The ACIT, Cochin V. Dr. Ramesh Kumar Iswara, Cochin

ITA 122/COCH/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3912 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 06-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 16-03-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Capital asset; Bad and doubtful debts; Benefit of exemption; Revised return
• Section: 143(3); 54F; 153A; 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM I.T.A. NO. 122 / COCH/201 6 ASSESSMENT YEAR : 2006 - 07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, NON- CORPORATE, KOCHI. VS. DR. RAMESH KUMAR ISWARA, NORTH SQUARE, PARAMARA ROAD, KOCHI-682 018. [PAN:AEZPK 4375F] ( REVENUE - APPELLANT) ( ASSESSEE - RESPONDENT) I.T.A. NO. 61/COCH/2016 ASSESSMENT YEAR : 2006 - 07 DR. RAMESH KUMAR ISWARA, NORTH SQUARE, PARAMARA ROAD, KOCHI-682 018. [PAN:AEZPK 4375F] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, NON- CORPORATE, KOCHI. ( ASSESSEE-APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SHRI A. DHANARAJ, SR. DR ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA DATE OF HEARING 06/06 / 201 7 DATE OF PRONOUNCEMENT 08 TH /06/ 201 7 I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 2 O R D E R PER GEORGE GEORGE K.,JUDICIAL MEMBER: THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, KOCHI DATED 16/12/2015. THE RELEVANT ASSESSMENT YEAR IS 2006-0 7. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FO LLOWS: THE ASSESSEE IS AN INDIVIDUAL. HE IS A DOCTOR BY PROFESSION AND WAS ENGAGED IN THE BUSINESS OF RUNNING A PATHOLOGY LAB. FOR THE A SSESSMENT YEAR 2006-07, THE RETURN OF INCOME WAS FILED ON 30/10/2006, DECLARING AN INCOME OF RS.34,08,116/-. ON THE BASIS OF INFORMATION AND DOCUMENTS AVAILABLE WITH THE DEPARTMENT THAT THE ASSESSEE HAD SOLD HIS PATHOLOGY LAB AND CAPITAL GAI NS LIABILITY HAS ARISEN IN THE HANDS OF THE ASSESSEE, NOTICE U/S. 148 OF THE ACT WAS ISS UED. THE RE-ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S. 147 OF THE ACT VIDE OR DER DATED 14/03/2014. WHILE COMPLETING THE RE-ASSESSMENT, THE ASSESSING OFFICER DID NOT GRANT EXEMPTION CLAIMED U/S. 54EC AND 54F OF THE ACT. THE ASSESSING OFFICER ALSO LEVIED INTEREST U/S. 234(1) OF THE ACT FROM 1-4-2006 UPTO DATE OF RE-ASS ESSMENT (ORDER DATED 14-3- 2014). AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICE R IN NOT GRANTING EXEMPTION U/S. 54EC AND 54F OF THE ACT. THE CIT(A) ALLOWED RELIEF I N RESPECT OF CHARGEABILITY OF INTEREST U/S. 234B OF THE ACT. THE CIT(A) HELD THAT INTEREST IS TO BE CHARGED AS PER SECTION 234B (3) OF THE ACT. I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 3 3. WE SHALL FIRST TAKE UP FOR ADJUDICATION, THE A SSESSEES APPEAL IN I.T.A. 122/COCH/2016. I.T.A. NO. 122/COCH/2016 (ASSESSEES APPEAL) THE EFFECTIVE GROUNDS RAISED IN ASSESSEES APPEAL R EAD AS FOLLOWS:- 2. THE COMMISSIONER OF INCOME TAX(APPEALS) WENT W RONG IN NOT GRANTING THE DEDUCTION U/S. 54EC ON THE GROUND THAT THE INVES TMENT IN CAPITAL GAINS BONDS WAS MADE BEYOND THE PERIOD STIPULATED UNDER T HE SAID SECTION. THE COMMISSIONER OF INCOME TAX(APPEALS) FAILED TO NOTE THAT THE APPELLANT COULD NOT INVEST IN THE BONDS WITHIN 31 ST DECEMBER 2006 BUT EVEN TILL 22 ND JANUARY 2007. YOUR APPELLANT HAD SUBSCRIBED TO THE BONDS O N 27 TH JANUARY, 2007, I.E., WITHIN FIVE DAYS IT BECAME AVAILABLE IN THE M ARKET AND THE SAME WAS ALLOTTED ON 31 ST JANUARY, 2007. IN CASE THE BONDS ARE NOT AVAILABL E, THE TIME TO INVEST IN THE BONDS GETS AUTOMATICALLY EXTENDED TILL SUCH BONDS BECOME AVAILABLE IN THE MARKET. