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TAX FORUM: QUESTIONS & ANSWERS
Reinvestment benefit for non-residents
It is not uncommon for non-resident Indians to sell their property or their assets in India and have sale proceeds utilised for acquiring property in the country, where they have become permanent residents or citizens. Would they be entitled to benefit of Sec. 54 or 54F? Some reservation has been expressed in Business Line dated July 5, 2008, by T. N. Pandey. In view of the fact that there is no specific bar for reinvestment abroad, is there any risk in making a claim on such reinvestment?
Mr. T. N. Pandey is right with reference to the objective of grant of such reinvestment benefit to promote housing, which has necessarily to be in India. Where the assessee had utilised the sale of residential property in India and acquired leasehold rights over a property for 150 years in the U.K., the non-resident assessee has been held by the Tribunal to be eligible for benefit under Sec. 54 in Mrs. Prema P. Shah v ITO (2006) 282 ITR (AT) 211 (Mum). However, the departmental reaction to this decision as to whether they have accepted it on principle or taken up the matter in further appeal to the High Court is not known. Unless it is officially accepted, a claim may be risky. But in the light of the Tribunal's decision, if a claim is made relying on the same, there is no risk of penalty because it gives a possible view. In view of this situation, the Board should clarify its stand one way or the other.
S. RAJARATNAM
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