Tribunal grants exemption for house purchase abroad under Income Tax Act

The Tribunal allowed the appeal, setting aside the disallowance of the claim of exemption under sections 54/54F of the Income Tax Act, 1961. The Tribunal considered the effective date of the relevant amendment to section 54, judicial precedents, and decisions supporting the extension of benefits to a residential house purchased outside India before the amendment. Consequently, the Tribunal directed the Assessing Officer to allow the deduction claimed by the assessee.

---

---

Issues:
Disallowance of claim of exemption u/s 54/54F of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax [Appeals] regarding the disallowance of the claim of exemption u/s 54/54F of the Income Tax Act, 1961. The Assessing Officer observed that the assessee purchased a residential house in New Zealand and denied the claim of exemption based on the belief that any residential house purchased outside India is not eligible for deduction u/s 54 and 54F of the Act. The ld. CIT(A) upheld this decision, citing a previous case as precedent.

During the appeal, the assessee argued that the relevant amendment to section 54 was effective from 01.04.2015, and since the assessment year under consideration was 2013-14, the amendment should not be applicable. The assessee relied on the decision of the Authority for Advance Rulings, New Delhi, and a co-ordinate bench decision to support their case. However, the ld. DR supported the findings of the ld. CIT(A), stating that the amendment was clear and no deduction could be allowed to the assessee.

The Tribunal considered the arguments and noted that the amendment to section 54 was effective from 01.04.2015. They referenced a similar decision by the Authority for Advance Rulings, New Delhi, and highlighted a High Court decision which allowed the benefit of section 54F before its amendment to be extended to a residential house purchased outside India. Based on these considerations and judicial decisions, the Tribunal directed the Assessing Officer to allow the claim of deduction. Consequently, the appeal of the assessee was allowed.

In conclusion, the Tribunal set aside the disallowance of the claim of exemption u/s 54/54F of the Income Tax Act, 1961, based on the effective date of the relevant amendment and judicial precedents supporting the extension of benefits to a residential house purchased outside India before the amendment.

---