Sec. 54F relief available if second house occupied by him is in foreign country: ITAT

  • Blog|Income Tax|News|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 25 March, 2023

Section 54F Relief

Case Details: Smt. Maries Joseph v. DCIT - [2023] 148 taxmann.com 97 (Cochin-Trib.)

Judiciary and Counsel Details

    • N.V. Vasudevan, Vice President & Ms Padmavathy S., Accountant Member
    • Arun Raj S., Advocate for the Appellant.
    • Smt J.M. Jamuna Devi, Sr. AR for the Respondent.

Facts of the Case

Assessee, a non-resident, filed its return of income for the relevant assessment year. During the relevant assessment year, the assessee sold land she jointly held with her husband. He made an investment in a residential property for claiming exemption under section 54F. During the scrutiny proceedings, the Assessing Officer (AO) disallowed claim for deduction under section 54F based on the fact that assessee owned two residential houses in USA.

On appeal, the CIT(A) affirmed the deletions by AO. Aggrieved by the order, assessee preferred an instant appeal to the Cochin Tribunal.

ITAT Held

The Tribunal held that the exemption under section 54F is available with respect to a residential house property provided the assessee does not own more than one residential house other than the new asset but does not explicitly say whether in India or abroad. The Finance (No. 2) Act, 2014 amended the section 54F to bring in clarity that the deduction is allowable only if the investment in the new residential house is made in India and not abroad.

Section 54F to the assessee is a benefit which is granted towards making an investment, whereas what is contained in the proviso is a condition/restriction towards existing ownership of the asset and, therefore, it cannot be categorically said that the same interpretation should be applied to both.

It is important that a proviso must be construed harmoniously with the main statute to give effect to the legislative objective, and the section should be read as a whole inclusive of the proviso in such a manner that they mutually throw light on each other and result in a harmonious construction. The legislative intent behind granting relief to the assessee through section 54F is investments in a residential house in India. Therefore, the proviso imposing the conditions cannot be read in isolation and should be construed harmoniously with the main section.

Accordingly, the condition that the deduction is not available if the assessee owns more than one residential house other than the new asset should be interpreted to mean ownership of residential houses in India. Therefore, the ground on which the deduction under section 54F was denied that the assessee owns two residential houses in the USA was not tenable.

List of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied