE CIT CANNOT REMAND THE MATTER TO THE AO FOR ITA NO.472/B/14 3 FURTHER ENQUIRIES OR TO DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS AND HOW THAT IS SO. A MERE REMAND TO THE AO IMPLIES THAT THE CIT HAS NOT DECIDED WHETHER THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE AO TO DECIDE THE ASPECT WHICH IS NOT PERMISSIBLE. RELIANCE PLACED IN THE CASE OF ITO VS.DG HOUSING PROJECTS [2012] 343 ITR 329 (DELHI) (HC). C. ORDER U/S 263 OF THE IT ACT, 1961 HAS NOT SATISFIED THE CONDITIONS AS LAID DOWN IN THE PROVISION OF HE IT ACT, 1961 AND FAILS TO APPRECIATE THAT BEFORE PASSING AN ORDER U/S 263, THE BASIS TWIN CONDITIONS NAMELY (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOUS AND (II) IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND EVEN ONE OF THESE IS ABSENT, RECOURSE CANNOT BE HAD TO SECTION 263 OF THE IT ACT, 1961. RELIANCE PLACED IN THE CASE OF MALABAR INDUSTRIAL CO. LTD., (2000_ 243 ITR 83 (SC) D. WHEN THE AO MADE PROPER ENQUIRY AND EXAMINED ACCOUNTS, IT COULD NOT BE SAID THAT THERE WAS NON APPLICATION OF MIND BY HIM. HENCE, THE ACTION U/S 263 WAS HELD INVALID. HELD IN THE FOLLOWING CASES. ITA NO.472/B/14 4 I. FINE JEWELLERY (INDIA) LTD., VS. ACIT [2012] 19 ITR 746 (MUM.) (TRIB). II. ROSHAN LAL VEGETABLE PRODUCTS PVT. LTD. VS. ITO [2012] 51 SOT 1 (URO) (ASR) (TRIB) III. ANTALA SANJAYKUMAR RAVJIBHAI VS. CIT [2012] 135 ITD 506 (RAJKOT) (TRIB) 4. FURTHER, THE LEARNED CIT NOT JUSTIFIED IN DENYIN G THE CLAIM OF EXEMPTION U/S 54F OF THE IT ACT, 1961 WHICH THE INVESTMENT IN HOUSE PROPERTY OUTSIDE INDI A AND THAT FUNDS INVESTED ARE NOT OUT OF THE FUNDS REALIZED OUT OF THE SALE OF PROPERTY AND CONSIDERIN G THE COST OF ACQUISITION OF THE PROPERTY RS.6,23,260 /- AS AGAINST THE CORRECT COST OF ACQUISITION OF RS.9,04,400/-. 3. THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS C OMPLETED U/S 143(3) ON 24/10/2011 ACCEPTING THE RETURN INCOME. SUBSEQUENTLY, THE CIT NOTICED FROM THE ASSESSMENT RECORD THAT THE ASS ESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE REASONS THAT THE AO ALLOWED THE CLAIM OF THE DEDUCTION U/S 54F, WHEREAS THE ASSESSEE HA S ACQUIRED THE NEW ASSET OUTSIDE INDIA AND FURTHER THE COST OF THE EXI STING ASSET WAS ALSO ITA NO.472/B/14 5 INFLATED BY THE ASSESSEE AND ACCEPTED BY THE AO. A CCORDINGLY, THE CIT ISSUED SHOW CAUSE NOTICE ON 13/2/2014 U/S 263 O F THE ACT. 4. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESS EE CONTENDED BEFORE THE CIT THAT DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED ALL THE RELEVANT DETAILS AND MADE SUBMISSIONS ON 4/11/2011. THEREFORE, THE AO ALLOWED THE CLAIM OF THE ASSESSEE AFTER CONSIDERING THE RELEVANT RECORD AND SUBMISSIONS OF THE ASSESSEE. FURTHER THE ASSESSEE CONTENDED THAT THERE IS NO REQ UIREMENT UNDER THE PROVISION OF SEC. 54F THAT THE ASSESSEE SHOULD INVE ST IN THE HOUSE PROPERTY ONLY IN INDIA AND NOT OUTSIDE INDIA. APART FROM THIS, THE ASSESSEE FURTHER CONTENDED THAT IT IS ALSO NOT REQU IRED