2022 (8) TMI 485

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....ng the year, the assessee has sold his property, the proceeds amounting to Rs.27,37,93,924/- have been remitted abroad as per the details of 15CA certificate. The Assessing Officer treated this amount under the head "short term capital gains" and taxed accordingly vide Assessment Order dated 31.03.2015. Later, a rectification order u/s 154 of the Income Tax Act, 1961 dated 28.07.2016 was passed wherein deduction claim u/s 54 of Rs.4,86,22,366/- has been allowed resulting into refund of Rs.76,44,140/- owing to computation of the taxable capital gains as NIL. The computation of capital gains was as under: • Sale cost of the residential cost of - Rs. 7,05,00,000/-. • Indexed cost of acquisition - Rs.3,45,92,417/- ....

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....bsection 3 of section 54F refers to imposition of capital gains tax, if the asset is transferred within a period of three years and such contemplated transfer can be of a house existing in India. Since the word 'new asset' i.e. new residential house has been used together with the words 'shall be deemed to be income chargeable under the head 'Capital gains' relating to long term capital assets, the implication is that the 'new asset' should not be situated outside India." 6. Aggrieved the assessee filed appeal before us. 7. We have gone through the issue. The pertinent issue involved is "whether the assessee is eligible for exemption u/s 54F in case of investment of capital gains through purchase of residential property outside India ....

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....eference, the relevant portion of the provisions of the Act is reproduced hereunder: "Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (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 ....

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....1.04.2015 12. Further, we have gone through EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE (No.2) ACT, 2014, Circular No. 1 of 2015 dated 21st January, 2015 F. No. 142/13/2014TPL, Government of India, Ministry of Finance, Department of Revenue wherein the issue has been explained in detail. The relevant explanatory note is as under: "20. Capital gains exemption in case of investment in a residential house property 20.1 The provisions contained in sub-section (1) of section 54 of the Income-tax Act, before its amendment by the Act, inter alia, provided that where capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, and the ass....