Jagdish Chand Verma Vs ITO (ITAT Mumbai)
ITAT Delhi Allows Section 54 for Property Purchased in Australia & Bank passbook is not books of accounts , a pre-condition to make addition u/s 68
In this case, Assessee, a 70-year-old retired bank employee who shifted to Australia in 2013, sold his Delhi flat for ₹70 lakh & earned LTCG of ₹54,35,000. He deposited ₹40,51,000 in his bank account from sale of household items & cash belonging to his spouse & son. Assessment was completed ex-parte u/s 144 with two additions: denial of exemption u/s 54 for purchase of a new house in Australia & addition u/s 68 for cash deposits.
CIT(A) rejected the exemption u/s 54 by treating the 2014 amendment (restricting purchase to properties in India) as “clarificatory”, & sustained the addition u/s 68 on the ground that affidavits were insufficient.
Tribunal held that CIT(A) erred in law since CBDT Circular No.01/2015 explicitly states the amendment to s.54 applies prospectively from AY 2015-16; hence for AY 2014-15 Assessee is fully eligible for s.54 even if the new property is outside India. Tribunal relied on Karnataka High Court rulings in Vinay Mishra, Hosagrahar & other supporting decisions.
On the s.68 addition, Tribunal accepted the argument that Assessee maintained no books of account, and as per Supreme Court in Baladin Ram & Delhi High Court in Mayawati, a bank passbook is not Assessee’s books; therefore s.68 cannot be invoked for bank deposits. With both issues decided in favour of Assessee, Tribunal deleted the entire additions & allowed the appeal.
