Capital gain section 54 and 54f (location of new property)
This query is : Resolved
30 November 2013
Hi,
Please clarify, Section 54 of Income Tax regarding purchase of New Property's location is restricted to India or overseas purchase is also valid? Thanks in Advance for your responses.
Please clarify, Section 54 of Income Tax regarding purchase of New Property's location is restricted to India or overseas purchase is also valid? Thanks in Advance for your responses.
30 November 2013
Dear Mohit,
As such yes you can buy the house abroad and still claim exemption under 54/54F. there is no restriction prescribed in the Act. Rather there is a Mumbai tribunal judgment in the case of Mrs. Prema P Shah vs ITO 282 ITR 211 that specifically ruled in its favor. Mumbai tribunal again ruled in favor of the assessee in the case of ITO v. Dr. Girish M. Shah, ITA No. 3582/M/ 2009
You may refer to the same for your case. However, kindly note -
1. its a tribunal ruling. Thus it is not binding on any other jurisdictional court.
2. Before Prema Shah judgment the earlier courts disallowed exemption in similar cases (refer Smt. Leena J. Shah v. ACIT, 6 SOT 721 (Ahd.). (however this judgment was itself was not too strong)
My personal belief is that allowing for exemption in such cases would lead to absurd result defeating the whole intent of promoting investment in residential assets in the country. So don't be surprised if they amend the act to nullify such judgments.
3. You also need to check how this fits in DTAA. Often it happens in case of Capital gains that both the countries are allowed to tax as per domestic rules. In such a scenario you still end up paying taxes in the country of residence.
But you can safely claim the deduction/exemption as long as the rule stands as it is today.
As such yes you can buy the house abroad and still claim exemption under 54/54F. there is no restriction prescribed in the Act. Rather there is a Mumbai tribunal judgment in the case of Mrs. Prema P Shah vs ITO 282 ITR 211 that specifically ruled in its favor. Mumbai tribunal again ruled in favor of the assessee in the case of ITO v. Dr. Girish M. Shah, ITA No. 3582/M/ 2009
You may refer to the same for your case. However, kindly note -
1. its a tribunal ruling. Thus it is not binding on any other jurisdictional court.
2. Before Prema Shah judgment the earlier courts disallowed exemption in similar cases (refer Smt. Leena J. Shah v. ACIT, 6 SOT 721 (Ahd.). (however this judgment was itself was not too strong)
My personal belief is that allowing for exemption in such cases would lead to absurd result defeating the whole intent of promoting investment in residential assets in the country. So don't be surprised if they amend the act to nullify such judgments.
3. You also need to check how this fits in DTAA. Often it happens in case of Capital gains that both the countries are allowed to tax as per domestic rules. In such a scenario you still end up paying taxes in the country of residence.
But you can safely claim the deduction/exemption as long as the rule stands as it is today.
Message likes :
2 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- U/s.234E late fee- balated filing the TDS returns
- Traces Portal
- Capital Gain Incidents
- Applicability of corporate governance provisions as per the SEBI LODR
- Minor - PPF Rules Doubt
- Cheque bounce intimation letter
- Form 121 of income tax
- ERROR IN GSTR1 NO SUMMARY GENERATED
- ESI Applicablility As per new wage code
- Closing sole proprietorship CA firm
- Rectification of TDS return - Sale of property
- Minor Aadhar card cancelled
- Query regarding applicability of UDIN on MCA forms signed using DSC by a Chartered Accountant
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Spice form, ? mark comes in address
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
