IN THE ITAT BANGALORE BENCH ‘C’
Vinay Mishra
Versus
Assistant Commissioner of Income-tax
IT Appeal No. 895 (Bang.) of 2012
s.p. no. 124 (Bang.) of 2012
[ASSESSMENT YEAR 2009-10]
OCTOBER 12, 2012
ORDER
Jason P. Boaz, Accountant Member
This appeal and stay petition by the assessee are directed against the order of the Commissioner of Income-tax (Appeals)-III, Bangalore, dated June 26, 2012 for the assessment year 2009-10.
2. The facts of the case, in brief, are as under :
The assessee is a director of M/s. Marketics Technologies (India) P. Ltd., Bangalore and derives his income from salary, business, capital gains and other sources. The assessee filed his return of income for the assessment year 2009-10 on July 20, 2009 declaring total income of Rs. 1,53,44,940. The return was processed under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) and subsequently taken up for scrutiny by issue of notice under section 143(2) of the Act. In the course of assessment proceedings, it was seen that in the relevant period, the assessee sold certain shares which resulted in long-term capital gains (LTCG). The assessee invested the entire capital gains in the acquisition of a house property in the United States of America and claimed exemption under section 54F of the Act. The Assessing Officer called upon the assessee to substantiate his claim for exemption under section 54F particularly in view of the fact that the asset purchased is outside India. The assessee submitted that he is eligible to claim deduction under section 54F of the Act notwithstanding the fact that the asset purchased is outside India, in the USA and relied on a decision of the Mumbai Bench of the Tribunal in the case of Mrs. Prema P. Shah v. ITO [2006] 100 ITD 60 (Mum.). The Assessing Officer did not agree with the contentions of the assessee on the ground that the Act is applicable only to the whole of India and therefore on a plain reading of the provisions, the purchase/construction of a residential house must necessarily be in India and not outside India and rejected the claim for exemption under section 54F of the Act. In come to this finding the Assessing Officer also relied on the decision of the Ahmedabad Bench of the Tribunal in the case of Leena J. Shah v. Asst. CIT [2006] 6 SOT 721 (Ahd).
3. Aggrieved by the order of assessment for the assessment year 2009-10 passed under section 143(3) of the Act on December 29, 2011, the assessee went in appeal before the Commissioner of Income-tax (Appeals), who vide his order dated June 26, 2012 confirmed the order of assessment. The learned Commissioner of Income-tax (Appeals) in his appellate order held that the order of the Income-tax Appellate Tribunal, Ahmedabad, relied on by the Assessing Officer, is to be preferred over the decision of the Income-tax Appellate Tribunal, Mumbai which was relied upon by the assessee. The learned Commissioner of Income-tax (Appeals) in his order was of the opinion that in both cases relied upon by the assessee, the claim for exemption was by a non-resident Indian (NRI) whereas the assessee is a resident tax payer who is also a director of a company located at Bangalore and that there are specific provisions of the Income-tax Act to regulate the income and grant exemptions to those assessees holding non-resident Indian status. The learned Commissioner of Income-tax (Appeals) has further opined that merely because the provisions of section 54F do not mandate that in order to be eligible to claim exemption under section 54F, the investment should be made in a house property in India, it cannot be construed that investment in a house property in a foreign country will make one entitled for exemption. In this view of the matter, the learned Commissioner of Income-tax (Appeals) dismissed the assessee’s appeal.
4. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals) dated June 26, 2012, the assessee is now in appeal, it has been contended as under :
