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

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.

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.

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.

This assessee’s appeal is allowed in above terms.