Exemption 54F before its amendment can be given to residential house purchased outside India

Benefit of exemption u/s 54F before its amendment can be extended to a residential house purchased outside India. ITAT allowed claim

ABCAUS Case Law Citation:
ABCAUS 3195 (2019) (12) ITAT

Important case law relied upon by the parties:
Anurag Pandit

The instant appeal was filed by the assessee against the order of the Commissioner of Income Tax [Appeals] in confirming the disallowance of claim of exemption u/s 54/54F of the Income tax Act, 1961 [‘The Act’].

The Assessing Officer (AO) noticed that the assessee had purchased a residential house outside India. The Assessing Officer was of the firm belief that any residential house purchased outside India is not eligible for deduction u/s 54 and 54F of the Act. Drawing support from the provisions of section 54 of the Act, the Assessing Officer concluded by denying the claim of exemption.

Before the Tribunal, the assessee stated that the amendment brought in section 54 is w.e.f 01.04.2015 and since the A.Y under consideration was before that, the said amendment was not applicable for the year under consideration.

The assessee placed reliance on the decision of Authority for Advance Rulings and also on the decision of the co-ordinate bench.

The Tribunal observed that the undisputed fact was that by selling the property situated in India, the assessee had purchased a residential property in a foreign country. It was equally true that the amendment had been brought in section 54 vide Finance Act, 2014 w.e.f 01.04.2015.

The Tribunal opined that the Legislature, in its wisdom, had given effect to the amended provision from 01.04.2015 and, therefore, there is no ambiguity as the said provisions are effective from A.Y 2015-16.

It was also noted that similar view was taken by the Authority for Advance Rulings. Moreover, the decision heavily relied upon by the Revenue had been reversed by the Hon’ble High Court holding that the benefit of section 54F before its amendment can be extended to a residential house purchased outside India.

Accordingly, the Tribunal directed the Assessing Officer to allow the claim of deduction.

Download Full Judgment Click Here >>

• Income Tax Rules 2026 notified by CBDT
• Absence of irrevocability clause no ground for rejecting registration u/s 12AB
• ITAT allows exemption of Rs. 25 lakhs u/s 10(10A) to non-government employees
• PCIT has revisionary jurisdiction u/s 263 over the cases passed by the NFAC or the JAO
• Appellate court interfering with MACT finding must undertake reappreciation of evidence