Smt. Alkaben B.Patel, Ahmedabad V. The Income tax Officer,Ward-14(2), Ahmedabad

ITA 1973/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73140 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL; O P VAISHNAV
• Assessee Lawyers: U S BHATI
• Keywords: Capital asset; Charitable institution
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SPECIAL BENCH, AHMEDABAD BEFORE G.C. GUPTA, VICE PRESIDENT, SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND N.S. SAINI, ACCOUNTANT MEMBER ITA NO.1973/AHD/2012 ALKABEN B. PATEL, 33, LAXMI INDUSTRIES ESTATE, NR. NAGARWELL HANUMAN, AHMEDABAD. PAN: ACVPP 7415K V/S. THE INCOME TAX OFFICER, WARD 14(2), AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : S/SHRI P.L. KUREEL, SR.D.R. AND O.P. VAISHNAV, CIT-DR. ASSESSEE(S) BY : SHRI U.S. BHATI, A.R . / // / DATE OF HEARING : 30/12/2013 / DATE OF PRONOUNCEMENT: 25/03/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THIS SPECIAL BENCH HAS BEEN CONSTITUTED VIDE AN ORD ER U/S 255(3) OF THE I.T.ACT ( HEREINAFTER MENTIONED AS TH E ACT) BY THE HONBLE PRESIDENT, I.T.A.T. THE QUESTION REFERRED T O US IS REPRODUCED BELOW: WHETHER FOR THE PURPOSE OF SECTION 54EC OF IT ACT, 1961, THE PERIOD OF INVESTMENT OF SIX MONTHS SHOULD BE RECKONED AFTE R THE DATE OF TRANSFER OR FROM THE END OF THE MONTH IN WHICH TRAN SFER OF CAPITAL ASSET TOOK PLACE? 1.1. IT IS DESIRABLE, AS WELL, TO REPRODUCE THE GR OUNDS OF APPEAL RAISED BY THE ASSESSEE, AS UNDER : THE LD. CIT(A)-XXI,AHMEDABAD HAS GROSSLY ERRED I N LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF LEGITIMATE INVESTMENT MADE U/S 54 EC OF RS. 45,00,000/-. THE L D. A.O. ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 2 - MAY BE DIRECTED TO ALLOW THE LEGITIMATE DEDUCTION I N RESPECT OF INVESTMENT IF NHAI BONDS U/S 54 EC OF RS. 45,00, 000/-. 2. THE LD. CIT(A)-XXI, AHMEDABAD HAS GROSSLY ERRED IN LAW IN CONSIDERING THE LAST DATE FOR INVESTMENT U/S 54E C AS 10.12.2008 IN PLACE OF 31.12.2008 AS THE MONTH WO ULD MEAN THAT THE FULL MONTH WHICH RECKONED FROM THE END OF THE MONTH IN WHICH TRANSFER TAKES PLACE. THEREFORE, HE MAY BE DIRECTED TO CONSIDER THE LAST DATE FOR MAKING IN VESTMENT U/S 54EC AS 31.12.2008 IN PLACE OF 10.12.2008. 2. BRIEF FACTS AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S. 143(3), DATED 28.11.2011 ARE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY HAS SOLD A FLAT SITUATED AT LO TUS CO-OPERATIVE SOCIETY, USMANPURA AHMEDABAD FOR A CONSIDERATION OF RS.64 LACS. THE APPELLANT HAD COMPUTED THE CAPITAL GAIN AT RS.N IL AND DECLARED THE SAME AS PER THE RETURN OF INCOME. A WO RKING OF THE CAPITAL GAIN WAS ADMITTEDLY FURNISHED ALONG WITH TH E RETURN OF INCOME. THE BASIS FOR NIL CAPITAL GAIN WAS THAT T HE GAIN WAS STATED TO BE AT RS.56,65,767/- HOWEVER THE ASSESSEE HAD MADE THE INVESTMENT IN NHAI BOND OF RS.45 LACS AND CLAIMED T HE DEDUCTION U/S.54 EC OF IT ACT. THE ASSESSEE HAS ALSO MADE AN INVESTMENT IN CAPITAL GAIN ACCOUNT SCHEME OF RS.12 LACS, NOT IN CONTROVERSY. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE INVESTMENT MADE IN NHAI BONDS OF RS.45 LACS FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S.54EC WAS PURCHASED ON 17 TH OF DECEMBER OF 2008 AS PER THE STATEMENT OF THE BA NK, APPEARING IN THE BANK PASS BOOK. THE ADMITTED FACTU AL POSITION WAS THAT THE GAIN WAS ARISING FROM A LONG TERM CAPITAL ASSET; HENCE, IT WAS TO BE ASSESSED UNDER THE HEAD LONG TERM CAPIT AL GAIN. ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 3 - DUE TO THE SAID REASON THE ASSESSEE WAS ENTITLED FO R A DEDUCTION IF INVESTMENT IS MADE OUT OF THE SALE PROCEEDS IN A S PECIFIED ASSET WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF THE TRANSFER OF THE ASSET. THE AO HAS REFERRED THE PROVISIONS OF SE CTION 54EC OF IT ACT AND THEREAFTER DISCUSSED THAT A SALE DOCUMEN T WAS REGISTERED ON 10 TH OF JUNE, 2008; HENCE, THE ASSESSEE WAS REQUIRED TO PURCHASE THE NHAI BOND WITHIN SIX MONTHS FROM THE SAID DATE OF REGISTRATION, I.E., 10 TH JUNE, 2008. HOWEVER, THE ASSESSEE HAD PURCHASED THE NHAI BOND ON 17 TH OF DECEMBER, 2008, ALLEGED BY THE AO. A SHOW CAUSE WAS ISSUED AS TO WHY THE CLAIM OF EXEMPTION BE NOT DISALLOWED IN RESPECT OF THE INVES TMENT MADE IN NHAI BOND IN THE LIGHT OF THE PROVISIONS OF SECTION 54EC OF IT ACT BEING NOT INVESTED WITHIN SIX MONTHS. THE ASSES SEE HAS INFORMED THAT THE SALE CONSIDERATION WAS DEPOSITED IN A CAPITAL GAIN ACCOUNT OUT OF WHICH THE INVESTMENT WAS MADE IN THE SPECIFIED ASSET, I.E., NHAI BOND TO CLAIM THE BENEFIT OF THE PROVISIONS U/S.54EC OF IT ACT. THE ASSESSEE HAS ALSO EXPLAINED TO THE AO THAT THE LAST DATE OF EXPIRY OF SIX MONTHS FROM THE DATE OF TRANSFER OF THE LONG TERM CAPITAL ASSET WAS 10 TH OF DECEMBER, 2008 HOWEVER THE ASSESSEE HAD ALLEGEDLY TENDERED A CHEQU E ON 8 TH DECEMBER, 2008 VIDE AN APPLICATION NO.157602 TO THE BANK. ACCORDING TO ASSESSEE SINCE THE APPLICATION FOR THE PURCHASE OF THOSE BONDS WAS TENDERED IN THE BANK ON 8 TH DECEMBER, 2008, WHICH WAS WITHIN THE PERIOD OF SIX MONTHS FROM THE DATE OF THE TRANSFER OF THE LONG TERM CAPITAL ASSET, THEREFORE, THE ASSESSEE WAS ELIGIBLE FOR THE DEDUCTION U/S.54EC. ACCORDING TO THE ASSESSEE THE CHEQUE WAS CLEARED ON 17 TH OF DECEMBER, 2008. ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 4 - ALTERNATIVELY THE ASSESSEES CONTENTION WAS THAT UP TO THE END OF THE MONTH OF DECEMBER 2008 THE SAID INVESTMENT W AS ELIGIBLE FOR THE DEDUCTION. THE AO WAS NOT CONVINCED AND HELD THAT THE ASSESSEE WAS REQUIRED TO INVEST THE CAPITA L GAIN IN THE SPECIFIED ASSET WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF THE TRANSFER AND THAT REQUIREMENT WAS NOT COMPLIED WITH BY THE ASSESSEE; HENCE, NOT ELIGIBLE FOR THE DEDUCTION U/S . 