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HIS CONCLUSION IN PARAGRAPH 4.4 OF THE ORDER THAT THE M UMBAI HIGH COURT DECISION WAS NOT APPLICABLE TO THE APPELLANT. 3. YOUR APPELLANT IS ELIGIBLE FOR THE DEDUCTION U/S . 54F IN RESPECT OF THE INVESTMENT IN RESIDENTIAL FLAT AMOUNTING TO RS.39,2 6,130. THE COMMISSIONER OF INCOME TAX (APPEALS) DID NOT GRANT THE DEDUCTION FOLLOWING THE DECISION OF THE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. VS. CIT (284 ITR 323). HOWEVER, THE SUPREME COURT HAS CLARIFIED IN THE SAI D ORDER THAT THE MANDATE OF THE JUDGMENT WAS LIMITED TO THE POWER OF THE ASS ESSING AUTHORITY AND DID NOT IMPINGE ON THE POWER OF THE APPELLATE AUTHORITY . HENCE, THE COMMISSIONER OF INCOME TAX(APPEALS) BEING AN APPELL ATE AUTHORITY SHOULD HAVE GRANTED THE DEDUCTION U/S. 54F ON THE INVESTME NT IN RESIDENTIAL FLAT. 3.1 THE FIRST GROUND IS REGARDING DENIAL OF EXEMPT ION U/S. 54EC OF THE ACT. THE FACTS NECESSARY FOR DISPOSAL OF THE ABOVE GROUND AR E AS FOLLOWS: THE ASSESSEE HAS SOLD HIS PATHOLOGY LAB ON 01/01/2006 FOR A CONSIDERATION OF RS.3,37,50,000/-. IN THE RETURN OF INCOME FILED ON 31/10/2006, THE ASSESSEE HAD DISCLOSED NIL CAPITAL GAINS. THE ASSESSING OFFIC ER HOWEVER CALCULATED LONG TERM CAPITAL GAINS U/S. 50B OF THE ACT AT RS.2,76,11,908 /-. THE ASSESSEE HAD CLAIMED EXEMPTION U/S. 54EC OF THE ACT AMOUNTING TO RS.50 LA KHS. THE ASSESSEES CLAIM OF I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 4 EXEMPTION U/S. 54EC OF THE ACT WAS DENIED BY THE ASS ESSING OFFICER. ACCORDING TO THE ASSESSING OFFICER LAST DATE OF INVESTMENT IN 54 EC BOND AS PER CBDT NOTIFICATION IS 31/12/2006. THE ASSESSEE IN THIS CASE HAS INVES TED IN 54EC BOND ONLY ON 27/01/2017. ACCORDINGLY, HE CONCLUDED THAT THE ASS ESSEE WAS NOT ENTITLED TO EXEMPTION U/S. 54EC OF THE ACT. THE RELEVANT OBSERVA TION OF THE ASSESSING OFFICER READS AS FOLLOWS: 10. I REITERATE HERE THAT RELIEF OF EXEMPTION U/S . 54EC CAN BE GRANTED WITHIN THE TIME LIMIT AS PRESCRIBED BY THE LEGISLATIVE PRO VISION AND NOT BEYOND THAT. HENCE, I AM UNABLE TO CONCUR WITH THE ASSESSEES CO NTENTION THAT THE TIME LIMIT FOR INVESTMENT WHICH WAS ADMITTEDLY EXTENDED BY NOTIFICATION UP TO 31/12/2006 CAN BE STRETCHED UP TO 31.1.2007, BY EXE RCISING THE JURISDICTION UNDER THE ACT. 3.2 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFI CER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE C IT(A) CONFIRMED THE VIEW TAKEN BY THE ASSESSING OFFICER. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: 4.5 IT HAS BEEN OBSERVED IN PARAGRAPH 10 OF THE AS SESSING OFFICERS ORDER THAT THE ASSESSEE HAS MADE INVESTMENT BEYOND THE TI ME LIMIT OF SIX MONTHS AS ENVISAGED BY SECTION 54EC AND EVEN BEYOND THE FUR THER EXTENDED TIME VIDE NOTIFICATION OF THE CBDT UP TO 31.12.2006. TH E ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE TO HAVE EVER APPLIED FOR INV ESTMENT IN BONDS FROM ANY DAY UP TO 1.8.2006. SINCE THE ASSESSEE HAS MAD E INVESTMENT ON 31.1.2007, BEYOND THE EXTENDED PERIOD I.E., 31.12.2 006, THE CLAIM OF EXEMPTION U/S. 54EC, IS HELD TO HAVE RIGHTLY DENIED BY THE ASSESSING OFFICER. 