THAT A NEW PROPERTY IS ACQUIRED ONLY FROM THE SALE PROCEEDS OF THE CAPITAL ASSET, OTHERWISE THE PROVISION OF SEC. 54F WOULD NOT HAVE ALLOWED THE INVESTMENT IN THE HOUSE PROPERTY WHICH WAS PRIOR TO THE TRANSFER OF THE CAPITAL ASSET RESULTING LONG TERM CAPITAL GAIN. T HE CIT DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE OR DER PASSED U/S 144(3) DATED 24/10/2011 IS DEEMED TO BE ERRONEOUS I N SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE SAME HAS BEEN PASSED WITHOUT APPLICATION OF MIND AND WITHOUT PROP ER APPRECIATION OF ITA NO.472/B/14 6 THE PROVISION OF LAW, THE AO WAS DIRECTED TO REDO THE ASSESSMENT AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 5. WE HAVE HEARD THE LEARNED AR AS WELL AS LEARNED DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE CI T INVOKED SEC. 263 ON THREE GROUNDS AS UNDER: I) THAT THE COST OF ACQUISITION CLAIMED BY THE ASSESSE E AT RS.9,04,000/- WAS COST OF REGISTRATION AND STAMP DU TY WAS NOT THE CORRECT CLAIM IN VIEW OF THE PAYMENT MADE B Y THE MOTHER OF THE ASSESSEE AS PER THE PURCHASE DOCUMENT WHICH IS RS.6,23,260/-. II) THE INVESTMENT IN THE NEW RESIDENTIAL PROPERTY IS I N IRELAND WHICH IS OUTSIDE INDIA, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 54F. III) THE AMOUNT OF CAPITAL GAIN AND SALE PROCEEDS WAS NO T AVAILABLE WITH THE ASSESSEE AT THE TIME OF PURCHASE OF NEW RESIDENTIAL HOUSE. 6. AS REGARDS THE COST OF ACQUISITION OF THE EXISTI NG ASSET WHICH WAS INHERITED BY THE ASSESSEE FROM HER MOTHER IS CO NCERNED, THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT DURIN G THE COURSE OF ITA NO.472/B/14 7 ASST. PROCEEDINGS THE ASSESSEE FURNISHED THE STATEM ENT OF ACCOUNT OF THE SELLER CHAMUNDESHWARI BUILD TECH PVT. LTD., WHE REIN ALL DETAILS OF THE COST OF THE ASSET AS WELL AS DETAILS OF THE ASSETS WERE GIVEN. THE AO AFTER CONSIDERING THE SAID STATEMENT OF ACCOUNT AND EXPLANATION OF THE ASSESSEE ACCEPTED THE COST OF THE ACQUISITION O F THE ASSET. HE HAS FURTHER POINTED OUT THAT FOR GIVING EFFECT TO THE 263 ORDER OF THE CIT, THE AO HAS ACCEPTED THE CLAIM OF THE COST OF THE AC QUISITION OF THE ASSET VIDE ORDER DATED 31/10/2014. HE HAS FILED A COPY OF THE ORDER PASSED BY THE AO IN PURSUANT TO THE REVISION ORDER. THUS, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT WHEN THE AO HAS A LLOWED THE CLAIM OF THE COST OF ACQUISITION BY CONSIDERING RELEVANT EVIDENCE THEN THE CIT WAS NOT JUSTIFIED IN INVOLVING THE PROVISION OF SEC. 263 OF THAT ASSESSMENT AND CONSEQUENTLY REVISING THE ASSESSMENT ORDER. ON THE POINT OF ACQUISITION OF THE NEW ASSET OUTSIDE INDIA , THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL DATED 12/10/2012 IN THE CASE OF VINAY MISHRA VS. ACIT, 141 ITD 301. THEREFORE, EVEN ON THE MERITS OF THE SAID ISSUE, IT IS NOT SUSTAINABLE. THUS THE LEARNED AR SUBMITTED THAT WHEN THE AO ALLO WING THE CLAIM HAS TAKEN A POSSIBLE VIEW THEN THE CIT(A) IS NOT JU STIFIED IN INVOKING THE PROVISION OF SEC. 263 MERELY BECAUSE HE DID NOT AGREE WITH THE ITA NO.472/B/14 8 VIEW TAKEN BY THE AO. AS REGARDS THE ACQUISITION O F THE NEW ASSET BY UTILIZING THE SALE PROCEEDS OF THE EXISTING ASSET THE LEARNED AR SUBMITTED THAT THERE IS NO SUCH REQUIREMENT UNDER T HE PROVISION THAT THE NEW ASSET SHALL BE PURCHASED ONLY FROM THE SALE PROCEEDS OF THE EXISTING ASSET. 7. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS ACQUIRED NEW ASSET OUTSIDE INDIA AND AS PER THE PROVISION OF SEC. 54F(3), IF THE NEW ASSET IS SOLD BY THE ASSESSEE WI THIN THE PERIOD OF 3 YEAR THEN THE CAPITAL GAIN WOULD BE TAXABLE IN THE YEAR IN WHICH THE NEW ASSET IS SOLD BY THE ASSESSEE. HOWEVER, IN THE CASE WHEN THE NEW ASSET IS ACQUIRED OUTSIDE INDIA, THE CAPITAL GAIN WOULD NOT BE TAXABLE IN THE HANDS OF NRI. HE HAS RELIED UPON THE IMPUG NED ORDER. 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, WE FIND THAT THE IMPUGNED REVIS ION ORDER PASSED BY THE CIT IS NOT SUSTAINABLE EITHER ON MERITS OF THE ISSUES INVOLVED OR ON THE JURISDICTION EXERCISED BY THE CIT. AS WE HAVE MENTIONED IN FOREGOING PARA THAT THE CIT PROPOSED TO REVISE ASS T. ORDER U/S 143(3) ON 3 GROUNDS ON WHICH THE CIT WAS OF VIEW THAT THE DEDUCTION U/S 54F ALLOWED BY THE AO OUGHT TO HAVE BEEN DISALLOWED . THE FIRST ITA NO.472/B/14 9 GROUND OF THE CIT IS REGARDING THE COST OF ACQUISIT ION OF THE EXISTING ASSET. THE CIT RECORDED IN THE SHOW CAUSE NOTICE T HAT AS PER THE PURCHASE DOCUMENT, WHEREBY THE MOTHER OF THE ASSESS EE PURCHASED ASSET IN QUESTION, THE COST OF PURCHASE OF THE ASSE T IS ONLY RS.6,23,260/-, WHEREAS THE ASSESSEE CLAIMED THE COS T OF ACQUISITION BEING SHARE OF THE MOTHER OF THE ASSESSEE IS AT RS. 9,04,000/-. ACCORDINGLY THE CIT CONCLUDED THAT THIS ASPECT OF T HE MATTER HAS NOT BEEN EXAMINED BY THE AO AND, THEREFORE, THE ASSESSM ENT ORDER WAS PASSED BY THE AO WAS WITHOUT APPLICATION OF MIND. IT IS PERTINENT TO NOTE THAT THE CLAIM OF RS.9,04,000/- BEING COST OF ACQUISITION OF THE ASSET BY THE MOTHER OF THE ASSESSEE WAS BASED ON DE TAILS AND DOCUMENT PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASST. PROCEEDINGS. 9. WE HAVE CAREFULLY GONE THROUGH THE STATEMENT OF ACCOUNT PRODUCED BY THE ASSESSEE BEFORE THE AO AND FOUND TH AT THE ASSESSEE HAD EXPLAINED THE COST OF ACQUISITION TOWARDS THE C OST OF SITE, CLUB MEMBERSHIP REGISTRATION CHARGES AND LEVELING CHARGE S. THE PAYMENT DETAILS WERE ALSO EXPLAINED IN THE SAID STATEMENT O F ACCOUNT. THIS STATEMENT OF ACCOUNT IS A CONFIRMATION BY THE SELLE R AND THEREFORE, THE AO ALLOWED THE CLAIM OF THE ASSESSEE BY CONSIDERING THE RELEVANT ITA NO.472/B/14 10 EVIDENCE IN THIS RESPECT. EVEN OTHERWISE THE CIT H AS NOT GIVEN CONCLUDING FINDING OF THIS ISSUE AND REMITTED THE I SSUE TO THE RECORD WITH AO WITH A DIRECTION TO REDO THE SAME AFTER GIV ING AN OPPORTUNITY TO THE ASSESSEE. IN GIVING EFFECT ORDER DATED 31/ 10/2014, THE AO AGAIN ACCEPTED THE CLAIM OF THE ASSESSEE BEING COST OF ACQUISITION OF THE ASSET AT RS.9,04,000/-. THUS IT IS CLEAR THAT THE IMPUGNED REVISION ORDER IS NOT SUSTAINABLE AS FAR AS THIS ISSUE OF CO ST OF ACQUISITION OF ASSET IS CONCERNED WHEN THE AO EVEN IN GIVING EFFEC T ORDER HAS EXAMINED THIS ISSUE AND FOUND THAT THE CLAIM OF THE ASSESSEE IS CORRECT. 10. AS REGARDS THE ISSUE OF ACQUIRING THE ASSET OUT SIDE INDIA, WE FIND THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AN D DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF VIN AY MISHRA VS. ACIT (SUPRA), IN PARA 14 TO 18 AS UNDER:- 14. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PERUSED AND CONSIDERED THE ORDER OF ASSESSMENT, THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND THE RIVAL WRITTEN SUBMISSION MADE. THE PROVISIONS OF SEC. 54 F OF THE ACT READS AS UNDER: .WHERE IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL ITA NO.472/B/14 11 GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITA L ASSET, BEING BUILDINGS OR LANDS APPURTENANT THERETO , AND BEING A RESIDENTIAL HOUSE, THE INCOME OF WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS WITHIN A PERI OD OF ONE YEAR BEFORE OR TWO YEARS, AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLA CE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLO WING PROVISIONS OF THIS SECTION. 15. ACCORDING TO THE AO, THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS STIPULATED IN SEC. 54F OF THE ACT, EXCEPT THAT THE NEW ASSET, THE RESIDENT IAL HOUSE ACQUIRED, IS SITUATED OUTSIDE INDIA. THE AHEMDABAD BENCH OF THE TRIBUNAL WHILE DECIDING THE CASE OF THE LEENA J SHAH (SUPRA) HELD THAT WHEN THE RESIDENTIAL HOUSE IS SITUATED OUTSIDE INDIA, THE ASSESSEE WOULD NOT BE ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT. THE BENCH FELT THAT THERE IS SOME AMBIGUI TY IN THE WORDINGS OF SEC. 54F OF THE ACT AND, THEREFO RE, THE TRIBUNAL RESORTED TO TAKING THE HELP OF EXTERNA L AID TO INTERPRET THE PROVISIONS. ITA NO.472/B/14 12 16. SUBSEQUENTLY, THE MUMBAI BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF MRS. PREMA P SHAH AND SANJIV P SHAH (SUPRA) RELIED ON BY THE ASSESSEE WHICH WAS SUBSEQUENTLY FOLLOWED BY THE ANOTHER BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL. MUMBAI IN THE CASE OF DR. GIRISH M SHAH (SUPRA), WAS OF THE VIEW THAT THE APPLICABILITY OF EXEMPTION U/S 54 IS NOT EXCLUDED IN CASE NEW PROPERTY IS PURCHASE D IN A FOREIGN COUNTRY, THE ASSESSEE HAVING ACQUIRED A RESIDENTIAL PROPERTY ON LEASE IN THE UK AFTER SELLI NG RESIDENTIAL PROPERTY IN INDIA EXEMPTION U/S 54 WAS ALLOWABLE SINCE THE LEASE IS VALID FOR 150 YEARS AN D THE ASSESSEE IS AS GOOD AS ABSOLUTE OWNER OF PROPER TY; CLAIM FOR EXEMPTION COULD NOT BE DENIED EVEN ON THE GROUND THAT THE ASSESSEE HAD UTILIZED BORROWED FUND S FOR INVESTMENT IN THE SAID PROPERTY. IN ACCORDANCE WITH THIS VIEW, THE HONBLE TRIBUNAL IN PARA 27 OF ITS ORDER HELD AS UNDER (PAGE 223): 27. IN SHORT, WE ARE OF THE CONSIDERED VIEW, FOR THE REASONS STATED HEREINABOVE, THE ASSESSEE IS ENTITLED TO THE BENEFIT U/S 54 OF THE ACT. IT DOES NOT EXCLUDE THE RIGHT OF THE ASSESSEE TO CLAIM THE PROP ERTY PURCHASED IN A FOREIGN COUNTRY, IF ALL OTHER CONDIT IONS LAID DOWN IN THE SECTION ARE SATISFIED, MERELY BECA USE THE PROPERTY ACQUIRED IS IN A FOREIGN COUNTRY. ITA NO.472/B/14 13 17. SUBSEQUENTLY, ANOTHER BENCH OF THE MUMBAI, ITAT IN THE CASE OF DR. GIRISH M SHAH (SUPRA) FOLLOWING THE DECISION IN THE CASE OF MRS. PREMA P SHAH AND SANJIV P SHAH (SUPRA) HELD THAT THE ASSESSEE WAS NOT TO BE DENIED EXEMPTION U/S 54F OF THE ACT MERELY ON THE GROUND THAT THE PURCHASE/CONSTRUCTION OF THE RESIDENTIAL HOUSE MUST BE IN INDIA AND NOT OUTSIDE INDIA IF ALL OTHER CONDITIONS LAID DOWN IN THE SECTION ARE SATISFIED. THE LATTER DECISION OF THE MUMBAI ITAT IN THE CASE OF GIRISH M SHAH NOTED THE ORDER OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF LEENA J SHAH [2006] 6 SOT 721 (AHD) BUT STILL PREFERRED TO FOLLO W THE ORDER OF THE MUMBAI ITAT IN THE CASE OF MRS. PREMA P SHAH & SANJIV P SHAH (SUPRA). 18. ON A PLAIN READING OF THE PROVISION OF SEC. 54F OF THE ACT, WE DO NOT FIND ANYTHING THEREIN TO SUGGEST THAT THE NEW RESIDENTIAL HOUSE ACQUIRED SHOULD BE SITUATED IN INDIA. THE JURISDICTIONAL HI GH COURT IN THE CASE OF MRS. JENNIFER BHIDE (SUPRA) HA D HELD THAT INTRODUCING A WORD WHICH IS NOT THERE INT O A SECTION AMOUNTS TO LEGISLATION WHEN PARLIAMENT HAS NOT USED THESE WORDS IN THE SAID SECTION. IN VIEW OF THIS DECISION, WE ARE PRECLUDED FROM READING THE WORDS IN INDIA INTO SEC. 54F OF THE ACT, WHEN THE PARLIAMENT IN ITS LEGISLATIVE WISDOM HAS DELIBERATE LY NOT USED THE WORD IN INDIA IN SEC. 54F OF THE ACT . ITA NO.472/B/14 14 THEREFORE, IN VIEW OF THE DISCUSSION ABOVE, WE FOL LOW THE LATTER DECISIONS FO THE MUMBAI BENCHES OF THE ITAT IN THE CASES OF MRS. PREMA P SHAH AND SANJIV P SHAH (SUPRA) AND DR. GIRISH M SHAH (SUPRA). THE PROVISIONS OF SEC. 54 OF THE ACT WHICH WAS CONSIDER ED BY THE MUMBAI BENCHES OF THE ITAT IN THE CASES OF MRS. PREMA P SHAH AND SANJIV P SHAH (SUPRA) AND DR. GIRISH M SHAH (SUPRA) ARE IN PARI MATERIAL WITH SEC. 54F OF THE ACT AND, THEREFORE, THESE TWO DECIS IONS OF THE MUMBAI BENCHES OF THE TRIBUNAL ARE EQUALLY APPLICABLE WHILE CONSIDERING THE EXEMPTION U/S 54F OF THE IT ACT AND HENCE WOULD BE APPLICABLE TO THE PRESENT CASE OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE ALLOW THE ASSESSEES CLAIM FOR EXEMPTION U/S 54F OF THE ACT SINCE ALL CONDITIONS LAID DOWN I N THIS SECTION ARE SATISFIED FOR AVAILING OF THE SAID EXEMPTION. 11. THE LEARNED DR ARGUED THAT AS PER THE SUB SEC. 3 OF SEC. 54F IF THE NEW ASSET IS TRANSFERRED WITHIN A PERIOD 3 YEAR S FROM THE DATE OF PURCHASE, THE AMOUNT OF CAPITAL GAIN WILL BE TAXED IN THE YEAR OF SALE BUT IN THE CASE OF THE ASSET PURCHASED OUTSIDE INDI A THE SAID AMOUNT OF CAPITAL GAIN CANNOT BE TAXED. WE DO NOT AGREE WITH THE SAID ITA NO.472/B/14 15 CONTENTION OF THE LEARNED DR BECAUSE IN THE CASE OF TRANSFER OF THE NEW ASSET WITHIN THE PERIOD OF 3 YEARS FROM THE DAT E OF PURCHASE, THE CONSEQUENCES WOULD BE TAXING THE CAPITAL GAIN ARIS ING FROM THE TRANSFER OF ORIGINAL ASSET NOT CHARGED TO TAX U/S 4 5 OF THE ACT AND, THEREFORE, IT MAKES NO DIFFERENCE AS FAR AS THE CON SEQUENTIAL CHARGEABILITY OF CAPITAL GAIN ARISING FROM THE TRAN SFER OF ORIGINAL ASSET WHETHER THE NEW ASSET IS PURCHASED IN INDIA OR OUTS IDE INDIA. FOR READY REFERENCE WE QUOTE SUB SEC. (3) OF SEC. 54F SECTION 54F(3) - WHERE THE NEW ASSET IS TRANSFERRED WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF ITS PURCHASE OR, AS THE CASE MAY BE, ITS CONSTRUCTION, THE AMOUN T OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED U/S 45 ON THE BASIS OF T HE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE (A) OR , AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1) SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN RELATING TO LONG TERM CAPITAL ASSETS OF THE PREVIOUS YEARS IN WHICH SUCH NEW ASSE T IS TRANSFERRED. 12. THE PLAIN LANGUAGE OF THE SUB SEC. 3, NO WHERE CONTEMPLATE TAXING OF THE CAPITAL GAIN ARISING FROM TRANSFER OF THE NEW ASSET BUT IT IS ONLY TAXING OF THE CAPITAL GAIN ARISING FROM TRA NSFER OF THE ORIGINAL ITA NO.472/B/14 16 ASSET, AND THEREFORE, THE STATUS OF THE ASSESSEE BE ING A RESIDENT OR NON- RESIDENT INDIA IS NOT AT ALL RELEVANT FOR THE PURPO SE OF SUB SEC. 3 OF SEC. 54F. 13. IN VIEW OF THE ABOVE DISCUSSION AND BY FOLLOWIN G THE DECISION OF THE COORDINATE BENCH, WE HOLD THAT THE CIT(A) IS NOT JUSTIFIED IN INVOKING THE PROVISION OF SEC. 263 ON THE ISSUE OF INVESTMENT MADE IN THE NEW ASSET OUTSIDE INDIA FOR THE YEAR UNDER CONS IDERATION. 14. THE NEXT GROUND RAISED BY THE CIT IS REGARDING THE INSUFFICIENCY OF THE FUND FROM THE SALE PROCEEDS OF THE EXISTING ASSET FOR ACQUIRING THE NEW ASSET. IF THIS VIEW OF THE C IT IS ACCEPTED THEN THE PROVISION OF SEC. 54F CANNOT BE GIVEN EFFECT IN ITS TOTALITY. AS PER SUB SEC. 1 OF SEC. 54F THE REQUIREMENT OF INVESTIN G IN NEW RESIDENTIAL HOUSE IS WITHIN PERIOD OF ONE YEAR BEFORE OR TWO YE ARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE OR CONSTRUCTION OF A HOUSE WITHIN A PERIOD OF 3 YEARS AFTER THE DATE OF TRANSFER. THER EFORE, IF NEW RESIDENTIAL HOUSE IS PURCHASED WITHIN A PERIOD OF O NE YEAR BEFORE THE TRANSFER OF EXISTING ASSET THEN THE QUESTION OF AVA ILABILITY OF SALE PROCEEDS OF THE EXISTING ASSET AT THE TIME OF ACQUI SITION DOES NOT ARISE. ACCORDINGLY, WE DO NOT FIND ANY SUBSTANCE IN THE VI EW OF THE CIT ON ITA NO.472/B/14 17 THIS POINT WHICH IS CONTRARY TO THE PROVISION OF SE C. 54F(1). HENCE CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISION OF SEC. 263 ON THIS POINT. 15. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE T HE IMPUGNED REVISION ORDER PASSED UNDER SEC. 263 OF THE INCOME- TAX ACT. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPT , 2015. SD/- SD/- (JASON P BOAZ) (VIJAYPAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 16/9/2015 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.