54EC OF IT ACT. ACCORDINGLY AN ADDITION OF RS.45 LACS WAS MADE IN T HE HANDS OF THE ASSESSEE. BEING AGGRIEVED THE MATTER WAS CARRIE D BEFORE THE FIRST APPELLATE AUTHORITY. 3. IT WAS REITERATED BEFORE THE LEARNED CIT(A) THAT THE DUE DATE OF SIX MONTHS, AS ALLEGED BY THE AO, WAS 10 TH OF DECEMBER 2008, HOWEVER, THE ASSESSEE HAD CLAIMED TO HAVE TENDERED THE CHEQUE ALONG WITH AN APPLICATION FOR ISSUE OF NHAI BOND TO THE BANK ON 8.12.2008. THAT CHEQUE WAS CLEARED ON 17 TH OF DECEMBER, 2008. IT WAS THUS PLEADED THAT ON ACCOUNT OF THE FACT THAT T HE ASSESSEE HAD SUBMITTED THE APPLICATION BEFORE THE LAST DAY OF TH E EXPIRY OF SIX MONTHS FROM THE DATE OF THE TRANSFER OF THE CAPITAL ASSET, HENCE ENTITLED FOR THE DEDUCTION U/S.54EC OF IT ACT. LEAR NED CIT(A) WAS OF THE VIEW THAT THE APPELLANT WAS UNABLE TO ESTABL ISH THAT THE IMPUGNED APPLICATION FOR INVESTMENT IN NHAI BOND WA S ACTUALLY TENDERED ON 8 TH OF DECEMBER, 2008. ACCORDING TO HIM, THE SEAL/STAMP AND THE DATE WAS NOT CLEAR ON THE SAID A PPLICATION. IN HIS OPINION SINCE THE SAID CHEQUE OF RS.45 LACS WAS ENC ASHED ON 17 TH DECEMBER, 2008 HENCE THAT WAS THE DATE OF THE INVES TMENT. THE INVESTMENT WAS MADE AFTER THE EXPIRY OF SIX MONTHS FROM THE DATE ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 5 - OF THE TRANSFER OF THE CAPITAL ASSET, WHICH HAD EXP IRED ON 10.12.2008, THEREFORE, NOT ENTITLED FOR THE CLAIM O F DEDUCTION U/S. 54EC OF IT ACT. ON THAT GROUND LEARNED CIT(A) HAS A FFIRMED THE ADDITION. BEING AGGRIEVED THE APPELLANT HAD FURTHER PREFERRED AN APPEAL BEFORE THE TRIBUNAL. 3.1) AS STATED EARLIER THE SHORT ISSUE IS WHE THER THE INVESTMENT OF RS.45 LACS WAS MADE WITHIN SIX MONTHS FROM THE D ATE OF THE TRANSFER OF THE LONG TERM CAPITAL ASSET SO AS TO QUALIFY FOR THE EXEMPTION U/S.54EC HAS BEEN REFERRED TO THE SPECIAL BENCH. THE APPELLANT IS REPRESENTED BY SRI U .S. BHATI WHO HAD MADE TWO FOLD ARGUMENTS. HIS FIRST PLANK OF ARGUMEN T IS LEGAL IN NATURE THAT AS PER THE GENERAL CLAUSES ACT THE WORD MONTH RECKONED ACCORDING TO THE BRITISH CALENDAR. FOR TH IS LEGAL PROPOSITION HE HAS SUBMITTED A COPY OF THE GENERAL CLAUSE ACT, 1897 AND REFERRED SECTION 3 CLAUSE(35) OF DEFINITIONS . HE HAS ENLARGED THE SAID ARGUMENT BY ALSO PLACING RELIANCE ON A CBDT CIRCULAR NO.791 OF 2 ND OF JUNE, 2000 FOR THE LEGAL PROPOSITION THAT WHILE INTERPRETING THE BENEFICIAL PROVISION A LIBERAL INTERPRETATION IS TO BE ADOPTED, AS RECOMMENDED IN THE SAID CIRCULAR. IN VIEW OF THE SAID CIRCULAR FOR THE PURP OSE OF CLAIM OF DEDUCTION ON SALE OR TRANSFER OF STOCK IN TRADE, TH E BOARD HAD DECIDED THAT THE PERIOD OF SIX MONTHS FOR MAKING IN VESTMENT IN SPECIFIED ASSETS FOR THE PURPOSE OF DEDUCTION U/S.5 4EA, 54EB AND 54EC SHOULD BE TAKEN FROM THE