FALUBAI M JAIN, MUMBAI V. ACIAT CIR 16(2) NOW 19(2), MUMBAI

ITA 134/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3220 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANU KIRISHNA AGARWAL
• Assessee Lawyers: D B SANGHVI; RAKES H SAKARIA
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 147; 148; 54; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) FALUBAI M. JAIN, FLAT NO.25,8 TH FLOOR, MATRU MANDIR, 278, TARDEO ROAD, MUMBAI 4007 PAN:ADMPJ 8215 ... APPELLANT VS. THE ACIT,CIR.16(2), MATRU MANDIR, TARDEO ROAD, MUMBAI..... RESPONDENT APPELLANT BY : S/SHRI D.B. SANGHVI & RAKES H SAKARIA RESPONDENT BY : MS ANU KIRISHNA AGARWAL DATE OF HEARING : 17/08/2016 DATE OF PRONOUNCEMENT : 24/08/2016 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(APPEALS)-27, MUMBAI DATED 4/09/2014 FOR THE ASS ESSMENT YEAR 2009-10. 2. THE FACTS OF THE CASE AS EMANATE FROM THE RECORD ARE, BRIEFLY, AS UNDER:- 2 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) 2.1 THE ASSESSEE, AN INDIVIDUAL DERIVING INCOME FR OM CAPITAL GAINS AND OTHER SOURCES, FILED HIS RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2009-10 ON 27/07/2009 DECLARING TOTAL INCOME OF RS. 1,71,24,320/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT).ON THE BASIS OF AIR INFORMATIO N, THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY BY INITIATION OF RE-ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT. IN RESPON SE TO NOTICE UNDER SECTION 148 DATED 23/01/2013, THE ASSESSEE FILED A RETURN OF INCOME ON 11/02/2013 DECLARING INCOME OF RS.1,71,24,320/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. ) OBSERVED THAT THE ASSESSEE HAD SOLD TWO PROPERTIES FOR RS.3.00 CRORES ON 28/04/2008 AND RS.1.5 CRORES ON 14/10/2008 AND CLAIMED EXEMPTION O F RS.1.00 CRORES U/S. 54EC OF THE ACT IN RESPECT OF TWO SEPARATE INV ESTMENTS OF RS.50.00 LAKHS EACH IN TWO DIFFERENT FINANCIAL YEARS. THE AO WAS OF THE VIEW THAT THE ASSESSEES CLAIM FOR EXEMPTION OF RS.1.00 CRO RES UNDER SECTION 54EC OF THE ACT WAS BASED ON A WRONG INTERPRETATION OF THE PROVISIONS OF SECTION 54EC(1) OF THE ACT, TO A CLAIM OF DOUBLE DEDUCTION OF RS.1.00 CRORES OVER TWO FINANCIAL YEARS INSTEAD OF RS.50.00 LAKHS AND CONSEQUENTLY RESTRICTED THE ASSESSEES EXEMPTION UN DER SECTION54EC OF THE ACT TO RS.50.00 LAKHS. THE ASSESSMENT WAS ACCOR DINGLY COMPLETED UNDER SECTION143(3) R.W.S. 147 OF THE ACT VIDE ORDE R DATED 28/03/2013. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 28/0 3/2013 FOR ASSESSMENT YEAR 2009-10, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS)-27, MUMBAI CHALLENGING ON BOTH THE TEC HNICAL ISSUE I.E., RE-OPENING OF THE ASSESSMENT FOR THE ASSESSMENT YEA R 2009-10 UNDER SECTION 147/148 OF THE ACT AND ALSO ON THE ISSUE OF RESTRICTION OF THE 3 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) EXEMPTION CLAIMED UNDER SECTION 54EC OF THE ACT TO RS.50 LAKHS AS AGAINST RS.1.00 CRORES CLAIMED BY THE ASSESSEE . TH E LD. CIT(A), VIDE ORDER DATED 4/09/2014 UPHELD THE ORDER OF THE ASSES SMENT FOR THE ASSESSMENT YEAR 2009-10; BOTH ON THE ISSUE OF RE-OP ENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND ALSO AF FIRMED THE ASSESSING OFFICERS ACTION IN RESTRICTING THE ASSES SEES CLAIM FOR EXEMPTION UNDER SECTION 54EC OF THE ACT TO RS.50.00 LAKHS, INTER-ALIA, BY PLACING RELIANCE ON THE DECISION OF THE JAIPUR BENC H OF THE ITAT IN THE CASE OF ACIT VS. SRI RAJKUMAR JAIN & SONS (HUF) IN ITA NO.648/JP/2011 AND THE MEMORANDUM EXPLAINING THE PROVISIONS CONTAI NED IN THE FINANCE (NO.2) BILL 2014, AMENDING THE EXISTING PRO VISIONS OF SUB- SECTION (1) OF THE SECTION 54EC OF THE ACT W.E.F. 1 /04/2015, I.E., EFFECTIVE FROM ASSESSMENT YEAR 2015-16. 3. AGGRIEVED BY THE ORDER OF THE CIT(A)-27, MUMBAI DATED 04/09/2014 FOR AY 2009-10, THE ASSESSEE HAS PREFER RED THIS APPEAL, RAISING THE FOLLOWING GROUNDS:- 1.1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS)-27,MUMBAI[LD. CIT(A)] ERRED IN CONFIRMING THE ACTION OF THE A.O IN FRAMING REASSESSMENT UNDER SECTION 147 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961[THE ACT]. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRC UMSTANCES OF THE CASE, AND IN LAW, THE REASSESSMENT WAS BAD IN LAW IN AS MUCH AS THE REQUISITE PRECONDITIONS FOR INITIATING THE REASSESSMENT PROCE EDINGS AS WELL COMPLETION THEREOF WERE NOT FULFILLED. WITHOUT PREJUDCIE TO THE ABOVE 2.1 THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION O F THE A.O IN CONFIRMING THE DEDUCTION UNDER SECTION 54EC TO RS.50 LACS, AS AGAI NST THE DEDUCTION OF RS.1 LAC CLAIMED BY THE APPELLANT UNDER SECTION 54EC OF THE ACT. 2.2 THE LD. CIT(A) FAILED TO APPRECIATE THAT THE IN VESTMENTS IN THE BONDS UNDER SECTION 54EC OF THE ACT WERE MADE [RS.50 LACS EACH] IN TWO DIFFERENT ACCOUNTING YEARS. 4 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) 2.3 IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMST ANCES OF THE CASE, AND IN LAW, NO SUCH REJECTION OF THE CLAIM WAS CALLED FOR. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY THE ABOVE GROUND AT THE TIME OF HEARING. 4. GROUND NO.1.1 AND 1.2 INITIATION OF RE-ASSESSMENT P ROCEEDINGS : 4.1 AT THE OUTSET, THE LD.AR FOR THE ASSESSEE SUBMI TTED, BEFORE THE BENCH, THAT THESE GROUNDS 1.1 AND 1.2 (SUPRA), ARE NOT BEING PRESSED OR URGED BY THE ASSESSEE IN THIS APPEAL. SINCE GROUNDS 1.1 AND 1.2 ARE NOT BEING PRESSED BEFORE US, THEY ARE RENDERED INFURCTU OUS AND ARE ACCORDINGLY DISMISSED. 5. GROUND NO.3: BEING GENERAL IN NATURE, NO ADJUDICATION IS CALLED FOR THEREON. 6. GROUNDS NO.2.1 TO 2.3-EXEMPTION U/S.54EC : 6.1.1. IN THESE GROUNDS (SUPRA), THE ASSESSEE ASSAI LS THE IMPUGNED ORDER OF THE LD. CIT(A), IN CONFIRMING THE AO'S ACTION IN RESTRICTING THE ASSESSEES CLAIM FOR EXEMPTION U/S.54EC OF THE ACT TO RS.50 LAKHS AS AGAINST RS.1.00 CRORES CLAIMED BY THE ASSESSEE, WIT HOUT APPRECIATING THE FACT THAT THE INVESTMENT IN SPECIFIED BONDS UND ER SECTION 54EC OF THE ACT WAS MADE IN TWO DIFFERENT FINANCIAL YEARS. ACCORDING TO THE ASSESSEE , THE LD. CIT(A) HAS COME TO A WRONG CONCL USION OF RESTRICTING THE ASSESSEES EXEMPTION UNDER SECTION54EC OF THE ACT TO RS.50.00 LAKHS ONLY, BY FOLLOWING THE DECISION OF THE ITAT, JAIPUR BENCH IN THE CASE OF RAJ KUMAR JAIN & SONS (HUF)(SUPRA), AND IN INVOKING THE PROVISIONS OF THE AMENDMENT TO SUB-SECTION (1) OF S ECTION 54EC OF THE ACT INSERTED BY FINANCE (NO.2) BILL, 2014, WHICH IS W.E.F. 1/04/2015 I.E. THEREFORE, EFFECTIVE ONLY FOR AND FROM ASSESSMENT Y EAR 2015-16. 