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2018 (2) TMI 1209 - AT - Income TaxDeduction u/s 54F - new residential flat is situated outside India and hence deduction u/s 54F is not available - Held that - There is an amendment by Finance Act 2014 in Section 54F with effect 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. Prior to the aforesaid amendment there 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 deduction u/s 54F are concerned . The Hon ble Gujarat High Court in the case of Leena Jugalkishore Shah (2016 (12) TMI 351 - GUJARAT HIGH COURT) has allowed the deduction u/s. 54F to the taxpayer making investments outside India in residential house properties . Claim of being charged to tax as long term capital gain on sale of shares of private limited company instead of it being short term capital gain as claimed in the return of income filed by the assessee with Revenue - Held that - Since the assessee filed the claim before the AO as well before learned CIT(A) to bring to tax capital gains as long term capital gain on sale of shares of Private Limited Company instead of short term capital gain as declared in the return of income we admit the said claim filed by the assessee however we are remitting the matter back to the file of the A.O for considering the aforesaid additional claim raised by the assessee on merits after hearing the contention of the assessee and evaluating evidences filed/to be filed by the assessee on merits in accordance with law. A.O will consider the claim of the assessee on merits in accordance with law. The assessee is directed to appear before the A.O. and file necessary contentions explanation and evidences before the A.O. w.r.t. aforesaid additional claim which shall be evaluated by the AO on merits in accordance with law. The AO shall provide proper and reasonable opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law on merits.
Issues Involved:
1. Disallowance of exemption claim under Section 54F of ?76,66,657. 2. Adoption of the sale price of Terrace in Arcadia Building as per Stamp Duty Valuation Authority under Section 50C of ?86,32,000. 3. Rejection of the valuation report valuing the terrace sold at ?9,90,000 as on 01-04-1981. 4. Disregard of the revised computation of income filed by the assessee, claiming sale of shares of a private limited company under Long Term Capital Gains instead of Short Term Capital Gains. Detailed Analysis: 1. Disallowance of Exemption Claim under Section 54F: The primary issue was whether the assessee was entitled to a deduction under Section 54F for an investment made in a residential flat in Dubai, UAE. The AO and CIT(A) denied this claim, asserting that the residential house property must be situated in India. The AO relied on the ITAT Mumbai decision in Farhad J Bottlewalla v. ACIT, which supported this view. However, the assessee cited the Gujarat High Court decision in Leena Jugal Kishore Shah vs. ACIT, which held that investments in residential house properties outside India were entitled to deduction under Section 54F before the amendment by Finance Act 2014 (effective from 01.04.2015). The tribunal, considering this precedent and the similar ITAT Mumbai decision in ITO v. Nishant Lalit Jadhav, ruled in favor of the assessee, allowing the deduction under Section 54F for the investment made in Dubai, UAE. 2. Adoption of Sale Price as per Stamp Duty Valuation Authority under Section 50C: The tribunal did not explicitly address this issue in detail, as the resolution of the primary issue (deduction under Section 54F) rendered other related issues academic. The tribunal refrained from adjudicating this matter further. 3. Rejection of Valuation Report of ?9,90,000 as on 01-04-1981: Similar to the second issue, the tribunal did not delve into this matter in detail. The resolution of the primary issue concerning the deduction under Section 54F made this issue academic, and thus, it was not further adjudicated. 4. Disregard of Revised Computation of Income: The assessee claimed that the sale of shares of a private limited company should be treated as Long Term Capital Gains instead of Short Term Capital Gains as originally declared. This claim was made through a revised computation of income filed during assessment and appellate proceedings but was not accepted by the AO and CIT(A) as it was not filed through a revised return of income. The tribunal referred to the Supreme Court decision in Goetze (India) Ltd. and the Bombay High Court decision in CIT v. M/s. Pruthvi Brokers & Shareholders, which allowed additional claims to be made before appellate authorities even if not filed through a revised return. Consequently, the tribunal admitted the assessee's claim and remitted the matter back to the AO for consideration on merits, directing the AO to evaluate the claim based on the contentions and evidence provided by the assessee. Conclusion: The tribunal allowed the appeal of the assessee, granting the deduction under Section 54F for the investment made in Dubai, UAE, and remitted the issue of the revised computation of income for the sale of shares back to the AO for consideration on merits. The other issues were deemed academic and not adjudicated further. The decision was pronounced in the open court on 15.02.2018.
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