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Exemption for CG Not Applicable to the Purchase of a Residential Home Outside the Country After 2015

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Exemption for CG Not Applicable to the Purchase of a Residential Home Outside the Country After 2015
Mumbai ITAT's Order for Khalid Sayed

The capital achieve exemption isn’t accessible for the residential home introduced overseas publish 1st April 2015.

For the interval previous to AY 2015-16 or to the introduction of the phrases “in India” in Part 54 of the Act vide Finance Act No. 2 of 2014, which got here into impact on April 1, 2015, the taxpayer obtains the benefit of deduction below Part 54F for the property purchased or constructed overseas or exterior India as effectively, however not from A.Y. 2015-16 onwards, the bench of N. K. Choudhry (Judicial Member) and Prashant Maharishi (Accountant Member) has noticed.

A Mumbai property acquired on October 29, 2003, for Rs. 25,30,020, is collectively and equally owned by the assessee and his spouse. Subsequently, the taxpayer, alongside along with his spouse, relocated to Canada and bought the flat. A TDS of Rs. 10,68,000 was deducted by the taxpayer upon the deal. The taxpayer then acquired a residential property in Canada for $775,000, transferring the whole long-term capital achieve, excluding TDS, to the Canadian vendor’s account.

The remaining a part of the consideration was paid by the assessee and was financed by Canada Avenue Capital Finance Company. The assessee contended that the whole long-term capital achieve was invested in residential property, and so they filed a return with an in depth notice to demand a refund of the TDS, which was refunded to the applicant.

Nevertheless, the Assessing Officer (AO) rejected the declare. Dissatisfied with this rejection, the assessee appealed to the Commissioner. The taxpayer argued that earlier than the Evaluation 12 months 2015-16, below Part 54, there was no restriction on buying property in or exterior India to say an exemption. The supply of “one residential home in India” was launched by means of the Finance Act, of 2014, efficient from April 1, 2015.

The taxpayer bought the unique property on July 19, 2013, and bought the overseas property on July 31, 2013, in overseas foreign money. Therefore, they argued that they need to be exempted from the limitation imposed beginning April 1, 2015.

Learn Additionally: Solved! Tax Legal responsibility Primarily based on Residental Standing of Assessee

The Commissioner (Appeals) upheld the choices of the CPC and AO in disallowing the TDS declare. The tribunal dominated stating that the taxpayer had acquired the overseas property on July 31, 2013 and had claimed the benefits below Part 54F of the Earnings Tax Act in the course of the Evaluation 12 months 2014-15. In consequence, the assessee was deemed eligible for the advantages stipulated in Part 54F of the Earnings Tax Act.

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