Bimal Natubhai Desai, Pune V. Deputy Commissioner of Income tax,

ITA 161/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4089 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 24-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK BABU
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO .1 61 /P U N/201 7 / ASSESSMENT YEAR : 20 1 3 - 14 BIMAL NATUBHAI DESAI, 1436, KASBA PETH, C/O : DESAI BROTHERS, PUNE 411011 PAN : ABOPD1865B ....... / APPELLANT / V/S. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE / RESPONDENT ASSESSEE BY : S HRI PRAMOD SHINGTE REVENUE BY : S HRI ASHOK BABU / DATE OF HEARING : 05 - 02 - 2019 / DATE OF PRONOUNCEMENT : 07 - 02 - 2019 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1, PUNE DATED 07 - 11 - 2016 FOR THE ASSESSMENT YEAR 201 3 - 14 . THE ASSESSEE IN PRESENT APPEAL HAS ASSAILED THE 2 ITA NO .161/PUN/2017, A.Y. 2013 - 14 ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON SOLITARY ISSUE OF RESTRICTING EXEMPTION U/S. 54EC O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) TO RS. 50,00,000/ - . THE GROUNDS RAISED BY THE ASSESSEE READS AS UNDER : 1) ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND I LAW THE LOWER AUTHORITIES HAVE ERRED IN RESTRICTING THE CLAIM OF EXEMPTION U/S. 54EC OF THE INCOME TAX ACT, 1961 FROM RS.97,32,657/ - T O RS.50,00,000/ - BY DISREGARDING APPELLANTS CONTENTION AND CLEAR PROVISION OF LAW. THE APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODIFY, DELETE ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME HEARING, IN THE INTEREST OF NATURAL JUSTICE. 2. SHRI PRAMOD S HINGTE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IN HIS RETURN OF INCOME CLAIMED EXEMPTION U/S. 54EC OF THE ACT IN RESPECT OF INVESTMENT MADE IN RURAL ELECTRIFICATION CORPORATION (REC) BONDS RS. 97,32,657/ - OUT OF LONG TERM CAPITAL GAI NS ARISING ON BUY BACK OF SHARES OF DESAI BROTHER LTD. THE LD. AR SUBMITTED THAT THE BUY BACK OF SHARES TOOK PLACE ON 27 - 03 - 2013 . THE CONSIDERATION RECEIVED WAS INVESTED FOR PURCHASE OF REC BONDS ON 28 - 03 - 2013 RS.50,00,000/ - AND ON 27 - 04 - 2013 RS.47.50 LA CS. THE SAID INVESTMENT WAS MADE WITHIN SIX MONTHS FROM THE DATE OF BUY BACK OF SHARES. THE ASSESSING OFFICER RESTRICTED THE EXEMPTION TO RS.50 LACS ONLY ON THE GROUND THAT THE EXEMPTION ADMISSIBLE UNDER THE PROVISIONS OF SECTION 54EC IS RESTRICTED TO RS .50 LACS. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTIONS OF ASSESSEE AND CONFIRMED THE FINDINGS OF ASSESSING OFFICER. 3 ITA NO .161/PUN/2017, A.Y. 2013 - 14 2.1 THE LD. AR SUBMITTED THAT IN ASSESSMENT YEAR 2012 - 13 ON IDENTICAL SET OF FACTS THE ASSESSEE HAD CLAIMED EXEMPTION U/S. 54EC TO THE TUNE OF RS. 1 CRORE. THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE ASSESSEES CLAIM TO RS.50,00,000/ - FOR SIMILAR REASONS. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TRIBUNAL IN ITA NO. 40/PUN/2016. THE TRIBUNAL VIDE ORDER DATED 31 - 10 - 2017 FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. C. JAYCHANDER REPORTED A S 370 ITR 579 ALLOWED ASSESSEES ENTIRE CLAIM OF EXEMPTION. THE LD. AR FURNISHED COPY OF ORDER OF TRIBUNAL IN ITA NO. 40/PUN/2016 (SUPRA). 3. SHRI ASHOK BABU REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEA LS). HOWEVER, THE LD. DR FAIRLY ADMITTED THAT THE TRIBUNAL IN IMMEDIATELY PRECEDING ASSESSMENT YEAR HAS ALLOWED THE EXEMPTION TO THE ASSESSEE U/S. 54EC ON THE ENTIRE AMOUNT OF INVESTMENT. THE LD. DR INFORMED THAT THE DEPARTMENT HAS FILED APPEAL BEFORE TH E HONBLE HIGH COURT AGAINST THE SAID ORDER OF TRIBUNAL. 