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TMI Blog2023 (1) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... es in USA in our considered view is not tenable. We accordingly hold that the assessee is entitled for claiming deduction u/s.54F for investments made in India in one residential house within the time limit stipulated under the said section. In the case of DIT (International Taxation) v. Mrs. Jenifer Bhide [ 2011 (9) TMI 161 - KARNATAKA HIGH COURT] has considered a similar issue and held that to attract section 54 and section 54EC of the Act, what is material is the investment of the sale consideration in acquiring the residential premises or constructing a residential premises or investing the amounts in bonds set out in section 54EC and once the sale consideration is invested in any such manner out of the entire sale consideration that had flown from the assessee, then the assessee would be entitled to the benefit conferred under this provision. In our view the facts of assessee s case needs to be examined based on evidences. We accordingly remit the issue back to the AO with a direction to verify the documents and evidences and allow the claim of the assessee with respect to the property acquired by the assessee out of sale consideration keeping in mind the ratio laid dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finding of the CIT (Appeals) that the conditions in the proviso to section 54F of the IT Act are not satisfied by the assessee as she was owning two residential properties abroad during the relevant assessment year and therefore not entitled for exemption under section 54F of the IT Act 6. The CIT(Appeals) failed to understand, in the right perspective, the legislative intend in bringing the amendment to section 54F of the Act by the Finance Act, 2014 with effect from AY 2015-16 onwards. The CIT (Appeals) ought to have held that properties held abroad shall not be considered for deciding a claim under section 54F of the Act with effect from AY 2015-16 onwards. The interpretation given by the CIT (Appeals) contrary to the above is totally illegal, arbitrary and against the legislative intention and the provisions of section 54F of the IT Act. 7. The assessing officer disallowed the claim under section 54F of the Act in respect of Skyline Infinity, Thrissur, solely for the reason that the assessee s name was also shown as purchaser along with her husband in the agreement for sale in respect of property at Shobha, Thrissur. The CIT (Appeals) got convinced of the fact, fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly it was proposed to disallow the entire claim under section 54F. 4. The assessee filed reply dated 29-8-2017 to the notice stating that the conditions under section 54F is satisfied and that the entire payments towards cost of the Apartment in Sobha City was paid by assesse's husband Dr. Jose Joseph Vempilly completely out of his fund and the name of the assesse was shown in the agreement with intention of being a nominee and the assesse has no beneficial or actual ownership is held by the assessee. Further it was stated that the possession of the apartment in the Sobha City was transferred only on 6th May, 2017 and the registration of the property is yet to be completed. Therefore it was contended that the claim in relation to the investment in 'Skyline Infinity' is not hit by the proviso to section 54 F of the Act. 5. It was further contended that the entire cost for the purchase of Skyline Infinity apartment was paid by the assesseee to Skyline builders and it was submitted that Rs 91,81,814/- may be taken as cost of apartment. The assessee thereafter submitted another letter dated 5-12-2017 specifically contending that the assessee has not purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed against the entire capital gain since she has paid an amount of Rs 91,81,814/- for investment in property at Skyline Infinity'. 7. During the course of hearing the CIT(A) called on the assessee to furnish the details of all the properties owned by the assessee including those owned in abroad. The assessee furnished the details as required from which the CIT(A) noticed that the assessee is jointly owning two residential houses in USA. The CIT(A) held that the assessee is not entitled to deduction u/s.54F at all since the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset. Accordingly the CIT(A) enhanced the assessed income of the assessee and also initiated penalty u/s.271(1)(c). Aggrieved the assessee is in appeal before the Tribunal 8. The ld AR submitted that prior to the AY 2015-16 ( prior to the amendment made by the Finance Act, 2014 to section 54 and 54F of the Income Tax Act), when a claim was made by an assessee under section 54 or 54F of the Income Tax Act in respect of investment made in a residential house ABROAD, the Courts have held that such claim in respect of investment in a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee abroad. 10. The learned DR relied on the order of the CIT(A). 11. We heard the rival submissions and perused the material on record. The assessee has sold a land jointly owned along with her husband and made an investment in a residential house property and claimed that the conditions given under section 54F of the Act. The AO allowed the deduction u/s.54F to the assessee not towards what she has claimed in the return of income but towards another property which is in the joint name of the assessee and her husband. This had resulted in reduction in the deduction u/s.54F and therefore the assessee preferred an appeal before the CIT(A). The CIT(A) took into account the residential property owned by the assessee in USA and denied the entire benefit under section 54F of the Act by stating that the assessee is hit by the proviso (i) to section 54F of the Act. Before proceeding further we will look at section 54F(1) which reads as follows Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not specify that the existing residential house in India alone should be considered for this purpose. Accordingly the two houses in USA owned by the assessee had been considered by the CIT(A) for denying the deduction. Subsection (1) of section 54F was amended by The Finance Act (No 2) 2014 where for the words constructed, a residential house was substituted to with constructed, one residential house in India to bring in clarity that the deduction is allowable only if the investment in the new residential house is made in India and not abroad. The proviso which puts conditions for claiming exemption however states that the assessee should not own more than one residential house other than the new house but does not explicitly say whether in India or abroad. The argument of the ld AR is that section 54F in its entirely is brought in to promote the real estate industry in India and therefore the proviso should be read in conjuncture with the main section where the deduction is allowable only for investment in property in India and therefore the condition restricting the deduction also should be applied only for existing properties in India and not abroad. It is to be notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for 50% of investment in Apartment in Sobha City and the CIT(A) after considering the evidences had allowed the deduction towards 100% of the investments in the hands of assessee s husband. Therefore the ld AR prayed for direction that the deduction u/s.54F shall be granted for investment in the property in 'Skyline Infinity' to the assessee. 14. We hear the parties. We see merit in the submissions of the assessee. In this regard we notice that the Hon ble Karnataka High Court in the case of DIT (International Taxation) v. Mrs. Jenifer Bhide [2011] 15 taxmann.com 82 has considered a similar issue and held that to attract section 54 and section 54EC of the Act, what is material is the investment of the sale consideration in acquiring the residential premises or constructing a residential premises or investing the amounts in bonds set out in section 54EC and once the sale consideration is invested in any such manner out of the entire sale consideration that had flown from the assessee, then the assessee would be entitled to the benefit conferred under this provision. In our view the facts of assessee s case needs to be examined based on evidences. We accordingly remit th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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