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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the Revenue against the order dated 29.07.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13.
The only issue raised by the Revenue in the various grounds of appeal is against the order of Ld. CIT(A) holding therein that investment in the house at Singapore would be entitled to exemption under section 54 of the Act.
2 M/s. Vatsal H. Lilani 3. The facts in brief are that the assessee filed a return of income on 25.07.2012 by declaring income at Rs.14,78,960/-. The case of the assessee was selected for scrutiny under CASS and the statutory notices under section 143(2) & 142(1) were issued and duly served on the assessee. During the assessment proceedings the AO observed that the assessee along with other co-owners have surrendered their tenancy rights for which a total consideration of Rs.17,75,00,000/- was received in which assessee’s share worked out to Rs.3,98,43,902/-. The assessee has shown the said surrender of tenancy in the return of income and also claimed the exemption under section 54 of the Act by putting the said money in the capital gain scheme account. The AO noticed that assessee has purchased new residential property in Singapore and a certificate dated 07.05.2014 issued by SBI certifying remittance of the entire amount for purchase of residence in Singapore was also examined. The AO concluded that the said purchase was not covered by the provision of section 54 of the Act as the property was purchased abroad and accordingly added the entire capital gain of Rs.3,98,43,902/- to the income of the assessee. The action of the AO was also affirmed by the Ld. CIT(A) by brushing aside the various contention put forward.
At the outset, the Ld. A.R. of the assessee submitted before the Bench that the issue in the present case of long term capital gain being invested in the purchase of property abroad stands settled in favour of the assessee by a series of judgments and therefore is squarely covered in his favour and 3 M/s. Vatsal H. Lilani accordingly the appeal of the assessee should be allowed. The assessee relied on the following decisions: 1. Ashok Keshavlal Tejuja vs. ACIT (2018) 91 taxmann.com 28 (Mumbai – Trib.) 2. Leena Jugalkishor Shah vs. ACIT (2016) 72 taxmann.com 185 (Guj) 3. ITO vs. Mr. Nishant Lalit Jadhav in ITA No.6883/Mum/2014 (A.Y. 2011-12)
The Ld. A.R. submitted that in the decision of the Hon’ble High Court and the two Tribunal decisions it have been held that investment of long term capital gain or sale proceeds of the asset in the purchase of residential house outside India, made prior to the amendment by Finance (No.2) Act, 2014 which is effective from 01.04.2015, is eligible investment and therefore the capital gain cannot be brought to tax.
The Ld. D.R., on the other hand, submitted that it has been provided in section 1 sub section 2 of the Act that the Act extends to whole of India and therefore the investments outside India are not eligible under section 54 of the Act.
Having heard the rival submissions of both the parties and perusing the material on record, we find that the matter is squarely covered by the ratio laid down by the Hon’ble Gujarat High Court in the case of Leena Jugalkishor Shah vs. ACIT (supra) and the decisions of the co-ordinate Benches of the Tribunal as referred to above wherein it have been held that any investment in the purchase of property out of long term capital gain is covered by the provision of section 54/54F which is made prior to the amendment by Finance (No.2) Act,
4 M/s. Vatsal H. Lilani 2014 effective from 01.04.2015 and accordingly the case of the assessee is squarely covered in his favour. We, therefore, respectfully following the ratio laid down as above, dismiss the appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 27.04.2018.