INCOME TAX OFFICER INTERNATIONAL TAXATION WARD-1(2), BANGALORE vs. M/S BASAVARAJ NANDITA REDDY, BANGALORE

The revenue raised the following grounds of appeal :

Briefly the facts of the case are that the respondent-assessee is an individual and Non-Resident Indian (NRI) deriving income under the heads ‘Capital Gains’ and ‘Income from Other Sources’. The assessee filed return of income for the Assessment Year 2014-15 on 8.7.2014 declaring a total income of Rs.3,32,650. Against the said return of income, the assessment was completed by the Assessing Officer vide order dt.30.12.2016 passed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') at a total income of Rs.88,06,650. The disparity between the returned income and assessed income is on account of addition of Rs.84,74,000 denying the exemption under Section 54F of the Act.

Brief facts leading to the above addition are as under :

3 IT(IT)A No.1721/Bang/2017 4.1 The respondent-assessee sold property situated at Hutchins Main Road, Corporation Ward No.86, Bangalore for a total consideration of Rs.2,73,00,000 in respect of which the respondent-assessee share in total sale consideration of Rs.91,00,000, for which the net sale proceeds was determined at Rs.84,74,000, which were invested in the purchase of residential property situated outside India i.e. in Malaysia, and claimed exemption under Section 54F of the Act. The Assessing Officer denied exemption under Section 54F on the ground that the legislature contemplated that purchase or construction of a house only in India.

The learned Departmental Representative vehemently contended that Section 54F of the Act was not available as far as the investment in new house property is situated at abroad.

We have heard the rival contentions and perused the material on record. The only issue in this appeal is whether the relief under Section 54F of the Act is admissible in respect of purchase of property situated outside India. The co-ordinate bench of this Tribunal held that since the provisions of Act, does not emanates that new house property should be situated in India. The learned CIT (Appeals) granted relief following the decision of the co-ordinate bench of this Tribunal in the in the case of Vinay Mishra Vs. ACIT (supra) and Hon'ble Gujarat High Court decision in the case of Jugalkishor Shah Vs. ACIT (supra). Admittedly, the amendment brought by the legislature is only prospective and is not applicable to the assessment year under consideration. Therefore, we do not find any reason to interfere with the orders of the learned CIT (Appeals). Accordingly, the appeal of revenue is dismissed.