TaxTMI 
TaxTMI 
2018 (5) TMI 1877
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....ppellant for the relevant financial year. 3. That on the facts and circumstances of the case of the appellant and in law, the Ld. CIT(A) has grossly erred in law, in interpreting the applicability of the amendments made to the Section 54 of the Act, vide the Finance Act 2014, by: - Ignoring the fact that such amendments were made specifically w.e.f. 1 April 2015; - Ignoring the fact that such amendments were prospective, and not retrospective; - Ignoring the fact that the appellant complied with all the provisions of Section 54, and had rightly claimed the exemption; - Unnecessarily misinterpreting the Circular No.01/2015 dated 21/01/2015 issued by the CBDT, being the explanatory notes to the provisions of the Finance Act, 2014. 4. That on the facts and circumstances of the case of the appellant and in law. the Ld. CIT(A) has erred in placing reliance on the decision of the Apex Court in the case of M/s American Hotel and Lodging Association Educational Institute vs CBDT (2008 170 Taxman 306 S.C.) in as much as the same related to exemption claimed by a non profit organization u/s 10(23C)(vi) of the Act and not to the section 54 as is the case of the appellant. ....
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....gs or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head 'Income from house property' (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years, after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to incometax 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." 1.1. From the above, on a very plain and simple reading of the provisions of section 54F of the Act as it stood applicable for the relevant financial year, it is clear that there is nothing that would suggest that the new residential house acquired should be situated in India. 1.2. In connection to the above, it is duly submitted that it is a settled law that if the words of the statute are precise and unambiguous, then nothing more would be required to explain those words in their ordinary and natural sense. Reference here is invited to the decis....
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....bsequent to the amendment, which has come into effect from 01/04/2015 that such investment is required to be made in a residential property in India. 2. In connection to the above, reference here is invited to the amended provisions of sec.54 of the Act which was introduced by the Finance Act, 2014 w.e.f. 01/04/2015, reproduced as under: "....where, in the case of an assessee being an individual or a Hindu undivided family the capital gain arises from the transfer of a long-term capital asset being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset) and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years 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. " 2.1. In view of the above, therefore, ....
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....ce Act, 2014 is prospective and cannot be applied retrospectively. 3.2. Reliance in connection to the above is directly placed on the recent decision of the Mumbai ITAT in the case of ITO vs. Nishant Lalit Jadhav, IT A No. 6833/Mum/2014, dated 26/04/2017 (order copy enclosed) which applies verbatim to the present case of the Assesese. 3.2.1. The facts of the said case being identical to the present case of the Assessee are that the respondent assessee is a Non-resident Indian(NRI) and during the year under consideration he, inter-alia, earned a long term capital gain of Rs. 67,06,652/- from sale of residential property located at Mumbai. In the computation of income assessee claimed (AY. 2011-12) exemption under section 54 of the Act on the ground that the capital gain arising on the sale of property was utilized in the purchase of a residential property at New York, USA. The Assessing Officer denied the claim of exemption under section 54 of the Act on the ground that investment in new residential property did not meet the requirements of section 54 of the Act as the property was acquired outside India. In coming to such conclusion, the Assessing Officer relied upon the d....
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....scope for importing the requirement of making such investment in a residential property located in India.. .. " Thus it was concluded by the Hon'ble bench that On similar analogy, in the present case too, we do not have any reason to uphold the stand of the Assessing Officer that the exemption under Section 54 of the Act is to be allowed only if the investment is made in residential property in India. Considered in the aforesaid light and in the absence of any contrary decision, the parity of reasoning laid down by the Honorable Gujarat High Court has to prevail and we find no reason to distract from the conclusion arrived by the CIT (A). Accordingly, the order of the CIT (A) is hereby affirmed and Revenue fails in its appeal. 3.3. Next, reliance is also placed on the decision of the ITAT-Bangalore in the case of Mr. Arunkumar Nathan vs. Asst. Commissioner of Income Tax, LT. A. No.l041/Bang/2017, pronounced on 25 October, 2017 (order copy enclosed) wherein it was categorically held at para 4 that amendment in section 54 of the Act is prospective and cannot be applied retrospectively. It was held as under: So far as the applicability of the amended provisions of Sect....
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....f the Supreme Court as relied on above in the case of Commissioner of Income Tax -III, Pune Vs Rajasthan And Gujarati Charitable Foundation Poona (supra} in which case it has been specifically held that since there is no specific provision in the Income Tax Act, the amendment has been made in Section 11(6) of the Act which makes the intention of the legislature clear. Applying the above in the instant case, it is submitted that had there been the intention of the legislature that the benefit will be granted for one residential house within India, then there would have been no requirement to subsequently bring an amendment to sec.54 vide Finance Act, 2014. 5. Further, reliance was also placed by the Ld.CIT(A) on the decision of the Apex Court in the case of M/s. American Hotel and Lodging Association Educational Institute vs. CBDT [2008 170 Taxman 306 SCJ. In connection to the above, it is submitted that the said reliance by the Id. CIT(A) is totally misplaced as the above-referred decision is distinguishable on facts. While in the said decision the hon'ble Apex Court has interpreted the provisions of section 10(22) of the Act which was later on replaced by section 10(2....
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..... The ld. AR also submitted that case of assessee is covered by the judgment of Hon'ble Gujrat High Court in the case of Leena Jugal Kishore Shah vs. ACIT 392 ITR 18 (Guj). 5. On the other hand, the ld. DR relied on the orders of the authorities below. He further submitted that the main intention to give exemption u/s. 54 and 54F is to give a boost to the domestic housing sector. Buying immovable property abroad would not serve any purpose or benefit to the domestic economy, though it is not spelt out in spirit, the law never intended for the benefit to be extended to purchase of property located abroad. 6. After hearing both the parties and perusing the materials available on record, and the orders of the authorities below, we find that undoubtedly, prior to amendment made by the Finance Act, 2014 w.e.f. 01.04.2015, the language of section 54 of the Act require the assessee to invest the capital gains in a residential property. It is only subsequent to the amendment, which has come into effect from 01.04.2015 that such investment is required to be made in a residential property in India. The assessment year before us is prior to 01.04.2015. Therefore, the amendment would not b....