4. BOTH SIDES HEARD. THE ORDERS OF AUTHORITIES BELOW PERUSED. THE ONLY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS AGAINST RESTRICTING THE CLAIM OF EXEMPTION U/S. 54EC TO THE EXTENT OF RS.50,00,000/ - . WE FIND THAT ON SIMILAR SET OF FACTS THE ASSESSEE HAD APPROACHED THE TRIBUNAL IN ASSESSMENT YEAR 2012 - 13 IN ITA NO. 40/PUN/2016 (SUPRA) . THE GROUND OF APPEAL RAISED BY ASSESSEE IN PRESENT APPEAL IS IDENTICAL TO THE ONE RAISED IN APPEAL FO R ASSESSMENT YEAR 2012 - 13 , EXCEPT FOR THE AMOUNTS. THE CO - ORDINATE BENCH OF TRIBUNAL ALLOWED ASSESSEES CLAIM BY FOLLOWING THE ORDER 4 ITA NO .161/PUN/2017, A.Y. 2013 - 14 OF HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. C. JAYCHANDER (SUPRA) AND IN THE CASE OF COMMIS SIONER OF INCOME TAX VS. COROMANDEL INDUSTRIES REPORTED AS 370 ITR 586. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL ON THIS ISSUE READS AS UNDER : 11. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF MADRAS, WHICH UNDOUBTEDLY, IS NOT THE JURISDICTIONAL HIGH COURT BUT THE SAID VIEW HAS PERSUASIVE VALUE AND HAS BEEN APPLIED BY THE PUNE BENCH OF TRIBUNAL IN ANOTHER CASE AND HENCE, WE FIND NO MERIT IN THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD. ACCORDINGLY, WE REVERSE THE FINDINGS OF THE CI T(A) AND HOLD THAT THE AMENDMENT BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 01.04.2015 BY WHICH PROVISO HAS BEEN INSERTED AFTER THE PROVISO TO SECTION 54EC(1) OF THE ACT IS TO BE APPLIED PROSPECTIVELY FROM ASSESSMENT YEAR 2015 - 16 ONWARDS. ACCORDINGLY, THE YEAR UNDER APPEAL BEING ASSESSMENT YEAR 2012 - 13, THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54EC OF THE ACT AT RS.1 CRORE I.E. ON ACCOUNT OF INVESTMENT MADE IN THE FINANCIAL YEAR IN WHICH THE ASSET WAS SOLD AT RS.50 LAKHS AND FURTHER DEDUCTI ON OF RS.50 LAKHS WHICH WAS MADE IN THE SUBSEQUENT FINANCIAL YEAR, THOUGH WITHIN PERIOD OF SIX MONTHS FROM THE DATE OF SALE OF ASSET. ACCORDINGLY, WE ALLOW THE CLAIM OF ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION UNDER SECTION 54EC OF THE ACT AT RS.1 CRORE. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, ALLOWED. 5. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISION BY THE HONBLE HIGH COURT OR THE HONBLE APEX COURT . THOUGH THE DR HAS SUBMITTED THAT A N APPEAL HAS BEEN FILED AGAINST THE ORDER OF TRIBUNAL BEFORE THE HONBLE HIGH COURT , NO ORDER HAS BEEN PLACED ON RECORD TO SHOW THAT THE ORDER OF TRIBUNAL HAS BEEN EITHER REVERSED OR STAYED BY THE HONBLE HIGH COURT. THUS, IN VIEW OF UNDISPUTED FACT S AND THE DECISION OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMING EXEMPTION U/S. 54EC ON THE ENTIRE AMOUNT OF INVESTMENTS MADE IN REC BONDS WITHIN THE SPECIFIED MANDATORY TIME PERIOD. CONSEQUENTLY, THE GROUND NO. 1 RAISED IN A PPEAL BY THE ASSESSEE IS ALLOWED 5 ITA NO .161/PUN/2017, A.Y. 2013 - 14 AND THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ARE MODIFIED , ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 07 TH DAY OF FEBRUARY, 201 9 . SD/ - SD/ - ( R.S. SYAL ) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 07 TH FEBRUARY, 2019 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 1, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 1, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / / / TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE