Non-Resident Indian Wins Tax Refund for US Property Purchase Under Pre-2015 Rule; Amendment Not Retroactive.

The HC ruled in favor of the Petitioner, a Non-Resident Indian, allowing the benefits of Section 54(F) of the Income Tax Act for purchasing a residential property in the USA before the amendment requiring such investments to be in India. The Court deemed the amendment substantive and prospective, not applicable to transactions before April 1, 2015. Additionally, the Court directed the Respondent to accept the Petitioner's revised return under Section 139(5), rejecting the Respondent's contention that it was non-est due to a filing delay. The Court found the rejection of the revision petition unsustainable, allowing the Petitioner a refund.

---

---

Issues involved:
The issue in this case is whether the benefits of Section 54(F) of the Income Tax Act are available to the Petitioner who transferred his residential house in India and purchased another house property in the United States of America, considering the amendment in Sections 54 and 54(F) by the Finance Act of 2014.

Comprehensive Details:

Issue 1: Eligibility for deduction under Section 54 of the Act
The Petitioner, a Non-Resident Indian working in the USA, filed a return of income for AY 2014-15 assuming his income was not taxable in India. He sold a residential flat in India and purchased another in the USA within the time limit prescribed by Section 54. The Respondent rejected his claim based on the amendment in Section 54(1) of the Act, which inserted the words 'in India'. The Petitioner argued that the amendment was prospective and should not apply to transactions before 1st April 2015. The Court agreed, stating that the pre-amended Section 54(F) did not restrict investment to India, and the amendment was not clarificatory but substantive, thus ruling in favor of the Petitioner.

Issue 2: Revision of return under Section 139(5) of the Act
The Respondent contended that the Petitioner's revised return was non-est as it was filed beyond the due date. Additionally, doubts were raised about the cost of the new asset declared by the Petitioner. The Court found that the Petitioner admitted to an inadvertent error in declaring total income as Nil and was entitled to a refund. The rejection of the revision petition on these grounds was deemed unsustainable, and the Respondent was directed to accept the rectified return of income filed by the Petitioner.

Separate Judgment Delivered:
No separate judgment was delivered by the judges in this case.

---