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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI N.K. PRADHAN, HONBLEShri Kunal Vatsal Lilani
O R D E R PER C.N. PRASAD 1. This appeal is filed by the Revenue against order of the Ld. Commissioner of the Income-tax (Appeals)-57 Mumbai dated 30.05.2016 for the Assessment Year 2012-13.
(A.Y: 2012-13) Shri Kunal Vatsal Lilani 2. The only issue in the appeal of the Revenue is that Ld.CIT(A) erred in holding that the investment in the house at Dubai would be entitled to exemption u/s. 54F of the Act.
Ld. Counsel for the assessee, at the outset submitted that issue as to whether the assessee is entitled for exemption u/s. 54F of the Act, when assessee invested sale proceeds for purchasing the flat outside India and whether the assessee is entitled to claim exemption u/s. 54F of the Act has been decided by the Mumbai Bench of the Tribunal in the case of Ashok Keshavlal Tejuja v. A.C.I.T [91 taxmann.com 28]. Copy of the order is placed on record. Ld. Counsel for the assessee also submitted that similar issue has been decided by the Hon'ble Gujarat High Court in the case of Leena Jugalkishor Shah v. A.C.I.T [392 ITR 18] and following this judgment of the Hon'ble Gujarat High Court the Tribunal in the case of Ashok Keshavlal Tejuja v. A.C.I.T. (supra) has held that assessee is entitled for exemption u/s. 54F of the Act on the property purchased outside India.
Ld. DR vehemently supported the order of the Assessing Officer in denying the exemption u/s. 54F of the Act on the property purchased in Dubai which is outside India by the assessee.
(A.Y: 2012-13) Shri Kunal Vatsal Lilani 5. We have heard the rival submissions, perused the orders of the authorities below and the decisions relied on. The only question to be decided is as to assessee is entitled for exemption u/s. 54F of the Act when the investment was made by the assessee outside India by purchasing the residential flat. The contention of the Assessing Officer was that the assessee could claim exemption u/s. 54F only when the property is purchased within the territory of India and not outside India. In the case on hand the assessee purchased residential flat in Dubai and claimed exemption u/s. 54F of the Act on the sale proceeds invested in such residential flat.
We find that identical issue has come up before the Coordinate Bench of the Tribunal in the case of Ashok Keshavlal Tejuja v. A.C.I.T (supra) and the Tribunal considering the decision of the Hon'ble Gujarat High Court in the case of Leena Jugalkishor Shah v. A.C.I.T (supra) and the decision of the Coordinate Bench in the case of ITO v. Nishant Lalit Jadhav in ITA.No. 6883/Mum/2014 dated 26.04.2017 and also the amendment made to section 54F by the Finance Act, 2014 w.e.f. 01.04.2015 wherein the exemption u/s. 54F was restricted only to the investment made within India; Tribunal held as under:-
“5. We have considered rival contentions and perused the material on record including cited case laws before us. After hearing both the parties, we are of the view that there is an amendment by Finance Act 2014 in Section 54F, with effect
(A.Y: 2012-13) Shri Kunal Vatsal Lilani from 01.04.2015 wherein the benefit of deduction u/s 54F will be allowed only when reinvestment in residential house property is made within India. Prior to the aforesaid amendment, there was no bar for the taxpayer making investments outside India in residential house property to get the benefit of deduction u/s. 54F provided other conditions are fulfilled. We are presently concerned with appeal for AY 2011-12 which is prior to amendment of Section 54F by Finance Act, 2014 w.e.f. 01-04-2015. There is no dispute between rival parties so far as compliance of the other conditions by the assessee as stipulated u/s 54F of the 1961 Act to get the benefit of deduction u/s 54F are concerned. The Hon’ble Gujarat High Court in the case of Leena Jugalkishore Shah(supra) has allowed the deduction u/s. 54F to the taxpayer making investments outside India in residential house properties. The relevant portion of the decision of Hon’ble Gujarat High Court in the case of Leena Jugalkishore Shah(supra) is reproduced here under: - “9. We have heard learned counsel for the parties. We have perused the order of the Tribunal. There is no finding recorded by the authorities below that the appellant assessee has not invested the sale proceeds in a residential house. It is also not in dispute that the appellant has not purchased the residential house in United States of America. In fact, she has purchased a residential house in U.S.A. out of the capital gain on sale of the plot in India and thus she has fulfilled the conditions stipulated in section 54F of the Income-tax Act. She has invested the capital gains in a residential house within the stipulated time. There was no condition in section 54F of the Income-tax Act at the relevant time that the capital gain arising out of transfer of capital asset should be invested in a residential house situated in India. The language of section 54F of the Income-tax Act before its amendment was that the assessee should invest capital gain in a residential house. It is only after the amendment to section 54F of the Income-tax Act by the Finance (No. 2) Act, 2014, which came into effect with effect from 1.4.2015 that the assessee should invest the sale proceeds arising out of sale of capital asset in a residential house situated in India within the stipulated period. Thus on a plain reading of section 54F of the Income-tax Act before its amendment by the Finance (No. 2) Act leaves no room for any doubt that the assessee should restrict her investment within India or outside India. The only condition was that the assessee should invest in a residential house. The Tribunal has wrongly interpreted section 54F of the Income-tax Act by holding that the assessee should purchase the residential house situated in India. Prior to amendment to section 54F of the Act, the only condition stipulated was investment in a residential house. When the section 54F of the Income-tax Act was clear and unambiguous, there is no scope for importing into the statute the words which are not there. Such importation would be not to construe but to amend the statute. If there is any defect in the Act, it can be remedied only by the legislation and not by judicial interpretation.
In the present case the assessee has purchased the residential house in U.S.A. out of the sale proceeds of the plot in India and thus she has fulfilled the conditions of section 54F of the (A.Y: 2012-13) Shri Kunal Vatsal Lilani Income-tax Act before its amendment by the Finance (No. 2) Act. Moreover, when the language of a taxing provision is ambiguous or capable of more meanings than one, then the court has to adopt the interpretation which favours the assessee. Section 54F of the Act before its amendment was clear that the assessee should investment in a residential house. The language of section is clear and unambiguous. Therefore, we cannot import into the statute the words `in India’ as interpreted by the authorities. Thus, taking into consideration the above facts, we are of the opinion that benefit of section 54F before its amendment can be extended to a residential house purchased outside India. In that view of the matter, the appeal is allowed. The order of the Tribunal is set aside. We answer the question in favour of the assessee and against the revenue.” The Mumbai tribunal has followed the decision of Hon’ble Gujarat High Court in the case of Leena Jugalkishore Shah(supra) while deciding appeal in the case of the Nishant Lalit Jadhav(supra). No contrary decision of Hon’ble High Courts and/or Hon’ble Supreme Court is brought to our notice by Revenue. Respectfully following the decision of Hon’ble Gujarat High Court in the case of Leena Jugalkishore Shah(supra) and also decision of the coordinate benches of ITAT, Mumbai in the case of Nishant Lalit Jadhav(supra), we allow the claim of the assessee for deduction u/s. 54F for investment made outside India in the residential flat in Dubai, UAE. As we have allowed the claim of deduction u/s 54F to the assessee for making investment in residential flat in Dubai, UAE. It is the say of the learned counsel for the assessee that the other grounds raised
by the assessee in its memo of appeal filed with the tribunal related to the methodology adopted and valuation of the property used for computation of capital gains by the AO have become academic and did not require adjudication and hence we refrain from adjudicating the same. We order accordingly.”
7. Since facts being Identical, respectfully following the said decision we uphold the order of the Ld.CIT(A) in allowing the exemption u/s. 54F of the Act to the assessee.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on the 15th June, 2018.