ITO (INTERNATIONAL TAXATION) - 3(1)(1), MUMBAI V. KUNAL VATSAL LILANI, MUMBAI

ITA 5042/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7180 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN , HON'BLE ACCOUNTANT MEMBER ITA NO . 5042 /MUM/2016 (A.Y : 2012 - 13 ) INCOME TAX OFFICER (IT) 3(1)(1) ROOM NO. 1627, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021 V . SHRI KUNAL VATSAL LI LANI 40/II, C - 398, OFF. PRINCESS STREET, KALBADEVI ROAD, MUMBAI 400 002 PAN NO : ADNPL 9325 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAROJ V. MANIAR SHRI RUCHIRA SHAH DEPARTMENT BY : SHRI V. VIDHYADHAR DATE OF HEARING : 02 . 04.2018 DATE OF PRONOUNCEMENT : 15 .06 .2018 O R D E R PER C.N. PRASAD 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER OF THE LD. COMMISSIONER OF THE INCOME - TAX (APPEALS) - 57 MUMBAI DATED 30.05.2016 F OR THE ASSESSMENT YEAR 2012 - 13. 2 ITA NO.5042/MUM/2016 (A.Y: 2012 - 13) SHRI KUNAL VATSAL LILANI 2. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS THAT LD.CIT(A) ERRED IN HOLDING THAT THE INVE STMENT IN THE HOUSE AT DUBAI WOULD BE ENTITLED TO E XEMPTION U/S. 54F OF THE ACT. 3. LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET SUBMITTED THAT ISSUE AS TO WHETHER THE ASSESSEE IS ENTITLED FOR E XEMPTION U/S. 54F OF THE ACT, WHEN ASSESSEE INVESTED SALE PROCEEDS FOR PURCHASING THE FLAT OUTSIDE INDIA AND WHETHER THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION U/S. 54F OF THE ACT HAS BEEN DECIDED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ASHOK KESHAVLAL TEJUJA V. A.C.I.T [91 TAXMAN N .COM 28]. COPY OF THE ORDER IS PLACED ON RECORD. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF LEENA JUGALKISHOR SHAH V. A.C.I.T [392 ITR 18] AND FOLLOWING THIS JUDGMENT OF THE HON' BLE GUJARAT HIGH C OURT THE TRIBUNAL IN THE CASE OF ASHOK KESHAVLAL TEJUJA V. A.C.I.T . (SUPRA) HAS HELD THAT ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 54F OF THE ACT ON THE PR OPERTY PURCHASED OUTSIDE INDIA. 4. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER IN DENY ING THE E XEMPTION U/S. 54F OF THE ACT ON THE PROPERTY PURCHASED IN DUBAI WHICH IS OUTSIDE INDIA BY THE ASSESSEE. 3 ITA NO.5042/MUM/2016 (A.Y: 2012 - 13) SHRI KUNAL VATSAL LILANI 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED ON. THE ONLY QUESTION TO BE DECIDED IS AS TO ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 54F OF THE ACT WHEN THE INVESTMENT WAS MADE BY THE ASSESSEE OUTSIDE INDIA BY PURCHASING THE RESIDENTIAL FLAT. THE CONTENTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE COULD CLAIM EXEMPTION U/S. 54F ONL Y WHEN THE PROPERTY IS PURCHASED WITHIN THE TERRITORY OF INDIA AND NOT OUTSIDE INDIA. IN THE CASE ON HAND THE ASSESSEE PURCHASED RESIDENTIAL FLAT IN DUBAI AND CLAIM ED EXEMPTION U/S. 54F OF THE ACT ON THE SALE PROCEEDS INVESTED IN SUCH RESIDENTIAL FLAT. 6. WE FIND THAT I DENTICAL ISSUE HAS COME UP BEFORE THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASHOK KESHAVLAL TEJUJA V. A.C.I.T (SUPRA) AND THE TRIBUNAL CONSIDERING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF LEENA JUGALKISHOR SHAH V. A.C.I.T (SUPRA) AND THE D ECISION OF THE COORDINATE BENCH IN THE CASE OF ITO V. NISHANT LALIT JADHAV IN ITA.NO. 6883/MUM/2014 DATED 26.04.2017 AND ALSO THE AMENDMENT MADE TO SECTION 54F BY THE FINANCE ACT, 2014 W.E.F. 0 1.04.2015 WHEREIN THE EXEMPTION U/S. 54F WAS RESTRICTED ONLY TO THE INVESTMENT MADE WITHIN INDIA; TRIBUNAL HELD AS UNDER: - 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD INCL UDING CITED CASE LAWS BEFORE US . AFTER HEARING BOTH THE PARTIES, WE ARE OF THE VIEW THAT THERE IS AN AMENDMENT BY FINANCE ACT 2014 IN SECTION 54F, WITH EFFECT 4 ITA NO.5042/MUM/2016 (A.Y: 2012 - 13) SHRI KUNAL VATSAL LILANI FROM 01.04.2015 WHEREIN THE BENEFIT OF DEDUCTION U/S 54F WILL BE ALLOWED ONLY WHEN REINVESTMENT IN RESIDENTIAL HOUSE PROPERTY IS MADE WITHIN INDIA. P RIOR TO THE AFORESAID AMENDMENT , THER E WAS NO BAR FOR THE TAXPAYER MAKING INVESTMENTS OUTSIDE INDIA IN RESIDENTIAL HOUSE PROPERTY TO GET THE BENEFIT OF DEDUCTION U/S. 54F PROVIDED OTHER CONDITIONS ARE FULFILLED. WE ARE PRESENTLY CONCERNED WITH APPEAL FOR AY 2011 - 12 WHICH IS PRIOR TO AMENDMENT OF SECTION 54F BY FINANCE ACT, 2014 W.E.F. 01 - 04 - 2015. THERE IS NO DISPUTE BETWEEN RIVAL PARTIES SO FAR AS COMPLIANCE OF THE OTHER CONDITIONS BY THE ASSESSEE AS STIPULATED U/S 54F OF THE 1961 ACT TO GET THE BENEFIT OF D EDUCTION U/S 54F ARE CONCERNED. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF LEENA JUGALKISHORE SHAH(SUPRA) HAS ALLOWED THE DEDUCTION U/S. 54F TO THE TAXPAYER MAKING INVESTMENTS OUTSIDE INDIA IN RESIDENTIAL HOUSE PROPERTIES . THE RELEVANT PORTION OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF LEENA JUGALKISHORE SHAH(SUPRA) IS REPRODUCED HERE UNDER: - 9. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES. WE HAVE PERUSED THE ORDER OF THE TRIBUNAL. THERE IS NO FINDING RECORDED BY THE AUTHORITIES BELOW THAT THE APPELLANT ASSESSEE HAS NOT INVESTED THE SALE PROCEEDS IN A RESIDENTIAL HOUSE. IT IS ALSO NOT IN DISPUTE THAT THE APPELLANT HAS NOT PURCHASED THE RESIDENTIAL HOUSE IN UNITED STATES OF AMERICA. IN FACT, SHE HAS PURCHASED A RESIDENTIAL HOUSE IN U.S.A. OUT OF THE CAPITAL GAIN ON SAL E OF THE PLOT IN INDIA AND THUS SHE HAS FULFILLED THE CONDITIONS STIPULATED IN SECTION 54F OF THE INCOME - TAX ACT. SHE HAS INVESTED THE CAPITAL GAINS IN A RESIDENTIAL HOUSE WITHIN THE STIPULATED TIME. THERE WAS NO CONDITION IN SECTION 54F OF THE INCOME - TAX ACT AT THE RELEVANT TIME THAT THE CAPITAL GAIN ARISING OUT OF TRANSFER OF CAPITAL ASSET SHOULD BE INVESTED IN A RESIDENTIAL HOUSE SITUATED IN INDIA. THE LANGUAGE OF SECTION 54F OF THE INCOME - TAX ACT BEFORE ITS AMENDMENT WAS THAT THE ASSESSEE SHOULD INVEST CAPITAL GAIN IN A RESIDENTIAL HOUSE. IT IS ONLY AFTER THE AMENDMENT TO SECTION 54F OF THE INCOME - TAX ACT BY THE FINANCE (NO. 2) ACT, 2014, WHICH CAME INTO EFFECT WITH EFFECT FROM 1.4.2015 THAT THE ASSESSEE SHOULD INVEST THE SALE PROCEEDS ARISING OUT OF SAL E OF CAPITAL ASSET IN A RESIDENTIAL HOUSE SITUATED IN INDIA WITHIN THE STIPULATED PERIOD. THUS ON A PLAIN READING OF SECTION 54F OF THE INCOME - TAX ACT BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT LEAVES NO ROOM FOR ANY DOUBT THAT THE ASSESSEE SHOULD RES TRICT HER INVESTMENT WITHIN INDIA OR OUTSIDE INDIA. THE ONLY CONDITION WAS THAT THE ASSESSEE SHOULD INVEST IN A RESIDENTIAL HOUSE. THE TRIBUNAL HAS WRONGLY INTERPRETED SECTION 54F OF THE INCOME - TAX ACT BY HOLDING THAT THE ASSESSEE SHOULD PURCHASE THE RESID ENTIAL HOUSE SITUATED IN INDIA. PRIOR TO AMENDMENT TO SECTION 54F OF THE ACT, THE ONLY CONDITION STIPULATED WAS INVESTMENT IN A RESIDENTIAL HOUSE. WHEN THE SECTION 54F OF THE INCOME - TAX ACT WAS CLEAR AND UNAMBIGUOUS, THERE IS NO SCOPE FOR IMPORTING INTO TH E STATUTE THE WORDS WHICH ARE NOT THERE. SUCH IMPORTATION WOULD BE NOT TO CONSTRUE BUT TO AMEND THE STATUTE. IF THERE IS ANY DEFECT IN THE ACT, IT CAN BE REMEDIED ONLY BY THE LEGISLATION AND NOT BY JUDICIAL INTERPRETATION. 10. IN THE PRESENT CASE THE ASSESSEE HAS PURCHASED THE RESIDENTIAL HOUSE 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 5 ITA NO.5042/MUM/2016 (A.Y: 2012 - 13) SHRI KUNAL VATSAL LILANI INCOME - TAX ACT BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT. MOREOVER, WHEN THE LANGUAGE OF A TAXING PROVISION IS AMBIGUOUS OR CAPABLE OF MORE 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 UNAMBIGUOUS. 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 BE EXTENDED TO A RESIDENTIAL 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 AN D AGAINST THE REVENUE. THE MUMBAI TRIBUNAL HAS FOLLOWED THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF LEENA JUGALKISHORE SHAH(SUPRA) WHILE DECIDING APPEAL IN THE CASE OF THE NISHANT LALIT JADHAV(SUPRA). NO CONTRARY DECISION OF HONBLE HIGH CO URTS AND/OR HONBLE SUPREME COURT IS BROUGHT TO OUR NOTICE BY REVENUE. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF LEENA JUGALKISHORE SHAH(SUPRA) AND ALSO DECISION OF THE COORDINATE BENCHES OF ITAT, MUMBAI IN THE CASE O F NISHANT LALIT JADHAV(SUPRA), WE ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 54F FOR INVESTMENT MADE OUTSIDE INDIA IN THE RESIDENTIAL FLAT IN DUBAI, UAE . AS WE HAVE ALLOWED THE CLAIM OF DEDUCTION U/S 54F TO THE ASSESSEE FOR MAKING INVESTMENT IN RES IDENTIAL FLAT IN DUBAI, UAE. IT IS THE SAY OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE OTHER GROUNDS RAISED BY THE ASSESSEE IN ITS MEMO OF APPEAL FILED WITH THE TRIBUNAL RELA TED TO THE METHODOLOGY ADOPTED AND VALUATION OF THE PROPERTY USED FOR COMPUTA TION OF CAPITAL GAINS BY THE AO HAVE BECOME ACADEMIC AND DID NOT REQUIRE ADJUDICATION AND HENCE WE REFRAIN FROM ADJUDICATING THE SAME. WE ORDER ACCORDINGLY. 7. SINCE FACTS BEING IDENTICAL , RESPECTFULLY FOLLOWING THE SAID DECISION WE UPHOLD THE ORDER OF THE L D.CIT(A) IN ALLOWING THE EXEMPTION U/S. 54F OF THE ACT TO THE ASSESSEE. 8. IN THE RESULT, APP EAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 15 TH JUNE , 2018 . SD/ - SD/ - ( N. K. PRADHAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 15 / 06 / 2018 GIRIDHAR , SPS 6 ITA NO.5042/MUM/2016 (A.Y: 2012 - 13) SHRI KUNAL VATSAL LILANI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM