The ITO, Ward-9(4), Ahmedabad V. Shri Kaushik Nandubhai Patel, Ahmedabad

ITA 113/AHD/2013

• Counselvise Citation: 11320514 RSA 2013
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital asset

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . . . . , , , , ! ! ! ! ' #$ ' #$ ' #$ ' #$ , , , , % % % % BEFORE S/SHRI N.S. SAINI, ACCOUNTANT MEMBER AND KUL BHARAT, JUDICIAL MEMBER) ITA NO.113/AHD/2013 [ASSTT.YEAR : 2009-2010] ITO, WARD-9(4) AHMEDABAD. /VS. SHRI KAUSHIK NANDUBHAI PATEL C/O. KAUSHIK PATEL & CO. A-58, 4 TH FLOOR, NOBLES BUILDING OPP: NEHRU BRIDGE, ASHRAM ROAD AHMEDABAD 380 009. PAN : ABCPP 2573 N ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) + , - / REVENUE BY : SHRI J.P. JHANGID, SR.DR /$ , - / ASSESSEE BY : SHRI S.N. SOPARKAR '0 , $1/ DATE OF HEARING : 28 TH OCTOBER, 2013 234 , $1/ DATE OF PRONOUNCEMENT : 31-10-2013 5 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A )-XV, AHMEDABAD DATED 1.10.2012. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE DI SALLOWANCE OF ITA NO.113/AHD/2013 -2- CLAIM OF EXEMPTION U/S.54EC OF THE ACT AMOUNTING TO ` 35,00,000/- AGAINST INVESTMENT MADE IN THE NAME OF HUF. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAS SOLD IMMOVABLE PROPERTY ON 8.12.2008 F OR A CONSIDERATION OF ` 55.00 LAKHS AND EARNED LONG TERM CAPITAL GAIN OF ` 38,31,887/-. THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54EC BEING INVESTMENT IN RURAL ELECTRIFICATION CO. LTD., OF ` 35.00 LAKHS. THE AO ON VERIFICATION OF THE ABOVE C ERTIFICATE ISSUED BY THE SAID COMPANY NOTICED THAT THE BOND IS SUED WAS IN THE NAME OF KAUSHIKBHAI N. PATEL, HUF. THE ASSESSE E ON SHOW CAUSE NOTICE ISSUED BY THE AO EXPLAINED THAT BY MIS TAKE THE CONSIDERATION OF ` 55.00 LAKHS RECEIVED ON SALE OF IMMOVABLE PROPERTY WAS DEPOSITED IN THE BANK ACCOUNT OF KAUSH IKBHAI N. PATEL, HUF. ACCORDINGLY, THE PAYMENT FOR PURCHASE OF THE BOND WAS MADE FROM THE SAID HUF ACCOUNT AND BOND CERTIFI CATE WAS ISSUED IN THE NAME OF KAUSHIKBHAI N PATEL, HUF. TH E AO OBSERVED THAT THE AMOUNT OF SALE CONSIDERATION OF P ROPERTY WAS DELIBERATELY DEPOSITED IN THE BANK ACCOUNT OF THE H UF TO INCREASE THE CAPITAL OF THE HUF AND NOT IN THE INDIVIDUAL AC COUNT OF THE ASSESSEE, AND DISALLOWED THE CLAIM OF DEDUCTION OF ` 35.00 LAKHS UNDER SECTION 54EC OF THE ACT. 4. ON APPEAL, THE LEARNED CIT(A) ALLOWED THE CLAIM OF DEDUCTION TO THE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. V. NATARAJ AN, (2006) 154 TAXMAN 399 (MAD.), IN WHICH CASE THE ASSESSEE S OLD A ITA NO.113/AHD/2013 -3- PROPERTY AT BANGALORE AND PURCHASED A PROPERTY AT A NNA NAGAR IN THE NAME OF HIS WIFE. BUT THE SAME WAS ASSESSED IN THE HANDS OF THE ASSESSEE. THE HONBLE HIGH COURT HELD THAT THE LEARNED CIT(A) AND THE TRIBUNAL CORRECTLY HELD THAT THE ASS ESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 54. THE CIT(A) FURTHER OBSERVED THAT THE AO HAS NOT CONTROVERTED THE ASSES SEES ARGUMENT THAT THE INVESTMENT IN THESE BONDS AND INT EREST EARNED OUT OF IT, WAS DULY REFLECTED BY THE ASSESSEE IN HI S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-2010, AND NOT I N THE RETURN OF INCOME OF HIS HUF, AND THAT THE RETURN OF THE SU BSEQUENT YEAR WAS FILED BY THE ASSESSEE BEFORE THE ASSESSMENT ORD ER, AND THEREFORE, THE BONA FIDE OF THE ASSESSEE CANNOT BE REJECTED. 5. THE LEARNED DR VEHEMENTLY ARGUED AND JUSTIFIED T HE ORDER OF THE AO. HE SUBMITTED THAT AS THE ASSETS WERE NO T IN THE NAME OF THE ASSESSEE, THE AO WAS FULLY JUSTIFIED IN NOT ALLOWING THE DEDUCTION UNDER SECTION 54EC OF THE ACT. 6. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT THE LEARNED DR HAS NOT DISPUTED THE FACT THAT THE ASSES SEE HAS SOLD THE PROPERTY IN QUESTION AND EARNED CAPITAL GAINS THERE ON OF ` 38.0 LAKHS, WHICH WAS DULY SHOWN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THE LEARNED DR HAS ALSO NOT DISPUTED THE FACT THAT THE ASSESSEE HAD BY MISTAKE DEPOSITED THE SALE CONSIDER ATION RECEIVED ON SALE OF THE PROPERTY IN THE BANK ACCOUNT OF THE HUF, AND THAT THE PAYMENT FOR PURCHASE OF BOND WAS MADE FROM THE BANK ACCOUNT OF THE HUF, AND THAT IS WHY, THE BOND CERTI FICATE WAS ITA NO.113/AHD/2013 -4- ISSUED IN THE NAME OF HUF. THE LEARNED DR HAS ALSO NOT CONTROVERTED THE FINDINGS OF THE LEARNED CIT(A) THA T THE MISTAKE WAS RECTIFIED BY THE ASSESSEE SUO MOTO IN THE RETURN OF INCOME FILED FOR ASSTT.YEAR 2009-2010 BEFORE PASSING THE I MPUGNED ASSESSMENT ORDER, WHEREBY THE ASSETS WERE SHOWN IN THE RETURN OF INCOME OF THE ASSESSEE, AND THE INTEREST INCOME EAR NED THEREON WAS ALSO SHOWN IN THE RETURN OF INCOME OF THE ASSES SEE. 7. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSES SEE SOLD LONG TERM CAPITAL ASSET FOR ` 55.00 LAKHS AND EARNED LONG TERM CAPITAL GAIN OF ` 38,31,887/-. FURTHER, IT IS ALSO NOT IN DISPUTE T HAT OUT OF THE SAID SALE PROCEEDS OF ` 55.00 LAKHS, INVESTMENT OF ` 35.00 LAKHS WAS MADE IN RURAL ELECTRIFICATION CO. LTD. BO NDS. FURTHER, UNDISPUTED POSITION IS THAT AN ASSESSEE ON INVESTME NT IN RURAL ELECTRIFICATION CO. LTD. IS ENTITLED FOR EXEMPTION UNDER SECTION 54EC FROM CAPITAL GAIN. THE ONLY CONTENTION OF THE REVENUE IS THAT SINCE THE INVESTMENT CERTIFICATES OF THE RELEV ANT INVESTMENTS STAND IN THE NAME OF ASSESSEE-HUF, AND THEREFORE, T HE ASSESSEE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 54EC OF TH E ACT. WE FIND THAT THE INVESTMENT WAS MADE FROM OUT OF SA LE PROCEEDS OF THE LONG TERM CAPITAL ASSET UNDER CONSI DERATION, AND INTEREST EARNED ON SUCH INVESTMENT WAS ASSESSED AS INCOME OF THE ASSESSEE-INDIVIDUAL. IN THE ABOVE CIRCUMSTANCES, I N OUR CONSIDERED VIEW THAT THE DECISION OF THE LEARNED CI T(A) IS SQUARELY COVERED BY THE DECISION OF THE HONBLE MAD RAS HIGH COURT IN THE CASE OF CIT VS. NATARAJAN (SUPRA). WE , THEREFORE, DO ITA NO.113/AHD/2013 -5- NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDE R OF THE LEARNED CIT(A), AND THEREFORE, THE GROUND OF THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ' #$ ' #$ ' #$ ' #$ /KUL BHARAT /JUDICIAL MEMBER . .. . . . . . /N.S. SAINI /ACCOUNTANT MEMBER