ALI MOHAMMED,HYDERABAD vs. INCOME TAX OFFICER, (INTERNATIONAL TAXATION)-1, HYDERABAD

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ITA 2098/HYD/2017Status: DisposedITAT Hyderabad11 June 2021AY 2012-133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amendment to Section 54, restricting the deduction to properties within India, was applicable from April 1, 2015. For the assessment year 2012-13, the deduction for a property purchased outside India was admissible.

What were the facts?

The assessee claimed a deduction under Section 54 for reinvesting capital gains in a residential property. The lower authorities disallowed the claim, stating the property was acquired in New York, USA, not India.

What were the issues?

Whether the deduction under Section 54 for reinvestment in a residential property outside India is admissible for the assessment year 2012-13, prior to the amendment restricting it to properties within India.

Which sections of the Income-tax Act were involved?

Section 54

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

O R D E R PER S.S.GODARA, J.M. : This assessee’s appeal for AY.2012-13 arises from the CIT(A)-10, Hyderabad’s order dated 31-08-2016 passed in case No.0029/CIT(A)-10/2015-16, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

2.

We have heard rival submissions. The sole substantive issue that requires our apt adjudication is that of correctness of both the learner lower authorities’ action disallowing assessee’s Section 54 deduction claim of Rs.44,20,000/. Both the learned lower authorities hold that the assessee is not entitled for the impugned deduction in view of the clinching fact that he had acquired/purchased the corresponding residential property in New York, USA than in India and therefore, Section 54 is not allowable in his case.

3.

We notice in this factual backdrop that the learner lower authorities and more particularly, the CIT(A)’s detailed discussion in para 6.1 to this effect has placed reliance on the legislative amendment in Section 54 vide Finance Act, 2014 that the impugned deduction is admissible in case of purchase of a residential house in India only.

4.

Learned departmental representative fails to dispute that the above stated amendment vide Finance Act, 2014 is applicable w.e.f.01-04-2015 only whereas we are in AY.2012- 13 and therefore, the same ought not to be held as carrying retrospective effect. This tribunal’s co-ordinate bench’s decisions in Vinay Mishra Vs. ACIT [141 ITD 301] (Bang) and Ms.Prema P.Shah Vs. ITO [100 ITD 60] hold in “pre- amendment era” that such a re-investment of capital gains in a residential house outside India is very much entitled for the impugned Section 54 relief. We thus reverse the learned lower authorities’ action disallowing assessee’s Section 54 deduction claim of Rs.44.20 lakhs for this precise reason alone. No other argument has been pressed before us.

5.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open court on 11th June, 2021

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