Section 54 exemption denied for reinvestment in a residential house outside India after the statutory amendment.

Section 54 relief was unavailable where capital gains from a residential house were reinvested in a residential property outside India for assessment year 2015-16. The provision was amended by the Finance (No. 2) Act, 2014 with effect from 1 April 2015, and the revised language no longer permitted exemption for overseas reinvestment. On that statutory basis, the claimed deduction could not be allowed and the exemption claim was rejected.

---

---

Issues: Whether deduction under section 54 of the Income-tax Act, 1961 was allowable where the capital gains from transfer of a residential house were reinvested in a residential house situated outside India for assessment year 2015-16.

Analysis: The deduction under section 54(1) stood substituted with effect from 01.04.2015 by the Finance (No. 2) Act, 2014, and the amended provision no longer permitted reinvestment in a residential house abroad for the relevant assessment year. In view of the amended statutory language, the claimed exemption could not be allowed.

Conclusion: The deduction claim was rightly disallowed and is rejected.

---