5 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) 6.1.2 THE LD.AR CONTENDS THAT THE ASSESSEES CLAIM FOR EXEMPTION OF RS.1.00 CRORES, UNDER SECTION 54EC OF THE ACT, IN T HE FACTS AND CIRCUMSTANCES OF THE CASE ON HAND, THAT INVESTMENT IN SPECIFIED BONDS WAS MADE BY THE ASSESSEE TWICE; @ RS.50 LAKHS EACH IN TWO DIFFERENT FINANCIAL YEARS, I.E., ON 30/09/2008 AND 9/04/2009, IS TO BE ALLOWED. IN SUPPORT OF THIS PROPOSITION, THE LD. AR FOR THE ASS ESSEE PLACED RELIANCE, INTER-ALIA, ON THE FOLLOWING JUDICIAL PRONOUNCEMENT S WHICH ARE STATED TO BE DIRECTLY ON THE ISSUE OF EXEMPTION UNDER SECTION 54EC OF THE ACT ON SIMILAR FACTS AND CIRCUMSTANCES AS IN THE CASE ON H AND AND COVER THE ISSUE SQUARELY IN FAVOUR OF THE ASSESSEE :- (I) CIT VS.C. JAICHANDER (2015) 370 ITR 579(MAD.); (II) CIT VS. COROMANDAL INDUSTRIES LTD. (2014) 370 ITR 586(MAD); (III) DR. KUMAR M. DHAWALE VS. ACIT- 11(2) (ITA NO. 7585/M/2012 DATED 9/10/2015); (IV) JNR SECURITIES BROKING LTD.(ITA NO.6987/MUM/2 013 DATED 8/07/2015); (V) VIVEK JAIROZBHOY VS. DCIT (ITA NO.236/BANG/20 12 DATED 14/12/2012). 6.2 PER CONTRA, THE LD.DR FOR THE REVENUE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW ON THIS ISSUE. 6.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL DECISIONS CITED. THE UNDISPUTED FACTS OF THE MATTER AS EMANATE FROM THE RECORD IS THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION SOL D TWO PROPERTIES ON 28/04/2008 AND 14/04/2008 AND IN ITS COMPUTATION OF INCOME FROM CAPITAL GAINS CLAIMED EXEMPTION FOR RS.1.00 CRORES UNDER SECTION 54EC 6 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) OF THE ACT IN RESPECT OF TWO SEPARATE INVESTMENTS WITHIN THE SPECIFIED PERIOD IN SPECIFIED BONDS OF RS.50 LAKHS EACH IN T WO DIFFERENT FINANCIAL YEARS I.E. ONE ON 30/08/2008 AND, THE OTHER ON 9/04 /2009. THE AUTHORITIES BELOW WERE OF THE OPINION THAT THE EXEM PTION U/S.50EC OF THE ACT IS TO BE ALLOWED ONLY TO THE EXTENT OF RS.5 0.00 LAKHS, AND RESTRICTED ALLOWANCE OF THE ASSESSEES CLAIM TO RS. 50.00 LAKHS AND DISALLOWED THE BALANCE RS.50.00 LAKHS. 6.3.2 WE HAVE HAD OCCASION TO PERUSE THE JUDICIAL P RONOUNCEMENTS CITED AND PLACED RELIANCE UPON BY THE ASSESSEE . IN THE CASE OF CIT VS. C. JAICHANDER (SUPRA), THEIR LORDSHIPS WERE OF THE VIE W THAT ON A PLAIN READING OF SECTION 54EC (1) OF THE ACT, IT RESTRICT S THE TIME LIMIT FOR THE PERIOD OF INVESTMENT AFTER THE SALE OF PROPERTY TO SIX MONTHS. THE FIRST PROVISO TO SECTION 54EC(1) OF THE ACT SPECIFIES THA T THE QUESTION OF INVESTMENT SO MADE AFTER 1/04/2007 IN THE SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED RS.50.00 LAKHS. THERE IS NO CAP PLACED ON THE INVESTMENTS TO BE MAD E IS SPECIFIED BONDS. IT WAS EXPLAINED THAT AS PER THE MANDATE OF SECTION 54 EC(1) OF THE ACT, THE TIME LIMIT FOR INVESTMENT IS SIX MONTH S AFTER SALE OF PROPERTY AND THE BENEFIT THAT FLOWS FROM THE FIRST PROVISO IS THAT, IF THE ASSESSEE MAKES AN INVESTMENT OF RS.50 LAKHS IN ANY FINANCIAL YEAR, IT WOULD HAVE THE BENEFIT OF SECTION 54 EC(1) OF THE A CT AND THE ASSESSEES CLAIM CANNOT BE DENIED . THE HONBLE COURT OBSERVED THAT IT WAS ONLY AFTER THE AMENDMENT BY FINANCE (NO.2) ACT, 2014 W.E .F. 1/04/2015, A SECOND PROVISO WAS INSERTED AFTER THE EXISTING PROV ISO TO SUB-SECTION (I) OF THE SECTION 54 EC OF THE ACT, THAT THE INVESTMEN T MADE BY AN ASSESSEE IN THE SPECIFIED BONDS, OUT OF CAPITAL GAI NS ARISING FROM THE 7 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) TRANSFER OF ONE OR MORE ORIGINAL ASSETS DURING THE FINANCIAL YEAR IN WHICH THE ASSET/ASSETS ARE TRANSFERRED AND IN THE SUBSEQ UENT FINANCIAL YEAR DOES NOT EXCEED RS.50.00 LAKHS. AT PARA 5 TO 11 OF ITS ORDER THE HON'BLE MADRAS HIGH COURT HELD AS UNDER :- 5. THE KEY ISSUE THAT ARISES FOR CONSIDERATION IS W HETHER THE FIRST PROVISO TO SECTION 54EC(1) OF THE ACT WOULD RESTRICT THE BENEFIT OF INVESTMEN T OF CAPITAL GAINS IN BONDS TO THAT FINANCIAL YEAR DURING WHICH THE PROPERTY WAS SOLD OR IT APPLIES TO ANY FINANCIAL YEAR DURING THE SIX MONTHS PERIOD. 6. FOR BETTER UNDERSTANDING OF THE ISSUE, IT WOULD BE APPOSITE TO REFER TO SECTION 54EC(1) OF THE ACT, WHICH READS AS UNDER: SECTION 54EC . CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN C ERTAIN BONDS. (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFE R OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRED BEI NG HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE O F SUCH TRANSFER, INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHALL BE DEALT WI TH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS T O SAY, (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSE T, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL G AIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE LONG-T ERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN, SHALL NOT B E CHARGED UNDER SECTION 45 . PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1 ST DAY OF APRIL, 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSE E DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. 7. ON A PLAIN READING OF THE ABOVE SAID PROVISION, WE ARE OF THE VIEW THAT SECTION 54EC(1) OF THE ACT RESTRICTS THE TIME LIMIT FOR THE PERIOD OF INVESTMENT AFTER THE PROPERTY HAS BEEN SOLD TO SIX MONTHS. THE RE IS NO CAP ON THE INVESTMENT TO BE MADE IN BONDS. THE FIRST PROVISO T O SECTION 54EC(1) OF THE 8 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) ACT SPECIFIES THE QUANTUM OF INVESTMENT AND IT STAT ES THAT THE INVESTMENT SO MADE ON OR AFTER 1.4.2007 IN THE LONG-TERM SPECIFIE D ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAK H RUPEES. IN OTHER WORDS, AS PER THE MANDATE OF SECTION 54EC(1) OF THE ACT, THE TIME LIMIT FOR INVESTMENT IS SIX MONTHS AND THE BENEFIT THAT FLOWS FROM THE FIRS T PROVISO IS THAT IF THE ASSESSEE MAKES THE INVESTMENT OF RS.50,00,000/- IN ANY FINANCIAL YEAR, IT WOULD HAVE THE BENEFIT OF SECTION 54EC(1) OF THE ACT. 8. THE LEGISLATURE NOTICING THE AMBIGUITY IN THE AB OVE SAID PROVISION, BY FINANCE (NO.2) ACT , 2014, WITH EFFECT FROM 1.4.2015, INSERTED AFTER T HE EXISTING PROVISO TO SUB-SECTION (1) OF SECTION 54EC OF THE ACT, A SECOND PROVISO, WHICH READS AS UNDER: PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN A SSESSEE IN THE LONG-TERM SPECIFIED ASSET, FROM CAPITAL GAINS ARISI NG FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL Y EAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AND IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES 9. AT THIS JUNCTURE, FOR BETTER CLARITY, IT WOULD B E APPROPRIATE TO REFER TO THE NOTES ON CLAUSES FINANCE BILL 2014 AND THE MEMORAN DUM EXPLAINING THE PROVISIONS IN THE FINANCE (NO.2) BILL, 2014, WHICH READ AS UNDER: NOTES ON CLAUSES FINANCE BILL 2014: CLAUSE 23 OF THE BILL SEEKS TO AMEND SECTION 54EC OF THE INCOME-TAX ACT RELATING TO CAPITAL GAIN NOT TO BE CHARGED ON I NVESTMENT IN CERTAIN BONDS. THE EXISTING PROVISIONS CONTAINED IN SUB-SEC TION (1) OF SECTION 54EC PROVIDE THAT WHERE CAPITAL GAIN ARISES FROM THE TR ANSFER OF A LONG-TERM CAPITAL ASSET AND THE ASSESSEE HAS WITHIN A PERIOD OF SIX MONTHS INVESTED THE WHOLE OR PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE PROPORTIONATE CAPITAL GAINS SO INVESTED IN THE LONG- TERM SPECIFIED ASSET OUT OF TOTAL CAPITAL GAIN SHAL L NOT BE CHARGED TO TAX. THE PROVISO TO THE SAID SUB-SECTION PROVIDES T HAT THE INVESTMENT MADE IN THE LONG-TERM SPECIFIED ASSET DURING ANY FI NANCIAL YEAR SHALL NOT EXCEED FIFTY LAKH RUPEES. IT IS PROPOSED TO INSERT A PROVISO BELOW FIRST PROV ISO IN SAID SUB-SECTION (1) SO AS TO PROVIDE THAT THE INVESTMENT MADE BY AN ASSESSEE IN THE LONG-TERM SPECIFIED ASSET, FROM CAPITAL GAINS ARISI NG FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL Y EAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AND IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. THIS AMENDMENT WILL TAKE EFFECT FROM 1ST APRIL, 201 5 AND WILL, ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 2 015-16 AND 9 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) SUBSEQUENT YEARS. MEMORANDUM: EXPLAINING THE PROVIS IONS IN THE FINANCE (NO.2) BILL, 2014: CAPITAL GAINS EXEMPTION ON INVESTMENT IN SPECIFIED BONDS. THE EXISTING PROVISIONS CONTAINED IN SUB-SECTION (1 ) OF SECTION 54EC OF THE ACT PROVIDE THAT WHERE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET AND THE ASSESSEE HAS, AT AN Y TIME WITHIN A PERIOD OF SIX MONTHS, INVESTED THE WHOLE OR ANY PAR T OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, OUT OF THE WHOLE OF THE CAPITAL GAIN, SHALL NOT BE CHARGED TO TAX. THE PROVISO TO THE SAI D SUB-SECTION PROVIDES THAT THE INVESTMENT MADE IN THE LONG-TERM SPECIFIED ASSET DURING ANY FINANCIAL YEAR SHALL NOT EXCEED FIFTY LA KH RUPEES. HOWEVER, THE WORDINGS OF THE PROVISO HAVE CREATED A N AMBIGUITY. AS A RESULT THE CAPITAL GAINS ARISING DURING THE YEAR AF TER THE MONTH OF SEPTEMBER WERE INVESTED IN THE SPECIFIED ASSET IN S UCH A MANNER SO AS TO SPLIT THE INVESTMENT IN TWO YEARS I.E., ONE WITH IN THE YEAR AND SECOND IN THE NEXT YEAR BUT BEFORE THE EXPIRY OF SI X MONTHS. THIS RESULTED IN THE CLAIM FOR RELIEF OF ONE CRORE RUPEE S AS AGAINST THE INTENDED LIMIT FOR RELIEF OF FIFTY LAKHS RUPEES. ACCORDINGLY, IT IS PROPOSED TO INSERT A PROVISO IN SUB-SECTION (1) SO AS TO PROVIDE THAT THE INVESTMENT MADE BY AN ASSESSEE IN THE LONG-TERM SPECIFIED ASSET, OUT OF CAPITAL GAINS ARISING FROM TRANSFER OF ONE OR MORE ORIGINAL ASSET, DURING THE FINANCIAL YEAR IN W HICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AND IN THE SUBSEQUE NT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. THIS AMENDMENT WILL TAKE EFFECT FROM 1ST APRIL, 201 5 AND WILL, ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 2 015-16 AND SUBSEQUENT AS SESSMENT YEARS. 10. THE LEGISLATURE HAS CHOSEN TO REMOVE THE AMBIGU ITY IN THE PROVISO TO SECTION 54EC(1) OF THE ACT BY INSERTING A SECOND PROVISO WITH EFFE CT FROM 1.4.2015. THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FINANCE (NO.2) BILL, 2014 ALSO STATES THAT THE SAME WILL BE APPLIC ABLE FROM 1.4.2015 IN RELATION TO ASSESSMENT YEAR 2015-16 AND THE SUBSEQU ENT YEARS. THE INTENTION OF THE LEGISLATURE PROBABLY APPEARS TO BE THAT THIS AMENDMENT SHOULD BE FOR THE ASSESSMENT YEAR 2015-2016 TO AVOID UNWANTED LIT IGATIONS OF THE PREVIOUS YEARS. EVEN OTHERWISE, WE DO NOT WISH TO READ ANYTH ING MORE INTO THE FIRST PROVISO TO SECTION 54EC(1) OF THE ACT, AS IT STOOD IN RELATION TO THE ASSESSE ES. 11. IN ANY EVENT, FROM A READING OF SECTION 54EC(1) AND 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 FINANCI AL YEARS, THE BENEFIT 10 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) CLAIMED BY THE ASSESSEE CANNOT BE DENIED. IT WOULD 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 ITSELF. HOWEVER, THE AMBIGUITY HAS BEEN REMOVED BY THE LEGISLATURE WITH EFFECT FROM 1.4.2015 IN REL ATION TO THE ASSESSMENT YEAR 2015-16 AND THE SUBSEQUENT YEARS. FOR THE FOREGOING REASONS, WE FIND NO INFIRMITY IN THE ORDERS PASSED BY THE TRIBUNAL WARRANTING INTERFERENCE BY THIS COURT. THE SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED AGAINST THE REVENUE AND THESE APPE ALS ARE DISMISSED. NO COSTS. 6.3.3. WE ALSO FIND ON A PERUSAL THEREOF THAT THE D ECISIONS OF THIS TRIBUNAL IN THE CASE OF (I) LILAVATI M. SAYANI(SUPR A) (II) D.C.KUMAR M. DHAWLA V. ACIT(SUPRA);(III)M/S. JNR SECURITIES LTD. , IN RESPECT OF ASSESSEES ENTITLEMENT TO CLAIM AND BE ALLOWED EXEM PTION UNDER SECTION 54EC(I) OF THE ACT, SUBSCRIBE TO THE SAME V IEW AS HELD BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. C. JAICHANDAR (2015) 370 ITR 579(MAD)(SUPRA). RESPECTFULLY FOLLOWING THE DEC ISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. C.JAICHANDA R(SUPRA) AND THE ABOVE REFERRED CASES OF THE CO-ORDINATE BENCHES OF THIS TRIBUNAL, WE HOLD THAT THE LANGUAGE OF THE PROVISIONS OF SECTION 54EC(1) OF THE ACT CLEARLY AND UNAMBIGUOUSLY MANDATE THAT THE ASSESSEE CAN MAKE THE INVESTMENTS IN TWO DIFFERENT FINANCIAL YEARS, PROVI DED THE INVESTMENT IN A FINANCIAL YEAR DOES NOT EXCEED RS.50.00 LAKHS. I N THE FACTUAL AND LEGAL MATRIX OF THE CASE ON HAND, WE, THEREFORE, REVERSE THE FINDINGS OF AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO ALLOW THE ASSESSEE EXEMPTION OF RS.1.00 CRORE UNDER SECTION 54EC(1) OF THE ACT IN RESPECT OF THE INVESTMENT OF RS.50.00 LAKHS EACH MADE BY IT IN SPECIFIED BONDS ON 30/9/2008 AND 9/4/2009 I.E. IN TWO SEPARATE FINA NCIAL YEARS, PURSUANT TO THE SALE OF TWO PROPERTIES ON 28/4/2008 AND 14/10/2008. 11 ITA NO. 134/MUM/2015 (ASSESSMENT YEAR : 2009-10) WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, THE ASSESSEES GROUNDS AT S.NO.S 2.1 TO 2.3 ARE ALLOWED. 7. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSM ENT YEAR 2009-10 IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 24/08/2016 SD/- SD/- (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 28/08/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI