Girdhar Mohanani, Mumbai vs Assessee

सर्वश्री आय.सी.शभमव, रेखम सदस्म एवुं श्री वर्जम ऩमर यमर्, न्ममयमक सदस्म BEFORE : SHRI R.C.SHARMA, AM & SHRI VIJAY PAL RAO, JM आमकय अऩीर सं./ITA No.4591/Mum/2013 ( नििाारण वषा / Assessment Year :2010-11) Mr. Girdhar Mohanani, 61-A, Vs. ITO-(IT)-4(1), Mumbai Mittal Tower, Nariman Point, Mumbai-400021 स्थममी रेखम सं ./ जीआइआय सं ./ PAN/GIR No. : AFBPM 0004 L (अऩीरमथी /Appellant) .. (प्रत्मथी / Respondent) AND आमकय अऩीर सं./ITA No.4592/Mum/2013 ( नििाारण वषा / Assessment Year :2010-11) Mrs. Varsha Girdhar Vs. ITO-(IT)-4(1), Mumbai Mohanani, 61-A, Mittal Tower, Nariman Point, Mumbai-

400021 स्थममी रेखम सं ./ जीआइआय सं ./ PAN/GIR No. : APPPM 1126 H (अऩीरमथी /Appellant) .. (प्रत्मथी / Respondent)

यनधमवरयती की ओर से /Assessee by : Shri Kirit Mehta यमजस्र् की ओर से /Revenue by : Shri Love Kumar

सन ु र्मई की तमयीख / Date of Hearing : 27/04/2015 घोषणम की तमयीख/Date of Pronouncement : 6/5/2015 आदे श / O R D E R

PER R.C.SHARMA (A.M.) :

These are the appeals filed by different assessees against the order

of CIT(A) for the assessment year 2010-2011, in the matter of order

passed u/s.143(3) of the I.T.Act.

2 ITA Nos.4591&4592/2013

2. Similar grounds have been raised in both the appeals, wherein

assessee is aggrieved for decline of claim of exemption u/s.54.,

3. At the outset, ld. AR placed on record order of the Tribunal in case

of Mrs.Prema P. Shah, 100 ITD 60, wherein it was held that even if house

property is acquired in a foreign country, Section 54 does not exclude

right of an assessee to claim benefit in respect of such property if all other

conditions laid down in that section are satisfied.

4. We have considered rival contentions and found that during the

year assessee has claimed exemption u/s.54. Out of the sale

consideration of Rs.87,37,291/-, assessee has deposited Rs.50 lakhs in

capital gains in scheme account. Subsequently deposit was withdrawn

during the assessment year 2010-2011 under consideration and was

invested in a flat in Dubai. As per AO assessee was not entitled for claim

of exemption u/s.54 in respect of investment made in house property

outside India.

5. It was contended by ld. DR that CIT(A) has already considered the

decision in the case of Dr. Girish M. Shah, Mrs.Prema P. Shah, Leena P.

Shah, wherein it was held that exemption is permissible, even if

investment in new residential house is made outside India.

6. On the other hand, ld. AR relied on the decision of Bangalore bench

of the Tribunal in the case of Vinay Mishra, 141 ITD 301, wherein it was

held that provisions of Section 54F does not suggest that new residential

house acquired should be situated only in India. Accordingly exemption

was granted in respect of residential house acquired outside India. It was 3 ITA Nos.4591&4592/2013

observed that on a plain reading of provisions of Section 54F one does

not find anything therein to suggest that the new residential house

acquired should be situated in India. The words "in India" cannot be read

into section 54F, when Parliament in its legislative wisdom has

deliberately not used the words „in India‟ in Section 54F, there was no

reason to show that exemption will not be applicable in respect of house

acquired outside India. Similarly, the Chennai Bench of the Tribunal in

case of N.Ranganathan, 33 ITR(AT) 444 held that the profit on sale of

property used for residential house (foreign house property) acquired

outside India is eligible for exemption u/s.54. However, no contrary

decision of Tribunal or Hon‟ble High Court was brought to our notice

suggesting that exemption will not be available in case residential house

is acquired outside India.

7. The Finance (No.2) Bill, 2014 brought an amendment in Section 54,

wherein sub-section (1), 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.54, that new 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 i.e. 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.

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ITA Nos.4591&4592/2013

8. The provisions contained in sub-section (1) of section 54 of the

Income-tax Act, before its amendment by the Act, inter alia, provided that

where capital gain arises from the transfer of a long-term capital asset,

being buildings or lands appurtenant thereto, and being a residential

house, and the assessee within a period of one year before or two years

after the date of transfer, purchases, or within a period of three years after

the date of transfer constructs, a residential house, then, the amount of

capital gains to the extent invested in the new residential house is not

chargeable to tax under section 45 of the Income-tax Act.

9. 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

that assessee has to comply with other conditions of Section 54. Since

the AO has out-rightly declined exemption on this plea without examining

the other conditions of Sec.54 so as to make assessee eligible, we

accordingly restore the appeal to the file of the AO for verifying other

conditions to be fulfilled for grant of exemption u/s.54 in both the appeals

of the assessees. The AO is also at a liberty to verify actual acquisition of

house property outside India, in terms of transfer deeds so executed in

favour of assessee. We direct accordingly.

10. In the result, appeals of both the assessees are allowed for

statistical purposes.

5

ITA Nos.4591&4592/2013

Order pronounced in the open court on this 06/05/2015.

Sd/- Sd/- (वर्जम ऩमर यमर्) (आय.सी.शभमव) (VIJAY PAL RAO) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भंफ ु ई Mumbai; ददनमंक Dated 06/05/2015 प्र.कु.मभ/pkm, यन.स/ PS

आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :

1. अऩीरमथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमक् ु त(अऩीर) / The CIT(A), Mumbai.

आदे शािसार/ BY ORDER,

4. आमकय आमुक्त / CIT

5. वर्बमगीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai

6. गमर्व पमईर / Guard file.

उप/सहायक पुंजीकार

सत्ममवऩत प्रयत //True Copy// (Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai