TaxTMI 
TaxTMI 
2019 (2) TMI 1206
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....e and in law, the Ld. CIT(A) erred in allowing deduction under section 54 for investment of capital gain in purchase of new residential house in Panama and thus allowing the shifting of tax base of India to foreign country, whereas provisions of Income Tax act extends to India only and not extra territorial?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred by not following the decision of the Hon'ble Supreme Court in the case of American Hotel & Lodging Association Educational Institute Vs. CBDT(2008 170 Taxman 306 SC) Where it was held that for claim of exemptions u/s 10(23c)(vi), "non profit" qualification has to be tested on Indian activities and applying the same principle, for....
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.... assessee bought the new residential house at a price of Rs. 3,62,81,700. The new residential house was purchased in Panama, a foreign country. The assessee therefore, claimed the exemptions u/s sec. 54 of the I.T. Act and declared Nil income under the head capital Gain. 5. The Assessing Officer (A.O. for short) was of the opinion that the investment should be in India and not abroad for the purpose of the claim of exemption u/s. 54. Hence, he did not grant the exemption. The A.O. held as under: The submission of the assessee is read. The contention of the assesses in the submission is that the law concerning the issue has been recently amended to restrict investment in property abroad to claim exemption u/s 54 of I.T. Act it....
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....ecision of the ITAT is not a final one, hence it has no binding effect on the department if the issue is sub-judies in even higher court. In the case of the the decision of Mumbai ITAT in the case of Prema Shah the department normally takes contrary stand. In view of the above the capital Gain to the extent of amount involved in purchasing the house in Panama is not allowable. The capital gain claimed exempted u/s 54 of Rs. Rs. 25041113 is taxable under the head Long Term Capital Gain. The same is added in the total income of the assessee. 6. Upon the assessee's appeal, the ld. CIT(A) decided the issue in favour of the assessee by noting the following decisions of the Tribunal: 1. N. Ranganathan vs. ITO [2014] ....
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....he law has been recently amended in the finance bill 2014-15 to restrict investment in property abroad to claim exemption under Section 54, itself implies that the said investment was allowed to claim the benefit of the exemption. However, the amendment is not retrospective & the assessee had entered in to this transaction in the Financial Year 2011-12 when the said amendment was not declared. Hence, the appellant is a bonafide tax payer and should not be penalized for the amendments that have taken effect subsequently. Furthermore, the appellant has placed reliance on various case laws which uphold the decision that claim under section 54 for deduction cannot be rejected on grounds that new house was purchased in a foreign country....
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....rs after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period o....
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....n of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. Explanation.-[Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.] 10. Here it is noted that Finance (No.....