3.3 AGGRIEVED, THE ASSESSEE HAS PREFERRED THE P RESENT APPEAL BEFORE THE TRIBUNAL. THE AUTHORIZED REPRESENTATIVE REITERATED THE SUBMIS SIONS MADE BEFORE THE INCOME I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 5 TAX AUTHORITIES. THE LD. DR SUPPORTED THE ORDERS O F THE ASSESSING OFFICER AND THE CIT(A). 3.4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL ON RECORD. THE ASSESSEE HAD SOLD HIS PATHOLOGY LAB ON 1.1.2006. IN THE NORMAL COURSE, THE ASSESSEE OUGHT TO HAVE INVESTED IN 54EC BONDS ON OR BEFORE 30 -06-2006. HOWEVER THE PERIOD OF INVESTMENT IN 54EC BONDS WERE EXTENDED UPT O 31/12/2006, BY CBDT NOTIFICATION DATED 30/06/2006. THE CBDT IN NOTIFIC ATION (AT PARA 3) HAD ACKNOWLEDGED THAT OLD BONDS WERE CLOSED ON 29/03/20 06 AND WERE NOT AVAILABLE FROM THE SAID DATE. THE NON AVAILABILITY OF THE BON DS FROM 29/03/2006 WAS THE REASON FOR EXTENSION OF PERIOD FOR INVESTMENT IN 54 EC BONDS FROM 30/06/2006 TO 31/12/2006 (IN THE CASE OF THE ASSESSEE). THE BOAR DS NOTIFICATION DATED 30/06/2006 IS REPRODUCED FOR READY REFERENCE: F.NO. 142/09/2006-TPL GOVERNMENT OF INDIA MINISTRY O F FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NEW DELHI, THE 30 TH JUNE, 2006 SECTION 54EC OF THE INCOME-TAX ACT, 1961 PROV IDES THAT CAPITAL GAIN ARISING FROM THE TRANSFER OF A LONG TERM CAPITAL AS SET SHALL NOT BE CHARGED TO TAX TO THE EXTENT SUCH GAINS ARE INVESTED IN LONG TERM SPECIFIED ASSET WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFE R. 2. PRIOR TO THE AMENDMENT TO SECTION 54EC BY THE F INANCE ACT, 2006, LONG TERM SPECIFIED ASSET FOR THE PURPOSES OF SAID SECT ION MEANS ANY BOND REDEEMABLE AFTER THREE YEARS AND ISSUED BY THE NATI ONAL BANK FOR AGRICULTURAL I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 6 AND RURAL DEVELOPMENT (NABARD), NATIONAL HIGHWAYS A UTHORITY OF INDIA (NHAI), RURAL ELECTRIFICATION CORPORATION LIMITED (R EC), NATIONAL HOUSING BANK (NHB), OR SMALL INDUSTRIES DEVELOPMENT BANK OF IND IA (SIDBI). 3. HOWEVER, AFTER THE AMENDMENT TO SAID SECTION BY THE FINANCE ACT, 2006, LONG TERM SPECIFIED ASSET MEANS ANY BOND, REDEEMA BLE AFTER THREE YEARS AND ISSUED ON OR AFTER 1.4.2006 BY NHAI AND REC AND NOTI FIED BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE FOR THE PURPOSES OF SAID SECTION. IT HAS BEEN REPORTED BY NHAI AND REC THAT CONSEQUENT UPON T HIS AMENDMENT PROPOSED BY THE FINANCE BILL, 2006, ISSUE OF OLD BO NDS WAS CLOSED ON 29.3.2006. 4. BONDS OF NHAI AND REC UNDER THE AMENDED PROVISIO N OF SECTION 54EC HAVE BEEN NOTIFIED BY THE CENTRAL GOVERNMENT VIDE NOTIFI CATION S.O. 963(E) AND S.O. 964E DATED 29/06/2006 FOR RS.1,500 CRORES AND R S.4,500 CRORES RESPECTIVELY TO BE ISSUED DURING FINANCIAL YEAR 200 6-07. IT HAS BEEN INFORMED BY REC AND NHAI THAT THESE BONDS WILL BE ISSUED FROM 1 ST JULY, 2006 AND 20 TH JULY, 2006 RESPECTIVELY. 