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

ITA 5856/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7369 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAROJ V MANIAR; RUCHIRA SHAH
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5856/M/2016 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER (INTERNATIONAL TAXATION)- 3(1)(1), ROOM NO.1627, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021 VS. M/S. VATSAL H. LILANI, GROUND FLOOR, NEPEAN SEA ROAD, 91-L, JAGMOHANDAS MARG, MUMBAI 400 006 PAN: AAAPL4176C (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SAROJ V. MANIAR, A.R. & MS. RUCHIRA SHAH, A.R. REVENUE BY : SHRI SAURABH KUMAR RAI, D.R. DATE OF HEARING : 11.04.2018 DATE OF PRONOUNCEMENT : 27.04.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 29.07.2016 OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THE VARI OUS GROUNDS OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A ) HOLDING THEREIN THAT INVESTMENT IN THE HOUSE AT SINGAPORE W OULD BE ENTITLED TO EXEMPTION UNDER SECTION 54 OF THE ACT. ITA NO.5856/M/2016 M/S. VATSAL H. LILANI 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED A RETURN OF INCOME ON 25.07.2012 BY DECLARING INCOME AT RS.14,78 ,960/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE STATUTORY NOTICES UNDER SECTION 143(2) & 14 2(1) WERE ISSUED AND DULY SERVED ON THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASS ESSEE ALONG WITH OTHER CO-OWNERS HAVE SURRENDERED THEIR T ENANCY RIGHTS FOR WHICH A TOTAL CONSIDERATION OF RS.17,75,00 ,000/- WAS RECEIVED IN WHICH ASSESSEES SHARE WORKED OUT TO RS.3,98,43,902/-. THE ASSESSEE HAS SHOWN THE SAID SU RRENDER OF TENANCY IN THE RETURN OF INCOME AND ALSO CLAIM ED THE EXEMPTION UNDER SECTION 54 OF THE ACT BY PUTTING TH E SAID MONEY IN THE CAPITAL GAIN SCHEME ACCOUNT. THE AO NO TICED THAT ASSESSEE HAS PURCHASED NEW RESIDENTIAL PROPER TY IN SINGAPORE AND A CERTIFICATE DATED 07.05.2014 ISSUED BY SBI CERTIFYING REMITTANCE OF THE ENTIRE AMOUNT FOR PURC HASE OF RESIDENCE IN SINGAPORE WAS ALSO EXAMINED. THE AO CO NCLUDED THAT THE SAID PURCHASE WAS NOT COVERED BY THE PROVI SION OF SECTION 54 OF THE ACT AS THE PROPERTY WAS PURCHASED ABROAD AND ACCORDINGLY ADDED THE ENTIRE CAPITAL GAIN OF RS.3,98,43,902/- TO THE INCOME OF THE ASSESSEE. THE ACTION OF THE AO WAS ALSO AFFIRMED BY THE LD. CIT(A) BY BRUSHI NG ASIDE THE VARIOUS CONTENTION PUT FORWARD. 4. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE SUBMITT ED BEFORE THE BENCH THAT THE ISSUE IN THE PRESENT CASE OF LONG TERM CAPITAL GAIN BEING INVESTED IN THE PURCHASE OF PROPERTY ABROAD STANDS SETTLED IN FAVOUR OF THE ASSESSEE BY A SERIES OF JUDGMENTS AND THEREFORE IS SQUARELY COVERED IN HIS FAVOUR AND ITA NO.5856/M/2016 M/S. VATSAL H. LILANI 3 ACCORDINGLY THE APPEAL OF THE ASSESSEE SHOULD BE AL LOWED. THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS: 1. ASHOK KESHAVLAL TEJUJA VS. ACIT (2018) 91 TAXMANN.COM 28 (MUMBAI TRIB.) 2. LEENA JUGALKISHOR SHAH VS. ACIT (2016) 72 TAXMANN.COM 185 (GUJ) 3. ITO VS. MR. NISHANT LALIT JADHAV IN ITA NO.6883/MUM/2014 (A.Y. 2011-12) THE LD. A.R. SUBMITTED THAT IN THE DECISION OF THE HO NBLE HIGH COURT AND THE TWO TRIBUNAL DECISIONS IT HAVE BEEN H ELD THAT INVESTMENT OF LONG TERM CAPITAL GAIN OR SALE PROCEE DS OF THE ASSET IN THE PURCHASE OF RESIDENTIAL HOUSE OUTSIDE INDIA, MADE PRIOR TO THE AMENDMENT BY FINANCE (NO.2) ACT, 2014 W HICH IS EFFECTIVE FROM 01.04.2015, IS ELIGIBLE INVESTMENT AN D THEREFORE THE CAPITAL GAIN CANNOT BE BROUGHT TO TAX. 5. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT IT HAS BEEN PROVIDED IN SECTION 1 SUB SECTION 2 OF THE AC T THAT THE ACT EXTENDS TO WHOLE OF INDIA AND THEREFORE THE INV ESTMENTS OUTSIDE INDIA ARE NOT ELIGIBLE UNDER SECTION 54 OF THE ACT. 6. HAVING HEARD THE RIVAL SUBMISSIONS OF BOTH THE P ARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT TH E MATTER IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HON BLE GUJARAT HIGH COURT IN THE CASE OF LEENA JUGALKISHOR SHAH VS . ACIT (SUPRA) AND THE DECISIONS OF THE CO-ORDINATE BENCHE S OF THE TRIBUNAL AS REFERRED TO ABOVE WHEREIN IT HAVE BEEN HELD THAT ANY INVESTMENT IN THE PURCHASE OF PROPERTY OUT OF L ONG TERM CAPITAL GAIN IS COVERED BY THE PROVISION OF SECTION 54/54F WHICH IS MADE PRIOR TO THE AMENDMENT BY FINANCE (NO .2) ACT, ITA NO.5856/M/2016 M/S. VATSAL H. LILANI 4 2014 EFFECTIVE FROM 01.04.2015 AND ACCORDINGLY THE CASE OF THE ASSESSEE IS SQUARELY COVERED IN HIS FAVOUR. WE, THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN AS ABOVE , DISMISS THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.04.2018. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27.04.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.