PARAMJEET SINGH SEHRA,GURGAON vs. ACIT, CIRCLE- 6(1), NEW DELHI

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ITA 4598/DEL/2018Status: DisposedITAT Delhi17 May 2022AY 2013-145 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 investment to India was effective from April 1, 2015, and thus applied prospectively. As the assessee invested in the Dubai property before this amendment, they were eligible for the deduction.

What were the facts?

The assessee claimed a deduction of Rs. 63,52,787 under Section 54 for investing in a house property in Dubai after selling another property. The Assessing Officer disallowed this claim, citing an amendment to Section 54 effective from April 1, 2015, which restricted investment to properties within India.

What were the issues?

Whether the amendment to Section 54 of the Income-Tax Act, 1961, restricting investment in a new house property to India, applies retrospectively or prospectively. Whether investment in a property outside India qualifies for deduction under Section 54 if made before the amendment.

Which sections of the Income-tax Act were involved?

Section 54

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI

Before: SHRI SAKTIJIT DEY & PRADIP KUMAR KEDIA

For Appellant: Shri MK Bhatt, CA & Shri Malav
For Respondent: Mr. Shayam Manohar Singh, Sr. DR
Hearing: 02.05.2022Pronounced: 17.05.2022

ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER: This is an appeal by the assessee against order dated 16.03.2018 of learned Commissioner of Income-Tax(Appeals)-2, New Delhi for the assessment year 2013-14.

2.

The only point in dispute in the present appeal is in relation to disallowance of assessee’s claim of deduction of Rs.63,52,787 under Section 54 of the Income-Tax Act, 1961.

3.

Briefly, the facts are, assessee is a resident individual. During the year under consideration, assessee sold a house property and offered long term capital gain of Rs.74,62,695. Against such long term capital gain, assessee claimed deduction of Rs.63,52,787 under Section 54 of the Act towards investment made in another house property. While examining assessee’s claim of deduction under Section 54 of the Act, Assessing Officer noticed that the new house property purchased by the assessee is located at Dubai. Referring to an amendment made under Section 54 of the Act by Finance Act, 2014, Assessing Officer held that claim of deduction under Section 54 of the Act will be available only if the new property, wherein, the investment was made is located in India. Accordingly, he disallowed assessee’s claim of deduction under Section 54 of the Act. The aforesaid decision of the Assessing Officer was also upheld by learned Commissioner (Appeals).

4.

Before us, learned counsel for the assessee submitted, the amendment to section 54 of the Act by Finance Act, 2014 restricting the investment in new house property located in India was made effective from 01.04.2015, hence, applicable to assessment year 2015-16 and subsequent assessment years. He submitted, since the assessee had made investment in the house property prior to the amendment of Section 54 of the act, he is eligible to claim deduction under Section 54 of the Act. In support of such contentions, learned counsel for the assessee relied upon the following decisions:

i) Leena Jugal Kishor Shah vs. ACIT (2016) 72 Taxmann.com 185 Guj.); ii) PCIT vs. Deepankar Mohan Ghose judgment dated 18.09.2019 & C.M App. 40767/2019; iii) CIT vs. Amarjeet Pandit judgment dated 14.05.2019 [delivered in (Hon'ble Delhi High Court).

5.

He also relied upon a decision of co-ordinate bench in case of Sunandan Kumar Minocha vs. ITO, dated 23.12.2021.

6.

Learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals).

7.

We have considered rival submissions in the light of decisions relied upon and perused the material available on record. There is no dispute between the parties in so far as facts are concerned. The core issue arising for our consideration is whether investment made by the assessee in a residential house located outside India would qualify for deduction under Section 54 of the Act.

Section 54 of the Income-Tax Act, 1961 as it existed prior to its amendment by Finance Act, 2014, did not specify any restriction regarding the investment in the new house property, whether in India or abroad. Only by way of amendment by Finance Act, 2014, effective from 01.04.2015, restriction was imposed by specifying that the deduction would be available if the new asset is constructed or purchased in India. In the facts of the present case, admittedly, the investment was made by the assessee prior to the amendment of section 54 of the Act. In case of Leena Jugal Kishore Shah vs. ACIT, the Hon'ble Gujrat High Court after taking note of the amendment made to section 54 of the Act by Finance Act, 2014 has held that such amendment made effective from 01.04.2015 would apply prospectively from assessment year 2015-16. The court further held that since prior to the amendment, there was no restriction in the provision requiring the assessee to invest in the new house property located in India only, the assessee would be eligible to avail deduction under Section 54 of the Act, even if, the new house property wherein investment was made is located outside India. In case of PCIT vs. Dipankar Mohan Ghose (supra) and CIT vs. Amarjeet Pandit (supra), Hon'ble jurisdictional High Court has expressed identical view.

No decision expressing contrary view was brought to our notice by learned Departmental Representative. Therefore, respectfully following the binding precedents of the Hon'ble jurisdictional High Court, we hold that the assessee is eligible to claim deduction under Section 54 of the Act qua the amount invested in house property purchased in Dubai. Accordingly, addition made is deleted.

8.

In the result, appeal is allowed.

Order pronounced in the open court on 17th May, 2022.

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