6. WITH A VIEW TO REMOVING THE HARDSHIP CAUSED TO TAXPAYERS, THE CENTRAL BOARD OF DIRECT TAXES, IN EXERCISE OF POWERS CONFER RED BY CLAUSE (C) OF SUB- SECTION (2) OF SECTION 119 OF THE INCOME TAX ACT, 1 961, HEREBY ORDER THAT THE LIMITATION OF SIX MONTHS FOR MAKING THE INVESTMENT U/S. 54EC OF CAPITAL GAINS ARISING FROM THE TRANSFER OF A LONG TERM CAPITAL AS SET IS EXTENDED- (I) UPTO 30 TH SEPTEMBER, 2006 IN CASE OF PERSONS WHERE THE LONG- TERM CAPITAL ASSET WAS TRANSFERRED BETWEEN 29.09.20 05 AND 31.12.2005 (BOTH DATES INCLUSIVE) (II) UPTO 31 ST DECEMBER, 2006 IN CASE OF PERSONS WHERE THE LONG- TERM CAPITAL ASSET WAS TRANSFERRED BETWEEN 01.01.2006 AN D 30.06.2006 (BOTH DATES INCLUSIVE). SD/- (SHARAT CHANDRA) DIRECTOR GOVERNMENT OF INDIA 3.5 THOUGH IN THE BOARDS NOTIFICATION IT IS MENT IONED THAT REC AND NHAI BONDS ARE AVAILABLE FROM 01/07/2006, ACCORDING TO THE ASS ESSEE, THE SAME WAS ISSUED ONLY I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 7 ON 22/01/2007. THE FACT OF ISSUE OF THESE BONDS ON LY FROM 22/01/2207 IS NOTICED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . CELLO PLAST (2012) 76 DTR 439 BOM.). THE RELEVANT PORTION OF THE JUDGMENT OF HO NBLE BOMBAY HIGH COURT READS AS FOLLOWS: 22. IN THE PRESENT CASE, THE BONDS WERE NOT AVAILA BLE FROM 4/8/2006 TO 22/1/2007. THE LAST DATE FOR INVESTMENT IN THE NORM AL COURSE WOULD HAVE BEEN 21/9/2006 WHICH WAS EXTENDED UP TO 31/12/2006. THE RESPONDENTS ADMITTEDLY INVESTED IN THE BONDS ON 31/1/2007 I.E. WITHIN NINE DAYS OF THEIR BEING AVAILABLE ONCE AGAIN FROM 22/1/2007. CONSIDE RING THAT THE BONDS WERE NOT AVAILABLE FOR SUCH A LONG PERIOD, AN EXTENSION OF MERELY NINE DAYS IS EXTREMELY REASONABLE IN THE PRESENT FACTS. 3.6 THE HONBLE HIGH COURT ALSO REJECTED THE REVE NUES CONTENTION THAT THE BONDS WERE AVAILABLE UPTO 3/8/2006 AND RESPONDENT ASSESSE E SHOULD HAVE PURCHASED THE BONDS BEFORE 3/8/2006. THE HONBLE HIGH COURT HELD THAT WHEN THE ASSESSEE WAS ENTITLED IN LAW TO WAIT TILL 21/9/2006 TO INVEST IN THE BONDS, THERE IS NO REASON TO INVEST IN THE BONDS PRIOR TO THE ABOVE MENTIONED DA TE 3.7 THE 54EC BONDS HAD IT NOT BEEN AVAILABLE DURI NG THE MONTH OF DECEMBER, 2006, IT WOULD HAVE BEEN IMPOSSIBLE FOR THE ASSESSE E TO HAVE INVESTED IN THESE BONDS. THE ASSESSEE CANNOT BE COMPELLED TO DO THE I MPOSSIBLE. SO THE QUESTION OR THE MOOT POINT TO BE EXAMINED IS WHETHER 54EC BONDS WERE AVAILED DURING THE MONTH OF DECEMBER, 2006. IF THE BONDS WERE AVAILAB LE DURING THE LAST DATES OF THE MONTH OF DECEMBER, 2006 (PERIOD OF INVESTMENT ENDED ON 31/12/2006), THE CLAIM OF DEDUCTION U/S. 54EC OF THE ACT CANNOT BE ALLOWED, SI NCE THE INVESTMENT HAS BEEN I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 8 MADE BEYOND THE PRESCRIBED TIME LIMIT. WE ARE OF T HE OPINION IF 54EC BONDS WERE NOT AVAILABLE IN THE MARKET FROM 01/12/2006 TO 22/0 1/2007, THE ASSESSEE SHOULD BE GIVEN A GRACE PERIOD OF FIVE DAYS, SINCE THE ASSESS EE HAD INVESTED IN 54EC BONDS ON 27/01/2007 (WHEREAS IN THE CASE CONSIDERED BY THE H ONBLE BOMBAY HIGH COURT (SUPRA), THE INVESTMENT WAS MADE ONLY ON 31/01/2007 ). FOR EXAMINATION OF THESE ASPECTS, THE MATTER IS RESTORED TO THE ASSESSING OF FICER. THE ASSESSING OFFICER SHALL VERIFY WHETHER THE BONDS ELIGIBLE FOR EXEMPTION U/S . 54EC WERE NOT AVAILABLE IN THE MONTH OF DECEMBER, 2006 UPTO 21/01/2007. IF THE AS SESSING OFFICER FINDS THAT THE 54EC BONDS WERE NOT AVAILABLE FOR THE ABOVE MENTIONE D PERIOD, THE BENEFIT OF DEDUCTION UNDER SECTION 54EC SHOULD BE GRANTED TO TH E ASSESSEE SINCE THE ASSESSEE HAD INVESTED IN 54EC BONDS WITHIN THE REASONABLE PER IOD OF ITS AVAILABILITY IN THE MARKET. IN TAKING THE ABOVE VIEW, WE RELY ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CELLO PLAST (SUPR A) WHICH IS IDENTICAL TO FACTS OF THIS CASE. 3.8 IN THE RESULT, GROUND NO. 2 RAISED BY THE ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. 4. GROUND NO. 3 RAISED BY THE ASSESSEE IS REGARDI NG ELIGIBILITY OF EXEMPTION U/S. 54F OF THE I.T. ACT. I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 9 4.1 THE BRIEF FACTS IN RELATION TO THE GROUND AR E AS FOLLOWS: THE ASSESSEE HAD MADE A CLAIM OF EXEMPTION U/S. 54F OF THE ACT. THE CLAIM WAS DENIED BY THE ASSESSING OFFICER FOR THE REASON THAT NO CLAIM WAS MADE IN THE RETURN OF INCOME BUT ONLY DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. THE OBSERVATION OF THE ASSESSING OFFICER FOR DENYING TH E BENEFIT OF DEDUCTION U/S. 54F READS AS UNDER: IN THE INSTANT CASE, THE AR WAS UNABLE TO PRODUCE ANY PROOF OF SUCH DEPOSIT INTO CAPITAL GAINS ACCOUNT SCHEME EXCEPT AN EXTRACT OF PAYMENT SCHEDULED DATED 12.8.2008 AS CONFIRMED BY THE PROPERTY DEVELO PER WHEREBY THE ASSESSEE WAS FOUND TO HAVE PAID AMOUNT OF RS.10.50 LAKHS BEFORE THE DUE DATE OF RETURN OF INCOME. EVEN THOUGH THE PAYMENT O F RS.10.50 LAKHS WAS MADE WITHIN 31.7.2006 WHICH QUALIFIES FOR DEDUCTION U/S. 54F, THE DEDUCTION WAS HOWEVER DISALLOWED ON THE GROUND THAT THERE WAS NO PROVISION UNDER THE INCOME TAX ACT TO MAKE AMENDMENT IN THE RETURN OF I NCOME BY MODIFYING AN APPLICATION AT THE ASSESSMENT STAGE WITHOUT REVISIN G THE RETURN. THIS WAS UPHELD BY THE APEX COURT IN GOETZE INDIA LTD VS CIT (284 ITR 323). THEREFORE THE ENTIRE EXEMPTION U/S. 54F AS CLAIMED BY THE ASS ESSEE COULD NOT BE ALLOWED. 4.2 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL T O THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE VIEW TAKEN BY THE ASSESSIN G OFFICER. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: IT IS SEEN THAT IN THE RETURN FILED BY THE APPELLA NT NO CLAIM OF DEDUCTION U/S. 54F WAS MADE. IT IS ONLY DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSEE BROUGHT THIS ISSUE BEFORE THE ASSESSING OF FICER AND UNDER THIS SET OF SPECIFIC FACTS AND CIRCUMSTANCES THE ASSESSING OFFI CER HAS RIGHTFULLY APPLIED THE RATIO PRONOUNCED BY THE HONBLE SUPREME COURT IN TH E CASE OF GOETZE (INDIA) LTD. VS CIT. IN THE AFORESAID DECISION, IT IS ONLY THE INCOME TAX APPELLATE TRIBUNAL, IS INTERPRETED TO BE THE APPELLATE AUTHOR ITY TO CONSIDER THE ALLOWANCE OF SUCH CLAIM, IF THE SAME HAS NOT BEEN CLAIMED ORI GINALLY BY THE ASSESSEE IN I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 10 THE RETURN OF INCOME. ACCORDINGLY IN VIEW OF THE R ATIO PRONOUNCED IN THE CASE OF GOETZE INDIA LTD. THE EXEMPTION DENIED BY ASSESS ING OFFICER U/S. 54F IS UPHELD. 4.3 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASS ESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ACTUALLY INVESTED A SUM OF RS.34,97,593/- IN THE CO NSTRUCTION OF RESIDENTIAL HOUSE WITHIN THE TIME ALLOWED U/S. 54F(1) OF THE ACT. IT WAS SUBMITTED THAT IN SUCH CASES, THE PROVISIONS OF SECTION 54F(4) REQUIREMENT TO MAK E DEPOSITS IN CAPITAL GAINS ACCOUNTS SCHEME HAS NO APPLICATION. FOR THE ABOVE PROPOSITION, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. K. RAMACHANDRA RAO (120 DTR 72). AS REG ARDS THE ASSESSING OFFICERS CONCLUSION THAT NO CLAIM OF DEDUCTION U/S. 54F WAS MADE IN THE RETURN OF INCOME BUT ONLY DURING THE COURSE OF ASSESSMENT, IT WAS SU BMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE RIGHTFUL CLAIM OF DEDUCTION U /S. 54F THOUGH NOT CLAIMED IN THE RETURN OF INCOME CAN BE CLAIMED IN THE COURSE OF AS SESSMENT PROCEEDINGS. IT WAS CONTENDED THAT THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (284 ITR 323), RELIED ON BY TH E ASSESSING OFFICER, DOES NOT HAVE APPLICATION TO THE FACTS OF THE CASE. IT WAS SUBMIT TED THAT THE HONBLE SUPREME COURT ONLY LIMITED THE POWER OF ASSESSING OFFICER A ND DOES NOT IMPINGE ON THE POWERS OF THE APPELLATE AUTHORITY. THEREFORE, IT W AS CONTENDED THAT THE CIT(A) OUGHT TO HAVE CONSIDERED THE GRANT OF EXEMPTION U/S . 54F WHICH WAS OTHERWISE AVAILABLE UNDER THE ACT. THE LD. COUNSEL FOR THE A SSESSEE RELIED ON THE JUDGMENT OF I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 11 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PR. CIT VS. WESTERN INDIA SHIPYARD LTD. (379 ITR 289). 4.4 THE LD. DR PRESENT WAS DULY HEARD. 4.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE CLAIM OF EXEMPTION (U/S. 54F OF THE ACT) WAS DENIED PRIMARILY FOR THE REASON THAT ASSESSEE HAD NOT MADE THE SAID CLAIM IN THE RETURN OF INCOME FILED. THE CIT(A) CONFIRMED THE VIEW TAKEN BY THE ASSESSING OFFICER AND DID NOT CONSIDER WHETHER THE ASSESSEE IS ENTITLED TO THE BE NEFIT OF EXEMPTION U/S. 54F OF THE ACT ON MERITS. THE ASSESSING OFFICER RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS . CIT (SUPRA) HAD DENIED THE CLAIM OF EXEMPTION U/S. 54F ONLY FOR THE REASON THA T THE SAID CLAIM WAS MADE ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT IN THE RETURN OF INCOME. THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (SUPRA) IN PARA 5 OF THE JUDGMENT HAD CATEGORICALLY HELD THAT THE JUD GMENT WAS TO LIMIT THE POWER OF THE ASSESSING OFFICER AND NOT TO IMPINGE ON THE POW ERS OF THE APPELLATE AUTHORITY. THIS POSITION HAS BEEN CLARIFIED BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. WESTERN INDIA SHIPYARD LTD .(SUPRA). THE RELEVANT PORTION OF THE SAME READS AS FOLLOWS: THE TRIBUNAL WAS RIGHT IN HOLDING THAT WHILE THERE WAS A BAR ON THE ASSESSING OFFICER ENTERTAINING SUCH CLAIM WITHOUT A REVISED R ETURN BEING FILED BY THE I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 12 ASSESSEE, THERE WAS NO SUCH RESTRAINT ON THE COMMIS SIONER (APPEALS) DURING THE APPELLATE PROCEEDINGS. HOWEVER, WHILE PERMITTI NG SUCH A CLAIM HE OUGHT TO HAVE EXAMINED WHETHER IN FACT THE BAD DEBTS WERE WRITTEN OF BY THE ASSESSEE IN THE FIRST INSTANCE IN THE ACCOUNTS AND THEN TAKEN INTO CONSIDERATION WHILE COMPUTING THE INCOME. THE REMAND OF THE MATTE R TO THE ASSESSING OFFICER FOR THAT PURPOSE WAS, THEREFORE, JUSTIFIED. 4.6 THE ITAT, MUMBAI BENCH IN THE CASE OF NAPTHA JHAKRI JOINT VENTURE VS. ACIT (5 ITR TRIB. 75) HAD ALSO CONSIDERED THE ABOVE JUDG MENT OF HONBLE APEX COURT AND HELD THAT EVEN IF THE ASSESSEE HAS FAILED TO MAKE D EDUCTION U/S. 54F IN THE RETURN OF INCOME FILED BY IT, WHICH IS OTHERWISE AVAILABLE TO IT AS PER LAW, DOORS OF JUSTICE CANNOT BE CLOSED TO THE ASSESSEE SIMPLY FOR THE REA SON THAT NO REVISED RETURN WAS FILED FOR MAKING SUCH CLAIM OF DEDUCTION. IT WAS H ELD BY THE MUMBAI BENCH OF THE TRIBUNAL (SUPRA) THAT THE APPELLATE AUTHORITY, NAME LY, THE CIT(A) OR THE TRIBUNAL CAN CONSIDER THE RIGHTFUL CLAIM OF THE ASSESSEE. THE R ELEVANT FINDING OF THE TRIBUNAL READS AS FOLLOWS: THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE FOR THE REASON THAT IN THE ABSENCE OF THE ASSESSEE FILING ANY REVI SED RETURN, IT WAS OT OPEN TO MAKE ANY CLAIM FOR DEDUCTION. IN SUPPORT OF THE AS SESSING OFFICERS STAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON T HE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC). IT IS TRUE THAT IT HAS BEEN HELD IN THIS CASE THAT THE ASSESSING OFFICER CANNOT ENTERTA IN THE CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING THE REVISED RETURN. HOWEVE R IT IS NOT THE END OF THE MATTER. THE HONBLE SUPREME COURT HAS CLARIFIED THE POSITION FURTHER IN PARA 4 OF THIS JUDGMENT WHICH MAKES IT EXPLICITLY CLEAR TH AT THE MANDATE OF THIS JUDGMENT IS LIMITED TO THE POWER OF THE ASSESSING A UTHORITIES AND DOES OT IMPINGE ON THE POWER OF THE TRIBUNAL UNDER S. 254 O F THE ACT. IN THIS VIEW OF THE MATTER THERE REMAINS NO DOUBT WHATSOEVER THAT I F THE ASSESSEE HAS FAILED TO CLAIM DEDUCTION IN THE RETURN FILED BY IT, WHICH IS OTHERWISE AVAILABLE TO IT AS PER LAW, THE DOORS OF JUSTICE CANNOT BE CLOSED TO T HE ASSESSEE SIMPLY FOR THE REASON THAT NO REVISED RETURN WAS FILED MAKING SUCH A CLAIM FOR DEDUCTION. IT IS I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 13 SIMPLE AND PLAIN THAT THE PURPOSE OF MAKING ASSESSM ENT IS TO COLLECT THE RIGHTFUL TAX DUE FROM THE ASSESSEE. FILING OF REVIS ED RETURN BY THE ASSESSEE MAY BE A VALID MODE OF CLAIMING DEDUCTION WHICH WAS OMITTED TO BE CLAIMED IN THE ORIGINAL RETURN. BUT IT IS NOT THAT IF REVISED RETURN IS NOT FILED OR THE TIME- LIMIT FOR THE FILING OF THE REVISED RETURN HAS EXPI RED BUT THE ASSESSMENT IS STILL PENDING, THAT THE ASSESSEE SHOULD BE PROHIBITED FRO M MAKING SUCH A CLAIM. TECHNICALITIES CANNOT BE ALLOWED TO WORK AS SPEED B REAKERS IN THE COURSE OF DISPENSATION OF JUSTICE. 4.7 IN THE INSTANT CASE, ADMITTEDLY, THE ASSESSEE HAD INCURRED COST OF RS.34,97,593/- IN THE CONSTRUCTION OF THE RESIDENTI AL HOUSE. WHETHER THE ASSESSEE WAS ENTITLED TO THE CLAIM OF EXEMPTION U/S. 54F IN RESPECT OF THE AMOUNT, HAS NOT BEEN DEALT ON MERITS FOR THE REASON THAT THE CLAIM OF EXEMPTION U/S. 54F WAS NOT MADE IN THE RETURN OF INCOME FILED. WHETHER ASSESS EE IS ENTITLED TO EXEMPTION U/S. 54F AS PER LAW, OUGHT TO HAVE BEEN EXAMINED BY THE CIT(A) AND THE ASSESSEE CANNOT BE FORECLOSED FROM THE BENEFIT OF EXEMPTION MERELY ON ACCOUNT OF NOT MAKING A CLAIM IN THE RETURN OF INCOME. THE ASSESS EE HAD MADE THE CLAIM OF EXEMPTION U/S. 54F OF THE ACT IN THE COURSE OF ASSE SSMENT PROCEEDINGS AND ALSO BEFORE THE FIRST APPELLATE AUTHORITY. THE HONBLE SUPREME COURT HAS CLARIFIED IN PARA 4 OF THE SAID JUDGMENT THAT THE CLAIM NOT MADE IN T HE RETURN OF INCOME DOES NOT IMPINGE UPON THE POWERS OF THE FIRST APPELLATE AUTH ORITY TO EXAMINE THE ALLOWABILITY OF THE CLAIM. IN VIEW OF THE JUDGMENT OF THE HONB LE DELHI HIGH COURT (SUPRA) AND THE MUMBAI TRIBUNAL (SUPRA), WE ARE OF THE VIEW THA T THE CIT(A) HAS POWER TO CONSIDER THE CLAIM OF DEDUCTION U/S. 54F OF THE ACT . SINCE ON MERITS, WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT OF THE CLAIM U/ S. 54F HAS NOT BEEN EXAMINED BY I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 14 THE CIT(A), WE DEEM IT APPROPRIATE TO RESTORE THE I SSUE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION. IT IS ORDERED A CCORDINGLY. 4.8 IN THE RESULT, GROUND NO. 3 OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 61/COCH/2016 (REVENUES APPEAL) 5. THE SOLITARY ISSUE OF THE ASSESSEE IN THE DEPAR TMENT APPEAL IS WHETHER INTEREST U/S. 234B IS TO BE CHARGED AS PER SECTION 234B(1) O R 234B(3) OF THE ACT. 5.1 THE ASSESSING OFFICER HAD LEVIED INTEREST U/S. 234B(1) FROM 1 ST APRIL, 2006 TO THE DATE OF COMPLETION OF RE-ASSESSMENT, I.E. UPTO 14.3.2014. ACCORDING TO THE ASSESSEE, ASSESSMENT U/S. 143(1) OF THE ACT WAS COM PLETED ON 17/8/2007. HENCE, THE ASSESSEE IS LIABLE FOR INTEREST ONLY FROM 17/08 /2014 TO 14/03/2014 AS PER SECTION 234B(3) OF THE ACT. THE CIT(A) ACCEPTED THE CONTEN TION RAISED BY THE ASSESSEE AND ALLOWED TH IS GROUND. 5.2 THE REVENUE BEING AGGRIEVED HAS FILED THE PRE SENT APPEAL BEFORE THE TRIBUNAL. THE LD. DR RELIED ON THE GROUNDS RAISED BY THE REVE NUE. THE LD. AR ON THE OTHER HAND SUBMITTED THAT AN IDENTICAL ISSUE WAS CONSIDER ED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. B. LAKSHMIKANTHAN REPORTED IN (198 TAXMAN 485), THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 15 5.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL ON RECORD. ON IDENTICAL FACTS, THE HONBLE JURISDICTIONAL HIGH CO URT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE HONBLE KERALA HIGH COURT HAS HELD THAT WHEN PROCEEDINGS U/S. 143(1) OF THE ACT HAS BEEN COMPLETED AND ISSUED TO THE ASSESSEE, INTEREST IS TO BE LEVIED AS PER SECTION 234B(3) OF THE ACT FROM THE D ATE OF PROCEEDINGS U/S. 143(1) OF THE ACT. THE RELEVANT FINDING OF THE HONBLE JURISD ICTIONAL HIGH COURT READS AS FOLLOWS: IN THIS CASE, THE ORIGINAL RETURNS WERE PROCESSE D UNDER S. 143(1) OF THE ACT AND TH E PROCEEDINGS SO COMPLETED WERE ISSUED TO THE ASSESSE E. IT IS ONLY THEREAFTER THE DEPARTMENT CONDUCTED SEARCH AND MADE REVISED ASSESSMENTS UNDER S.153A OF THE ACT THOUGH BY ACCEPTING RETURNS UNDISCLOSED INCOME FILED AND BY ISSUING PROCEEDINGS UNDER S. 143(1) R/W S.15 3A OF THE ACT. WE, THEREFORE, HOLD THAT THE ASSESSMENTS UNDER S. 153A ARE REVISED ASSESSMENTS AND SO MUCH SO, INTEREST COULD BE DEMANDED FOR THE PERIOD MENTIONED IN S. 234(B)(3) OF THE ACT AS HELD BY THE TRIBUNAL. IN T HIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE TRIBUNAL AND DISMISS THE DE PARTMENT APPEALS FOR BOTH THE YEARS . 5.3 MOREOVER WE NOTICE THAT SECTION 234B(3) WAS AM ENDED BY FINANCE ACT, 2015 WITH EFFECT FROM 1.6.2015 WHEREBY INTEREST U/S. 234 B IS TO BE CALCULATED FROM FIRST DAY OF APRIL TO NEXT FOLLOWING SUCH FINANCIAL YEAR. THEREFORE, IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA) AN D THE AMENDMENT WITH EFFECT FROM 1.6.2015, WE ARE OF THE VIEW THAT THE ORDER OF THE COMMISSIONER IS CORRECT AND NO INTERFERENCE IS CALLED FOR. 5.4 IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. I.T.A.NOS.122/COCH/2016 & 61/COCH/2016 16 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 08 -06 -2017. SD/- SD/- (ABRAHAM P. GEORGE) (GEOR GE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: KOCHI DATED: 08S-06-2017 GJ COPY TO: 1. DR. RAMESH KUMAR ISWARA, NORTH SQUARE, PARAMARA ROAD, KOCHI-682 018. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1 NON-CORPORATE, KOCHI. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOCHI. 4. THE PR. COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN