2020 (2) TMI 246 - AT - Income Tax

Deduction u/s. 54/54F - deduction u/s. 54/54F when purchased the house outside India - assessee claimed deduction on the capital gain on sale of the property as he invested the capital gain in purchase of a residential house in Texas on 12.7.2013 - whether the assessee would be entitled to ? - HELD THAT - We find that in the decision rendered in the case of Jai Kumar Gupta HUF 2019 (3) TMI 466 - ITAT MUMBAI on identical facts the assessee had made a claim for deduction u/s. 54 of the Act instead of 54F of the Act. The Tribunal held that the assessee s claim for deduction u/s. 54F should be examined. In the case of Arshia Basith 2018 (8) TMI 1359 - ITAT BANGALORE the Bangalore Bench of the Tribunal held that assessee would be entitled to deduction u/s. 54F of the Act even in respect of property purchased which is located outside India. In the case of assessee the deduction claimed should be examined in the parameters of section 54F of the Act in the light of decision cited before us. The AO is directed to apply the ratio laid down in the aforesaid decision and allow the claim of deduction of assessee in accordance with the law, after affording assessee opportunity of being heard. Appeal of assessee is treated as allowed for statistical purposes.

Summary

Issues:
- Denial of deduction u/s. 54/54F of the Income-tax Act, 1961 for the assessee's claim.

Analysis:
1. Background: The appeal concerns the denial of the claim for deduction u/s. 54/54F of the Income-tax Act, 1961 by the revenue authorities for the assessment year 2013-14.

2. Facts: The assessee, an individual, sold a property and invested the capital gain in a residential house in Texas. The assessing officer (AO) disallowed the deduction u/s. 54/54F on the grounds that the property sold was a vacant site and the new asset was purchased outside India.

3. AO's Decision: The AO computed the capital gain and denied the deduction u/s. 54/54F, resulting in a taxable long-term capital gain of ?1,89,50,133.

4. CIT(Appeals) Decision: The CIT(A) upheld the AO's decision on disallowing the deduction u/s. 54/54F but provided some relief on the quantum of capital gain.

5. Tribunal's Analysis: The Tribunal considered the assessee's reliance on precedents where deductions u/s. 54F were allowed for properties purchased outside India. Referring to various cases, the Tribunal held that the assessee is entitled to deduction u/s. 54F even for properties acquired abroad, based on the plain language of the statute.

6. Tribunal's Decision: The Tribunal directed the AO to reexamine the deduction claim under section 54F in line with the cited decisions, allowing the assessee's claim for deduction. The appeal was treated as allowed for statistical purposes.

7. Conclusion: The Tribunal's decision clarified that the assessee is entitled to claim deduction u/s. 54F for properties purchased outside India, based on the plain language of the statute and consistent judicial precedents. The AO was directed to allow the deduction after due consideration, resulting in the appeal being treated as allowed for statistical purposes.