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TMI Blog2022 (3) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision , while interpreting the section . Undoubtedly, the word used in section 54 is a residential house and not a residential house in India , therefore, it will be violation of literal interpretation of statute, if we read a residential house as residential house in India. The Tribunal is bound to interpret the law within four corners of statute and refrain from inserting any word in the statute and it would amount to legislating the Act. - Appeal of assessee allowed. - I.T.A.No.178/Viz/2018 - - - Dated:- 28-3-2022 - Shri Laliet Kumar, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Appellant : Shri I.Kama Sastry, AR For the Respondent : Shri SPG Mudaliar, DR ORDER PER SHRI LALIET KUMAR, JUDICIAL MEMBER This appeal is filed by assessee against the order of the Commissioner of Income Tax (Appeals) [for short CIT(A)]-10, Hyderabad in ITA No.0040/CIT(A)-10/2016-17/CIT(A), Hyd-10/10187/2016-17 dated 19.03.2018 for the Assessment Year (A.Y.)2010-11. 2. The assessee has raised the following grounds of appeal : 1. The Id. AO is not correct in denying the benefit of exemption provided under section 54 of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed u/s 54F. On examination of the submissions made by the Ld.AR , the AO observed that Long Term Capital Gains has been devised and introduced inter-alia in order to develop and encourage the housing and infrastructure needs in India. Accordingly, such exemption is being granted under various sections viz., Sec.54, 54EC, 54F etc. for the reinvestments made in the assets as specified by the said sections. The AO observed that income arisen in India on account of capital gains cannot be said to go tax free if it is reinvested elsewhere outside India, as in the case on hand, income from such house property in USA cannot be taxed in India as it is taxed in USA. The AO further observed that even as per Article 13 of the Indo-USA DTAA, capital gains are to be taxed in the contracting state in which they arise and as per the law of that contracting state as follows : Article 13- Gains Except as provided in Article 8 (Shipping and Air Transport) of this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law. In view of the above, the AO has passed assessment order u/s 143(3) r.w.s. 147 by disallowing the exemption clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2015, therefore, the benefit of section 54F cannot be denied to the assessee. The assessee has constructed the house in USA after the selling the property in India 7. We have heard the rival contentions and the material available on record. It is not disputed by the Ld.DR before us that the assessee has sold the immovable property within the definition of capital asset in India. It is also undisputed fact that the assessee has claimed exemption u/s 54F for ₹ 17,89,099/- by reinvesting the house situated in USA. It is also not disputed that reason for denying benefit of 54F by the AO as well as the Ld.CIT(A) was solely on the ground that the assessee has reinvested the amount in USA in the residential house property. In our considered opinion, once, the assessee invested the long term capital gain in buying the residential house either in India or outside India prior to 01.04.2015, the assessee is entitled for exemption. The language used inthe statute for the A.Y. 2010-11 under section 54F provides as under : Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 64 54F. (1) 65 [Subject to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head Income from house property , other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such new asset is transferred.] 71 [(4) The amount of the net c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he literal meaning of construction of a residential house used in section 54 cannot be restricted to only purchasing or constructing or acquiring a residential house within India . In our considered opinion, the golden rule of interpretation as envisaged in law is required to be applied. In our view, when the statue is clear and unambiguous, then the Tribunal or court should refrain from adding any meaning or word which has not been provided by the statute, to the provision , while interpreting the section . Undoubtedly, the word used in section 54 is a residential house and not a residential house in India , therefore, it will be violation of literal interpretation of statute, if we read a residential house as residential house in India. The Tribunal is bound to interpret the law within four corners of statute and refrain from inserting any word in the statute and it would amount to legislating the Act. The above said views are fortified by the decisions of the three High Courts referred by the Ld.AR and the most recent decision was of the Hon ble Madras High Court in the case of CIT Vs. Saroja Naidu, wherein, the Hon ble High Court in para No.21 and 22, after discussing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to the benefit of deduction under section 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. The said provision also envisages an investment in the prescribed securities which to some extent the present Assessee also made and even that was held entitled to deduction from Capital Gains tax liability by the authorities below. If that be so, the Assessee-HUF in the present case, in our opinion, complied with the conditions of Section 54 of the Act in its true letter and spirit and, therefore was entitled to the deduction under section 54 of the Act for the entire investment in the properties and securities. Therefore, in our opinion, Judgment rendered by the Karnataka High Court in CIT v. D.AnandaBasappa ((2009) 309 ITR 329 (Karn)) KhoobchandM.Makhija(supra) cited at bar by the learned counsel for the Assessee apply on all fours to the facts of the present case. 22. The decision of Punjab and Haryana High Court relied upon by the learned counsel for the Revenue, in which the Division Bench of the said Court finding a distinction with D.AnandaBasapaa's case (supra) on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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