2019 (12) TMI 1616 - AT - Income Tax

Disallowance of claim of exemption u/s 54/54F - HELD THAT - The undisputed fact is that by selling the property situated in India the assessee has purchased a residential property in Auckland New Zealand. It is equally true that the amendment has been brought in section 54 vide Finance Act 2014 w.e.f 01.04.2015. We are of the considered opinion that the Legislature in its wisdom has given effect to the amended provision from 01.04.2015 and therefore there is no ambiguity as the said provisions are effective from A.Y 2015-16. Similar view was taken by the Authority for Advance Rulings New Delhi in the case of Dipankar Mohan Ghosh 2018 (1) TMI 947 - AUTHORITY FOR ADVANCE RULINGS NEW DELHI . Moreover we find that the decision heavily relied upon by the first appellate authority has been reversed by the Hon ble High Court of Gujarat 2016 (12) TMI 351 - GUJARAT HIGH COURT . We find that the Hon ble High Court has held We are of the opinion that benefit of section 54F before its amendment can be extended to a residential house purchased outside India - Appeal of assessee allowed.

Summary

Issues:
Disallowance of claim of exemption u/s 54/54F of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax [Appeals] regarding the disallowance of the claim of exemption u/s 54/54F of the Income Tax Act, 1961. The Assessing Officer observed that the assessee purchased a residential house in New Zealand and denied the claim of exemption based on the belief that any residential house purchased outside India is not eligible for deduction u/s 54 and 54F of the Act. The ld. CIT(A) upheld this decision, citing a previous case as precedent.

During the appeal, the assessee argued that the relevant amendment to section 54 was effective from 01.04.2015, and since the assessment year under consideration was 2013-14, the amendment should not be applicable. The assessee relied on the decision of the Authority for Advance Rulings, New Delhi, and a co-ordinate bench decision to support their case. However, the ld. DR supported the findings of the ld. CIT(A), stating that the amendment was clear and no deduction could be allowed to the assessee.

The Tribunal considered the arguments and noted that the amendment to section 54 was effective from 01.04.2015. They referenced a similar decision by the Authority for Advance Rulings, New Delhi, and highlighted a High Court decision which allowed the benefit of section 54F before its amendment to be extended to a residential house purchased outside India. Based on these considerations and judicial decisions, the Tribunal directed the Assessing Officer to allow the claim of deduction. Consequently, the appeal of the assessee was allowed.

In conclusion, the Tribunal set aside the disallowance of the claim of exemption u/s 54/54F of the Income Tax Act, 1961, based on the effective date of the relevant amendment and judicial precedents supporting the extension of benefits to a residential house purchased outside India before the amendment.