Nashik Jillha Krishi Audyogik Sahakari Sangh Ltd., Nashik V. Commissioner of Income-tax - 1,

ITA 1945/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1481 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Capital asset
• Section: 143(3); 263; 63

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1945/PN/2014 ASSESSMENT YEAR : 2010-11 NASHIK JILLHA KRISHI AUDYOGIK SAHAKARI SANGH LTD., DWARKA CIRCLE, DWARKA, NEAR KANDA BATATA BHAVAN, MUMBAI AGRA ROAD, NASHIK 422 011. PAN : AAAAN2343N . APPELLANT VS. THE COMMISSIONER OF INCOME TAX-I, NASHIK. . RESPONDENT / APPELLANT BY : SMT. DEEPA KHARE / RESPONDENT BY : SHRI J. P. CHANDRAKAR / DATE OF HEARING : 27.07.2016 / DATE OF PRONOUNCEMENT: 29.07.2016 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX-I, NASHIK (IN SHORT THE COMMISSIONER) DATED 10.10.2014 WHEREBY THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT) DATED 30.03.2013 HAS BEEN HELD TO BE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECT ION 263 OF THE ACT. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE ASSESSEE IN SUBSTANCE ASSAILS THE ACTION OF THE CIT(A) IN INVOKING SECTION 263 OF THE ACT WHEN THE SUBJECT ASSESSMENT ORDER FR AMED UNDER SECTION 143(3) IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2 ITA NO.1945/PN/2014 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSMENT UND ER SECTION 143(3) FOR THE ASSESSMENT YEAR 2010-11 WAS COMPLETED BY THE ASSESS ING OFFICER DETERMINING THE TOTAL INCOME OF RS.15,81,92,480/- ON 30.03.2013 . THEREAFTER, THE COMMISSIONER IN EXERCISE OF ITS REVISIONARY POWER, ISSUED NOTICE UNDER SECTION 263 OF THE ACT DATED 20.09.2014 REQUIRING THE ASSES SEE TO SHOW-CAUSE AS TO WHY THE ASSESSMENT SO FRAMED UNDER SECTION 143(3) S HOULD NOT BE SET-ASIDE OR MODIFIED. IT WAS ALLEGED BY THE COMMISSIONER THAT EXAMINATION OF RECORDS REVEALED THAT ASSESSMENT ORDER SO PASSED IS ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE FOR THE REASONS THAT THE ASSESSING OFFICER HAS FAILED TO CONDUCT PROPER ENQUIRIES/VERI FICATIONS/EXAMINATIONS IN RESPECT OF CLAIM OF EXEMPTION TOWARDS CAPITAL GAINS OF RS.1 CRORE ON SALE OF GODOWN WITH REFERENCE TO SECTION 54EC OF THE ACT. IN RESPONSE, THE ASSESSEE SUBMITTED BEFORE THE COMMISSIONER THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY. DURING THE FINANCIAL YEAR 2009-10, THE ASSESSEE SOL D PROPERTY (LONG TERM ASSET) BEARING SURVEY NO.881/1A ON 31.12.2009 FOR A CONSID ERATION OF RS.15,67,91,800/-. THUS RESULTED IN LONG TERM CAPI TAL GAINS OF RS.15,11,02,283/- IN THE HANDS OF THE ASSESSEE. TH E ASSESSEE MADE INVESTMENTS IN LONG TERM SPECIFIED BONDS (RURAL ELECTRIFICATION BONDS) WITHIN THE PERIOD OF SIX MONTHS I.E. BEFORE 30.06.2010 OF RS.1 CRORE. R S.50 LAKHS WERE INVESTED IN THE SAME FINANCIAL YEAR 2009-10 I.E. ON 28.02.2010. OTHER AMOUNT OF RS.50 LAKHS WERE INVESTED IN THE NEXT FINANCIAL YEAR 2010 -11 ON 30.04.2010 ALBEIT WITHIN SIX MONTHS OF TRANSFER OF CAPITAL ASSET. TH E ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY ALLOWED THE EXEMPTION UNDER SECTION 54EC OF RS.1 CRORE FOLLOWING THE PROVISO TO SECTION 54EC WH ICH PROVIDES THAT INVESTMENT MADE ON OR AFTER 01.04.2007 IN LONG TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKHS RUPEES. THE ASSESSEE SUBMITTED THAT STAGGERED INVESTMENT OF RS. 50 LAKHS EACH WERE MADE IN DIFFERENT FINANCIAL YEARS WITHIN THE PERIOD OF SIX MONTHS AFTER THE DATE OF TRANSFER OF CAPITAL ASSET. THE INVESTMENT IN ONE F INANCIAL YEAR DOES NOT EXCEED RS.50 LAKHS. THEREFORE, THERE WAS NO ERROR ON THE PART OF THE ASSESSEE TO CLAIM EXEMPTION UNDER SECTION 54EC OF RS.1 CRORE. LIKEWI SE, THE ACTION OF THE ASSESSING OFFICER IN ALLOWING THE EXEMPTION IS NOT ERRONEOUS AND AGAINST THE INTERESTS OF THE REVENUE. FOR THE PROPOSITION THAT INVESTMENT OF RS.50 LAKHS 3 ITA NO.1945/PN/2014 EACH MADE IN TWO DIFFERENT FINANCIAL YEARS WITHIN T HE STIPULATED PERIOD OF SIX MONTHS UNDER SECTION 54EC IS PERMISSIBLE, THE ASSES SEE RELIED UPON THE DECISION OF ITAT CHENNAI BENCH IN THE CASE OF SMT. SHRIRAM INDUBHAI VS. ITO, NO.1950 (MSD) OF 2012 DATED 31.01.2013; ITAT B ANGALORE BENCH IN THE CASE OF SHRI VIVEK JAIRAZBHOY VS. DCIT IN ITA NO.23 611/BANGALORE/2012 AND AHMEDABAD ITAT BENCH IN THE CASE OF ASPI GINWALA & ORS. VS. ACIT IN ITA NO.3226/AHD/2011 BEFORE THE COMMISSIONER. THE ASSE SSEE FURTHER SUBMITTED BEFORE THE COMMISSIONER THAT SECTION 54EC HAS BEEN AMENDED BY FINANCE (NO.2) ACT, 2014 WHEREBY THE INVESTMENT MADE BY AN ASSESSEE IN THE LONG TERM SPECIFIED ASSET IS RESTRICTED TO RS.50 LAKHS IRRESP ECTIVE OF ONE OR MORE FINANCIAL YEARS INVOLVED. IT WAS THE CASE OF THE ASSESSEE BE FORE THE COMMISSIONER THAT THIS AMENDMENT APPLIES IN RELATION TO ASSESSMENT YE AR 2015-16 AND SUBSEQUENT YEARS AND HAS PROSPECTIVE EFFECT AND THEREFORE IT I S IMPLIED THAT INVESTMENTS OF RS.1 CRORE IN TWO FINANCIAL YEARS BETWEEN THE PERIO D OF SIX ELIGIBLE MONTHS I.E. RS.50 LAKHS IN EACH FINANCIAL YEAR WAS ALLOWABLE FO R EXEMPTION UNDER SECTION 54EC IN THE ASSESSMENT YEARS PRIOR TO AMENDMENT COM ING IN EFFECT. THE COMMISSIONER, HOWEVER, DID NOT PAY HEED TO THE CONT ENTIONS OF THE ASSESSEE AND OBSERVED THAT ASSESSING OFFICER FAILED TO MAKE REQUISITE ENQUIRY IN THIS REGARD AND IN THE ABSENCE OF ENQUIRY/VERIFICATIONS ON THE VITAL ISSUE, THE ASSESSMENT IS RENDERED ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. CONSEQUENTLY, THE COMMISSIONER SET-AS IDE THE ASSESSMENT MADE UNDER SECTION 143(3) WITH DIRECTIONS TO RE-FRAME TH E ASSESSMENT AFTER PROPER ENQUIRIES ON THE AFORESAID ISSUE. AGGRIEVED BY THE AFORESAID REVISIONARY ORDER OF THE COMMISSIONER UNDER SECTION 263, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE, SMT. DEEPA KHARE REITERATED THE AFOREMENTIONED FACTS AND SUBMITTED A T THE OUTSET THAT IN VIEW OF THE SEVERAL JUDICIAL PRECEDENTS ON THE ISSUE PERMIT TING INVESTMENTS OF SPECIFIED AMOUNT OF RS.50 LAKHS EACH IN TWO DIFFERENT FINANCI AL YEARS, THE ACTION OF THE ASSESSING OFFICER IN ACCEPTING THE CLAIM OF DEDUCTI ON OF RS.1 CRORE I.E. RS.50 LAKHS EACH INVESTED IN TWO DIFFERENT FINANCIAL YEAR S CANNOT BE FAULTED. FOR THE PROPOSITION THAT INVESTMENT OF RS.50 LAKHS IN LONG TERM SPECIFIED ASSET IN TWO 4 ITA NO.1945/PN/2014 DIFFERENT FINANCIAL YEARS IS PERMISSIBLE FOR THE PU RPOSES OF SECTION 54EC, SHE RELIED UPON THE DECISION OF CO-ORDINATE BENCH OF TH E TRIBUNAL IN THE CASE OF DR. ARVIND S. PHADKE VS. ADDL.CIT IN MA NO.74/PN/20 14, ORDER DATED 20.02.2015 AND ANOTHER DECISION IN THE CASE OF ITO VS. SMT. BALA R. VENKITACHALAM (2016) 71 TAXMANN.COM 219 (PUNE TRI B.) TO SUPPORT HER PLEA. SHE FURTHER RELIED UPON THE SUBSEQUENT AMENDMENT CA RRIED OUT IN SECTION 54EC APPLICABLE TO ASSESSMENT YEAR 2015-16 AND SUBSEQUEN T ASSESSMENT YEARS TO BUTTRESS HER PROPOSITION THAT IT WAS PERMISSIBLE FO R THE ASSESSEE TO MAKE INVESTMENTS OF RS.50 LAKHS EACH IN TWO DIFFERENT FI NANCIAL YEARS PRIOR TO THE AFORESAID AMENDMENT. SHE ACCORDINGLY SUBMITTED THA T THERE WAS NO ERROR IN THE ORDER FRAMED UNDER SECTION 143(3) OF THE ACT PER SE AND THEREFORE THE POWER EXERCISED BY THE COMMISSIONER UNDER SECTION 263 IS VITIATED IN LAW. CONSEQUENTLY, THE ORDER FRAMED UNDER SECTION 263 OF THE ACT DATED 10.10.2014 REQUIRES TO BE SET-ASIDE. 5. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE COMMISSION ER AND SUBMITTED THAT IN THE ABSENCE OF REQUISITE ENQUIRY ON THE ISSUE, THE ACTION OF THE COMMISSIONER UNDER SECTION 263 WAS IN ACCORDANCE WITH LAW AND JU STIFIED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE COMMISSIONER IN THE PRESENT CASE HAS PURPORTED TO ACT IN EXERCIS E OF POWER UNDER SECTION 263 ON THE GROUND THAT THE ORDER OF THE ASSESSING OFFIC ER IN GRANTING EXEMPTION UNDER SECTION 54EC TO THE EXTENT OF RS.1 CRORE IS W ITHOUT ANY ENQUIRY AND THEREFORE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WE NOTICE THAT THERE ARE SEVERAL JUDICIAL PRECEDENTS O N THE ISSUE OF ALLOWABILITY OF EXEMPTION TO THE EXTENT OF RS.50 LAKHS EACH IN ONE OR MORE FINANCIAL YEARS UNDER SECTION 54EC OF THE ACT. THE ACTION OF THE A SSESSEE IN MAKING INVESTMENTS OF RS.50 LAKHS EACH IN TWO DIFFERENT FI NANCIAL YEARS IS THEREFORE NOT OUT OF SYNC WITH THESE JUDICIAL PRECEDENTS. HENCE, THERE IS AN APPARENT PLAUSIBILITY IN THE ACTION OF THE ASSESSING OFFICER IN ACCEPTING THE CLAIM OF RS.1 CRORE UNDER SECTION 54EC. THUS, THE ACTION OF THE ASSESSING OFFICER IN ADOPTING A VIEW EXPRESSED BY THE SUPERIOR FORUM CAN NOT BE VIEWED AS ARBITRARY 5 ITA NO.1945/PN/2014 OR UNREASONABLE. THE ISSUE INVOLVED IS PRE-DOMINAN TLY LEGAL IN NATURE AND DOES NOT REQUIRE ANY FACTUAL ENQUIRY. ON OBJECTIVE CONS IDERATION OF THE FACTS ON RECORD, IT IS DIFFICULT TO HOLD THAT ACTION OF THE ASSESSING OFFICER WAS ERRONEOUS PER SE AND HOSTILE TO THE INTEREST OF THE REVENUE. THUS, SOURCE OF POWER TO SET- ASIDE THE ASSESSMENT ORDER IS NOT TRACEABLE TO SECT ION 263 OF THE ACT. IN VIEW OF SEVERAL JUDICIAL PRECEDENTS COMPREHENSIVELY UPHO LDING THE EXEMPTION TO THE EXTENT OF RS.50 LAKHS EACH INVESTED IN LONG TERM SP ECIFIED ASSET IN TWO DIFFERENT FINANCIAL YEARS FOR THE PURPOSES OF SECTION 54EC AN D IN THE LIGHT OF SUBSEQUENT AMENDMENT CARRIED IN THE ACT, THE ACTION OF THE ASS ESSING OFFICER IS CLEARLY PLAUSIBLE IN LAW. ACCORDINGLY, NO ERROR CAN BE INF ERRED IN THE ASSESSMENT ORDER PER SE . RESULTANTLY, WE FIND MERIT IN THE PLEA OF THE AS SESSEE ON THIS ISSUE AND HENCE THE ORDER OF THE COMMISSIONER UNDER SECTION 2 63 DATED 10.10.2014 IS SET-ASIDE AND QUASHED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY, 2016. SD/- SD/- ( VIKAS AWASTHY ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 29 TH JULY, 2016. & ' () *+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-I, NASHIK; 4) THE DR B BENCH, I.T.A.T., PUNE; 5) GUARD FILE. &, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE