ITO 27(1)(3), NAVI MUMBAI V. CHANDRU T VAZIARANI, MUMBAI

ITA 102/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3050 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, M UMBAI BEFORE SHRI B.R. BASKARAN, AM ./ I.T.A. NO.102/MUM/2015 ( / ASSESSMENT YEAR: 2011-12) INCOME TAX OFFICER-27(1)(3), ROOM NO.406, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI-400 703. / VS. SHRI CHANDRU T VAZIRANI 51, VENUS APARTMENTS, GOLF LINKS, OFF A SOARES ROAD, CHEMBUR, MUMBAI-400 071. ./ ./PAN/GIR NO. AAAAH 0613D ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI MOHAMMED RIZWAN / RESPONDENT BY : NONE / DATE OF HEARING : 21/06/2016 !'# / DATE OF PRONOUNCEMENT : 21/06/2016 $% / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 10-10-2014 PASSED BY LD CIT(A)-33, MUMBA I AND IT RELATES TO THE ASSESSMENT YEAR 2011-12. THE REVENUE IS AGGRIEVED B Y THE DECISION OF LD CIT(A) IN HOLDING THAT THE ASSESSEE IS ENTITLED TO C LAIM DEDUCTION OF RS.82.00 LAKHS U/S 54EC OF THE ACT AS AGAINST THE AMOUNT OF RS.40.00 LAKHS ALLOWED BY THE AO. 2 ITA NO. 102/MUM/15(A.Y. 2011-12) ITO VS. SHRI CHANDRU T. VAZIRANI 2. NONE APPEARED ON BEHALF OF THE ASSESSEE AND HENCE I PROCEED TO DISPOSE OF THE APPEAL EX-PARTE, WITHOUT THE PRESENCE OF THE ASSESSEE. 3. THE FACTS RELATING TO THE ISSUE UNDER CONSIDE RATION ARE THAT THE ASSESSEE SOLD A FLAT ON 21.01.2011 FOR A CONSIDERATION OF RS .1,05,00,000/-. THE ASSESSEE INVESTED A SUM OF RS.40.00 LAKHS IN REC BONDS ON 31 .3.2011 AND FURTHER SUM OF RS.42.00 LAKHS IN NHAI BONDS ON 01.07.2011. THE ASS ESSEE CLAIMED EXEMPTION U/S 54EC OF THE ACT IN RESPECT OF AGGREGATE INVESTM ENT OF RS.82.00 LAKHS MADE BY HIM, SINCE THEY HAVE BEEN MADE WITHIN SIX MONTHS AFTER THE DATE OF TRANSFER OF CAPITAL ASSET. IT IS PERTINENT TO NOTE THAT THE PROVISIONS OF SEC. 54EC OF THE ACT ALLOWS DEDUCTION OF THE INVESTMENT MADE BY AN ASSESS EE OUT OF CAPITAL GAINS IN THE LONG TERM SPECIFIED ASSET WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF TRANSFER OF CAPITAL ASSET. 4. THE AO NOTICED THAT THE FIRST PROVISO TO SEC. 54EC(1) HAS PROVIDED THAT INVESTMENT MADE ON OR AFTER THE 1 ST DAY OF APRIL, 2007 IN THE LONG TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKHS OF RUPEES. ACCORDINGLY THE AO HELD THAT THE FIRST INV ESTMENT OF RS.40.00 LAKHS ALONE IS ELIGIBLE FOR DEDUCTION U/S 54EC OF THE ACT AND ACCORDINGLY RESTRICTED THE DEDUCTION CLAIMED BY THE ASSESSEE TO RS.40.00 LAKHS . 5. THE LD CIT(A) HOWEVER ALLOWED THE CLAIM OF THE A SSESSEE BY FOLLOWING THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT IN T HE CASE OF CIT VS. C.JAICHANDER T.C (A) NOS. 419 AND 533 OF 2014 DATED 15-09-2014, WHEREIN THE HONBLE MADRAS HIGH COURT HAS HELD AS UNDER:- IN ANY EVENT, FROM A READING OF SECTION 54EC(1) A ND THE FIRST PROVISO, IT IS CLEAR THAT THE TIME LIMIT FOR INVESTMENT IS SIX MON THS FROM THE DATE OF TRANSFER AND EVEN IF SUCH INVESTMENT FALLS UNDER TWO FINANCIAL YEARS, THE 3 ITA NO. 102/MUM/15(A.Y. 2011-12) ITO VS. SHRI CHANDRU T. VAZIRANI BENEFIT CLAIMED BY ASSESSEE CANNOT BE DENIED. IT WO ULD HAVE MADE A DIFFERENCE, IF THE RESTRICTION ON THE INVESTMENT IN BONDS TO RS.50,00,000/- IS INCORPORATED IN SECTION 54EC(1) OF THE ACT ITSEL F. HOWEVER, THE AMBIGUITY HAS BEEN REMOVED BY THE LEGISLATURE WITH E FFECT FROM 1.4.2015 IN RELATION TO THE ASSESSMENT YEAR 2015-16 AND THE SUBSEQUENT YEARS. THE CASE OF THE ASSESSEE BEFORE LD CIT(A) WAS THAT THE FIRST PROVISO TO SEC. 54EC(1) PROVIDES RESTRICTION FOR INVESTMENT TO BE M ADE IN A FINANCIAL YEAR TO RS.50.00 LAKHS AND IT DOES NOT RESTRICT THE AGGREGA TE AMOUNT OF INVESTMENTS MADE IN TWO DIFFERENT FINANCIAL YEARS. THE ASSESSEE SUBMITTED THAT THE INVESTMENT MADE BY HIM IN EACH OF THE FINANCIAL YEA RS DID NOT EXCEED THE PRESCRIBED AMOUNT OF RS.50.00 LAKHS. THE ASSESSEE A LSO CONTENDED THAT THE PROVISIONS OF SEC. 54EC(1) PROVIDES FOR DEDUCTION O F INVESTMENTS MADE WITHIN SIX MONTHS AFTER THE DATE OF TRANSFER OF CAPITAL ASSET AND HE HAS MADE INVESTMENT OF RS.82.00 LAKHS WITHIN THE PRESCRIBED PERIOD. ACCORD INGLY HE CONTENDED THAT HE IS ELIGIBLE FOR DEDUCTION OF RS.82.00 LAKHS U/S 54EC O F THE ACT. 6. I NOTICE THAT THE ABOVE SAID CONTENTIONS OF THE ASSESSEE FOUND FAVOUR WITH THE LD CIT(A) IN VIEW OF THE DECISION RENDERED BY HON BLE MADRAS HIGH COURT IN THE CASE OF C. JAICHANDER (SUPRA). THE LD D.R SUBMI TTED THAT THE FINANCE (NO.2) ACT, 2014 HAS INSERTED SECOND PROVISO TO SEC. 54EC( 1) PROVIDING THAT THE OVERALL INVESTMENTS MADE IN TWO FINANCIAL YEARS SHOULD NOT E XCEED RS.50.00 LAKHS. HOWEVER, I NOTICE THAT HONBLE MADRAS HIGH COURT HAS CONSIDERED THE SECOND PROVISO AND HAS HELD THAT IT WOULD APPLY FROM AY 201 5-16. 7. SINCE THE LD CIT(A) HAS RENDERED HIS DECISION BY FOLLOWING THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT IN THE CASE C ITED ABOVE, I DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER. 4 ITA NO. 102/MUM/15(A.Y. 2011-12) ITO VS. SHRI CHANDRU T. VAZIRANI 8. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2016 SD/- (B.R. BASKARAN) $ / ACCOUNTANT MEMBER & ' MUMBAI; ($ DATED : 21.06.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT - CONCERNED 5. ,-. //01 , 01# , & ' / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, & ' / ITAT, MUMBAI