Deduction u/s 54F is allowable on Purchase of Property Outside India: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Bangalore bench has held that deduction under section 54F is allowable on the purchase of property outside India.

During assessment proceedings of the appellant, Mr. Rahil Mahesh Kumar, Mr. Nizamuddin CA, Mr. K.Y. Ningoji Rao & Mr. Venkatesulu, Chartered Accountants fail to claim deduction under section 54F of the Act in respect of investment of Rs.8,74,20,000/- in the purchase of a residential building in Newton MA, USA, and later by letter addressed to the Assessing Officer claimed deduction.

The AO disallowed the deduction alleging that the benefit of section 54F of the Act should be given only in respect of investment in the residential house in India.  The aggrieved appellant filed an appeal before the CIT(A). the CIT(A) by relying on the decision of the Supreme Court in the case of Goetz (India) Ltd. held that the appellant had not claimed exemption for investment in house property located in the USA in the return of income and upheld the disallowance. Hence the appellant filed an appeal before the ITAT.

The Tribunal by relying on its earlier decision in Dr. Sunita Aggrawal observed that on a plain reading of the provisions of section 54F of the Act, nothing is suggesting that the new residential house acquired should be situated in India. The Tribunal further observed that about the non-claiming of deduction in the return of income as per the judgment of the Supreme Court in Goetz (India) Ltd., Tribunal is not precluded in entertaining the claim of the appellant.

The Coram of Mr. Chandra Poojari, Accountant Member and Smt. Beena Pillai, Judicial Member has held that “we allow the claim of assessee u/s 54F of the Act in respect of investment made in property situated in Newton MA, USA”.

Mr. K.Y. Ningoji Rao and Mr. V.S. Chakrapani appeared on behalf of the appellant and respondent respectively.

To Read the full text of the Order CLICK HERE

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