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TMI Blog2018 (5) TMI 1877X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee 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. In the present case the assessee has purchased the residential house abroad out of the sale proceeds of the plot in India and thus she has fulfilled the conditions of section 54F of the Income-tax Act application to the assessee s case. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... at ₹ 87,80,287/- and claimed transfer expenses of ₹ 11,99,443/-, thereby a long term capital gain arrived at ₹ 12,14,20,270/-. The assessee invested the capital gain of ₹ 8,70,97,925/- in purchase of his residential property in Boston, USA and declared the balance amount of ₹ 3,43,22,345/- as long-term capital gains in his return of income filed. According to the Assessing Officer, the assessee's claim for exemption u/s. 54 on investment in house property purchased abroad is out of the purview of section 54 & 54F of the Act. He, therefore, being dissatisfied with the submissions of the assessee and relying on the case law in American Hotel & Lodging Association Educational Institute (supra), rejected the claim of exemption made by the assessee. In appeal, the ld. CIT(A) after considering the submissions of the assessee and the case laws, also denied the exemption u/s. 54 of the Act. Aggrieved, the assessee is in appeal before the Tribunal. 3. The ld. AR of the assessee submitted a written synopsis, which reads as under : "1. Before going into the particular facts of the case of the Assessee, your Honours attention is first and foremost invited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the statute was intended to remedy, or of the circumstances which led to the passing of the statute may be looked into for the purpose of ascertaining the object which the legislature had in view in using the words in question " 1.3. Further, it is also a settled position that the court cannot read anything into a statutory provision which is plain and unambiguous. Support in this regard is taken from the decision of the Hon'ble Karnataka High Court in the case of DIT(International Taxation) v. Mrs. Jennifer Bhide [2012] 349 ITR 80/[2011] 203 Taxman 208/15 taxmann.com 82 (Kar.) in /. T. A. No, 169 of 2011 wherein, the Hon'ble High Court, while considering the issue as to whether an investment in joint names of the assessee and her spouse would preclude the assessee from availing of exemption under sections 54 and 54EC of the Act, held that there is no specific condition in section 54 or 54CC that the investment/construction should be there in the name of the assessee only. 1.4. Thus, in view of the above decisions, it is clear that one is precluded from reading the words "in India" into section 54F of the Act, as contended by the AO, when Parliam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er copy enclosed) In this case, the issue concerned regarding disallowance of claim of depreciation u/s.32 of the Act by the AO on the ground that once the capital expenditure is treated as application of income for charitable purposes, the assessee had virtually enjoyed a 100 per cent write off of the cost of assets and, therefore, the grant of depreciation would amount to giving double benefit to the assessee. In this regard, finally, the Hon'ble Supreme Court, denying the contention of the Department, held as under: "It may be mentioned at this stage that the legislature, realizing that there is no specific provision in this behalf in the Income Tax Act, has made amendment in Section 11(6) of the Act No.2/2014 which became effective from the Assessment Year 2015-16. The Delhi High Court has taken the view and rightly so, that the said amendment is prospective in nature..." Based on the above analogy as clearly laid out by the Apex Court of the Country, the following inference may be drawn in assessee's case that during the relevant assessment year, sec.54, as it stood before the amendment vide Finance Act, 2014, did not stipulate that the new reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITA No.3582/Mum/2009 and Vinay Mishra vs. CIT , in ITA No.895/(bang) of 2012. Against such a decision of the CIT(A), Revenue was in appeal before the Hon'ble ITAT. 3.2.2. It was duly held by the Hon'ble ITAT as under: (para 5 of the Order) "Undoubtedly, prior to the amendment made by Finance (Nos.2) Act, 2014 w.e.f. 01/04/2015, the language of section 54 of the Act required the assessee to invest the capital gain in a residential property. It is only subsequent to the amendment, which has come into effect from 01/04/2015* that such investment is required to be made in a residential property in India* The assessment year before us is prior to 01/04/2015, and, therefore, the amendment would not be applicable. Discussing the case of Smt. Leena J. Shah (6 SOT 721), on which reliance was placed by the Id. A.O. in the present case of the Assessee the Hon'ble ITAT, noting that the said decision has since been reversed by the Hon'ble Gujarat High Court in its judgment in ITA No. 483 of 2006 dated 14/06/2016,held that A similar situation, though in the context of section 54F of the Act, has been considered by the Hon'ble Gujarat High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exemption claimed u/s.54 of the Act during the relevant assessment year. 3 4 Reference is further invited to the decision of the Mumbai ITAT in the case of ITO vs. Shri Farokh Jal Deboo, ITA No. 4650/Mum/2013, (order copy enclosed). In the said case, the Hon'ble Tribunal held as under: "7. The Finance (No 2) Bill, 2014 brought an amendment in Section 54, wherein sub-section (I), for the words "constructed, a residential house", the words "constructed, one residential house in India " has to be substituted w.e.f. 1st day of April, 2015. Thus, it is clear from the amendment so brought for claiming exemption U/S'S residential house should to be constructed in India only w.e.f. assessment year 2015- 2016. However, the assessment year under consideration is 2010-2011 U. much prior to the amendment so brought in Finance (No.2) Bill, 2014. There is no reason to decline exemption u/s.54 during the A.Y.2010-11 under consideration. .............. In view of the above, we hold that during the year under consideration, assessee was entitled for exemption u/s.54 even if investment was made in residential house situated outside India, provided th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A provision for exemption or relief should be construed liberally and in favour of the assessee even if it results in his obtaining "a double advantage". Refer CIT vs. Naga Hills Tea Co. Ltd. [89 ITR 236, 240 (SC)] and CIT vs. Contr ED vs. Kanakasabai [89 ITR 257, 257(5C)J. Reliance in this connection is also placed on the decision of the Apex Court in the case of Gursahai Saigal vs. CIT [48 ITR (SC) 1] wherein it was held that "those sections which impose the charge or levy should be strictly construed; but those which deal merely with the machinery of assessment and collection should not be subjected to a rigorous construction but should be construed in a way that makes the machinery workable." Therefore, as regards the provisions of section 54 and section 54F are concerned they are workable and operative and as such from the plain language it is very clear that an assessee is entitled to benefit u/s 54 if he fulfills the conditions laid down in that section irrespective of the fact that whether the property is purchased in India or out of India. Hence, it amply follows from the above that by virtue of this rule of interpretation also the assessee is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, the assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) observed that acquiring of new asset outside India by the assessee is beyond the purview of the Income-tax Act and as such section 54F will have no 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 sale 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. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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