DATE WHEN SUCH STOCK IN TRADE IS SOLD OR OTHERWISE TRANSFERRED AS PER SECTION 54(I) OF IT ACT. LIKEWISE A LIBERAL INTERPRETATION WAS MADE IN RESPE CT OF ONE MORE ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 6 - PROVISION OF IT ACT BY CBDT IN A CIRCULAR NO.359 DATED 10.05.1983 WHEREIN IT WAS FELT BY THE BOARD, WHILE CONSIDERING THE PROVISIONS OF SECTION 54E, THAT EXEMPTION FOR LONG TERM CAPITAL GAIN IS AVAILABLE IF THE CONSIDERATION IS INVESTED IN A SPECIFIED ASSET. A TECHNICAL INTERPRETATION OF SECTION 54E TH EREFORE COULD MEAN, AS PER BOARD, WAS THAT THE EXEMPTION FROM TAX ON CAPITAL GAIN WOULD BE AVAILABLE IF PART OF THE CONSIDERATIO N IS INVESTED PRIOR TO THE DATE OF THE EXECUTION OF THE SALE DEED . AS PER THE BOARD, THE INVESTMENT COULD BE REGARDED AS HAVING BEEN MA DE WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF TRANSFER. AN ALYZING THIS SITUATION, THE BOARD HAS GIVEN THE DIRECTION THAT, QUOTE ON CONSIDERATION OF THE MATTER IN CONSULTATION WITH TH E MINISTRY OF LAW, IT IS FELT THAT THE FOREGOING INTERPRETATION W OULD GO AGAINST THE PURPOSE AND SPIRIT OF THE SECTION. AS THE SECTI ON CONTEMPLATES INVESTMENT OF THE NET CONSIDERATION IN SPECIFIED AS SETS FOR A MINIMUM PERIOD AND AS EARNEST MONEY OR ADVANCE IS P ART OF THE SALE CONSIDERATION THE BOARD HAVE DECIDED THAT IF T HE ASSESSEE INVESTS THE EARNEST MONEY OR THE ADVANCE RECEIVED I N SPECIFIED ASSETS BEFORE THE DATE OF TRANSFER OF ASSET THE AMO UNT SO INVESTED WILL QUALIFY FOR EXEMPTION UNDER SECTION 54E OF THE IT ACT, 1961 UNQUOTE. 4. FROM THE SIDE OF THE REVENUE, ID. D.R. MR. P. L . KUREEL AND MR. O. P. VAISHNAV APPEARED AND STATED THAT THE INC OME TAX ACT AND THE INCOME TAX RULES HAVE USED TWO TYPES OF PHRASEOLOGY IN RESPECT OF THE COMPUTATION OF PERIOD FOR THE PURPOS E OF PRESCRIBING A LIMITATION. THE FIRST TYPE OF WORDINGS USED ARE 'NOT EXCEEDING 6 MONTHS FROM THE DATE ON WHICH APPLICATION IS MADE' OR 'ANY ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 7 - TIME WITHIN A PERIOD OF 6 MONTHS AFTER THE DATE OF SUCH TRANSFER'. ACCORDING TO ID. D.R. THESE WORDS ARE USED IN SECT ION 54EC AND SECTION 281 B OF IT ACT AS WELL AS IN IT R ULE 10K(2), RULE 11AA(6). THE SECOND TYPE OF WORDINGS USED ARE '6 MONTHS/4 MONTHS/1 MONTH FROM THE END OF THE MONTH' IN WHICH A PARTICULAR ORDER IS MADE/RECEIVED/APPLICATION IS RE CEIVED. THIS WORDING IS FOUND IN SECTION 275 AND SECTION 154(8) OF IT ACT AS WELL AS IN IT RULE 6DDA(5). ACCORDING TO ID. D.R. T HE WORDINGS ARE UNAMBIGUOUS AND THE INTENTION OF THE LEGISLATIO N IS APPARENT THAT WHEREVER THE END OF THE MONTH IS TO BE CALCULATED THEN THE INTENTION IS MADE CLEAR IN THE STATUTE ITSELF. OTHE RWISE AS PER THE LANGUAGE, A PARTICULAR DATE IS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF CALCULATION OF DAYS/MONTHS. HE HAS THERE FORE PLEADED THAT IN A SITUATION WHEN THE INTENTION OF THE LEGIS LATION IS CLEAR THEN THERE IS NO NECESSITY TO TAKE THE HELP OF 'GENERAL CLAUSES ACT, 1897'. 4.1 COMING TO THE PROVISIONS OF SECTION 54EC, LD. D.R. HAS PLEADED THAT THE LIMITATION OF PERIOD FOR AN IN VESTMENT HAS BEEN PRESCRIBED AS 'AT ANY TIME WITHIN A PERIOD OF 6 MON THS FROM THE DATE OF SUCH TRANSFER'. IN ORDINARY SENSE, A MONTH IS A PERIOD FROM A SPECIFIED DATE IN A MONTH TO THE DATE NUMERI CALLY CORRESPONDING TO THE DATE IN THE FOLLOWING MONTHS, LESS ONE. LD. D.R. HAS GIVEN EXAMPLE THAT IF A PARTICULAR DATE IS 10 TH JUNE, 2008, ONE MONTH SHALL BE UP TO 9 TH JULY, 2008. THEREFORE, THE TERM 'MONTH' HAS BEEN USED IN SECTION 54EC IN ORDINARY S ENSE AND THE SAME SHOULD NOT EXCEED MORE THAN 30 DAYS. HE HAS TH US PLEADED THAT THE WORDINGS OF THE SECTION SHOULD NOT BE REPL ACED BY ANY ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 8 - OTHER WORDINGS. THEREFORE, IN THE SAID EXAMPLE, ONE MONTH CANNOT BE EXTENDED UP TO 31 ST JULY, 2008. IF THAT WOULD HAVE BEEN THE INTENTION OF THE LEGISLATION THEN CERTAINLY THESE W ORDS OUGHT TO HAVE BEEN PRESCRIBED IN THE PROVISIONS OF SECTION 54EC O F THE ACT. 4.2 LD. D.R. HAS PLACED RELIANCE ON A DECISION OF DHANRAJ SINGH CHOUDHARY V. NATHULAL VISHWAKARMA ORDER DATED 08.12.2011 REPORTED IN 16 TAXMANN.COM249 (SC) , RELEVANT PORTION QUOTED AS UNDER: 'THE PUNISHMENT FOR PROFESSIONAL MISCONDUCT HAS TWI N OBJECTIVES - DETERRENCE AND CORRECTION. HAVING REGARD TO THE OVE R ALL FACTS AND CIRCUMSTANCES OF THE CASE WHICH HAVE BEEN NOTED ABO VE, WE ARE OF THE VIEW THAT IF THE ADVOCATE APPELLANT IS SUSPENDED FROM PRACTICE FOR A PERIOD OF THREE MONTHS EFFECTIVE FROM TODAY THE ABOVE OBJECTIVES WOULD BE MET. WE ORDER ACCORDINGLY.' THE HON'BLE COURT HAS SPECIFIED THAT 3 MONTHS WERE TO BE TAKEN FROM THAT DAY WHEN THE ORDER WAS PRONOUNCED BECAUSE THE WORDINGS WERE 'FOR A PERIOD OF 3 MONTHS EFFECTIVE F ROM TODAY'. LIKEWISE, IN THE CASE OF CHIRONJILAL SHARMA HUF VS. UOI,(AN UNREPORTED DECISION), THE RELEVANT EXTRACT OF THE ORDER PLACED IN THE COMPILATION, THE HON'BLE SUPREME COURT HAS DIRECTED THAT THE 'INTEREST WAS TO BE PAID WITHIN 2 MONTH FROM TODAY' . IN AN IDENTICAL FASHION, THE HON'BLE BOMBAY HIGH COURT IN CASE OF JETHMALFAUJIMAL SONIV. ITAT IN W.P. NO. 1744 OF 2010 IN ORDER DATED APRIL 12, 2010 REPORTED IN [2010] 231 CTR 332(BOM.) HAD DIRECTED THE TRIBUNAL TO DISPOSE OF THE PENDING APPEAL WITHIN A PERIOD OF FOUR MONTHS FROM TODAY. T HE ID. D.R. HAS ALSO CITED FEW UNREPORTED DECISIONS OF THE TRIBUNAL AS FOLLOWS: ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 9 - I. HON'BLE ITAT 'G' BENCH; KUMARPAL AMRUTLAL DOSH I VS. THE DCIT (APPEAL)-33, NAVI MUMBAI, IN A.Y. 2006-07 IN ITA NO, 1523MUM/2010, ORDER DATED 09.02.2011. II. HON'BLE ITAT 'C' BENCH, AHMADABAD; SHRI A PSI GINWALA, SHREE RAM ENGG. & MFG INDUSTRIES VS. ACIT, CIRCLE-5 , BARODA IN ITANO. 3226/AHD/2011 AND THE CASE OF SHR I RUSTAM GINWALA, SHREE RAM ENGG. & MFG W INDUSTRIES VS. ACIT, CIRCLE-5, BARODA IN ITA NO. 3227/AHD/2011 IN A.Y. 2008-09 . III. HON'BLE HIGH COURT OF BOMBAY; HINDUSTAN UNILEVER L TD. DEPUTY COMMISSIONER OF INCOME-TAX 1(1), MUMBAI IN W .P. NO. 85 OF 2009 VIDE ORDER DATED APRIL 1, 2010 REPOR TED IN [2010] 191 TAXMAN 119 (BOM.) IV. HON'BLE ITAT AMRITSAR BENCH; S. LAKHA SINGH BAHRA CHARITABLE TRUST VIDE ORDER DATED 15,06.2011 REPORT ED IN 15 TAXMANN.COM 97(ASR). REVENUES LINE OF REASONING IS THAT IN THESE CASES, A MONTH IS UNDERSTOOD AS PER THE ORDINARY SENSE I.E. THE MO NTH IS A PERIOD FROM A SPECIFIED DATE IN A MONTH TO THE DATE NUMERICALLY CORRESPONDING DATE IN THE FOLLOWING MONTH. 5. WE HAVE HEARD BOTH THE SIDES AT LENGTH. THE LEGA L ISSUE INVOLVED IS WITHIN A NARROW COMPASS, AS ALSO REVOLV ES AROUND FEW SUCCINCT FACTS. A SALE WAS EXECUTED AND REGISTERED ON 10 TH OF JUNE, 2008. AS PER THE REVENUE DEPARTMENT, THE ASSESSEE W AS REQUIRED ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 10 - U/S.54EC TO INVEST IN NHAI BOND ON OR BEFORE 10 TH OF DECEMBER, 2008,I.E. WITHIN SIX MONTHS, HOWEVER, THE SAID INVE STMENT WAS STATED TO BE MADE BY THE ASSESSEE ON 17 TH OF DECEMBER, 2008. AT THIS JUNCTURE IT MAY NOT BE OUT OF PLACE TO MENTION THAT THERE WAS A CLAIM OF THE ASSESSEE THAT THE SAID CHEQUE WAS TEND ERED ON 8 TH OF DECEMBER, 2008, HENCE THE SAID INVESTMENT WAS OTHER WISE MADE BEFORE THE EXPIRY OF LIMITATION AS PRESCRIBED. BE T HAT AS IT WAS, THIS CONTROVERSY OF EXACT DATE OF INVESTMENT, SHALL BE A DDRESSED AFTER ADDRESSING THE MAIN CONTROVERSY THAT WHETHER THE SA ID INVESTMENT OF THE ASSESSEE WHICH WAS ALLEGEDLY MADE ON 17 TH OF DECEMBER, 2008 WAS WITHIN THE PHRASEOLOGY, AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER AS PRESCRIBED IN SECTION 54EC. FOR READY REFERENCE, THE RELEVANT POR TION OF THE SECTION IS REPRODUCED BELOW: CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN CER TAIN BONDS. 54EC. (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG- TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRE D BEING 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 DA TE OF 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. 5.1 AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDE WE ARE OF THE VIEW THAT TO RESOLVE THE CONTROVERSY EXACTLY, IT IS REQUIRED TO KNOW THAT FOR THE PURPOSE OF SEC 54 EC OF THE IT ACT 196 1, THE PERIOD OF INVESTMENT SHOULD BE CALCULATED AS SIX MONTHS AFTER THE DATE OF TRANSFER OR TO BE RECKONED 180 DAYS FROM THE DATE O F TRANSFER. THIS IS THE CRUX OF THE ISSUE. ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 11 - 5.2 WE SHALL FIRST DEAL WITH THE ARGUMENTS OF LEARNED DR BECAUSE THIS CONTROVERSY WAS REFERRED TO US AT THE BEHEST OF THE REVENUE DEPARTMENT. THE ARGUMENT OF LEARNED DR IS T HAT THE TERM MONTH IS TO RECKON FROM THE DATE WHEN AN EVENT TA KES PLACE UPTO THE DATE OF THE FOLLOWING MONTH. IN OTHER WORDS LEA RNED DR HAS PLEADED THAT IN ORDINARY SENSE A MONTH IS A PERIO D FORM A SPECIFIED DATE IN A MONTH, TO THE DATE NUMERICALLY CORRESPONDING TO THAT DATE IN THE FOLLOWING MONTH, LESS ONE. THE ARG UMENT IS THAT SINCE THE STATUTE HAS PRESCRIBED THE LIMITATION OF SIX MONTHS, THEREFORE, THOSE WORDS I.E. AT ANY TIME WITHIN A PERIOD OF SIX MONTHS MUST NOT BE REPLACED BY THE WORDS AT ANY TIME WITHIN A PERIOD OF END OF SIX MONTHS. 5.3 WE HAVE DULY ANALYZED THIS ARGUMENT. THE TERM MONTH IS NOT DEFINED IN THE INCOME TAX ACT, THEREFORE SEEKIN G THE HELP OF AN ANOTHER STATUTE ; HENCE, EXAMINED THE TERM MONT H AS PER GENERAL CLAUSES ACT, 1897 WHICH SAYS- SECTION 3 DEFINES - (35) MONTH SHALL MEAN A MONT H RECKONED ACCORDING TO THE BRITISH CALENDAR. IT MAY NOT BE OUT OF PLACE TO MENTION T HAT IN SECTION 54E, 54EA AND 54EB, THE PHRASE IS IDENTICAL, I.E., WITH IN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER. WE HAV E BEEN INFORMED THAT THIS PHRASE OTHERWISE IS NOT USED BY THE LEGIS LATOR IN ANY OTHER PROVISIONS OF IT ACT, 1961 OR IT RULE, 1982. WHICH MEANS A SPECIFIC PERIOD IS PRESCRIBED FOR THE PURPOSE OF IN VESTMENT IN CERTAIN SPECIFIED ASSETS IN RESPECT OF COMPUTATION OF CAPITAL GAIN. MEANING THEREBY, AN INCENTIVE IS PRESCRIBED BY THE STATUTE TO A TAX PAYER, WHO HAS EARNED LONG TERM CAPITAL GAIN, TO GE T RELIEF IF ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 12 - INVEST THE GAIN IN ANY OF THE SPECIFIED ASSET. BUT THE INVESTMENT HAS TO BE MADE AT ANY TIME WITHIN A PERIOD OF SIX MONTH S AFTER THE DATE OF SUCH TRANSFER. 5.4 BEING A BENEFICIAL PROVISION THROUGH WHICH A N INCENTIVE IS GIVEN, AN ARGUMENT HAS BEEN RAISED, THAT SUCH PROVI SION SHOULD BE INTERPRETED LIBERALLY. FOR THIS LEGAL PROPOSITION O F LIBERAL INTERPRETATION DECISIONS CITED ARE NAMELY, BAJAJ TEMPO LTD. VS. CIT, 196 ITR 188 (SC) , CIT VS. GWALIOR RAYAN SILK MANUFACTURING COMPANY, 196 ITR 149 (SC) AND CIT VS, VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC). EVEN IT HAS ALSO BEEN ARGUED THAT THE HIGHEST REVENUE AUTHORITY, I.E., CB DT HAS ALSO TAKEN DUE COGNIZANCE OF SUCH INCENTIVE PROVISIONS, THEREFORE, GRANTED RELAXATION. SUCH AS IN CBDT CIRCULAR NO.794 DATED 9 TH OF AUGUST, 2000; CBDT CIRCULAR NO.359 DATED 10 TH OF MAY, 1983 AND CIRCULAR NO.791 DATED 2 ND OF JUNE, 2000. CERTAIN TRIBUNALS HAVE ALSO ACCEPTED THE LEGAL ASPECT OF L IBERAL INTERPRETATION OF STATUTE IN RESPECT OF PROVISIONS OF SECTION 54E OR SECTIONS 54EA SUCH AS IN THE CASE OF MAHESH NEMCHANDRA GANESHWADE VS. ITO, 17 ITR (TRIBUNAL) 116 (PUNE), BHIKHULAL CHANDAK (HUF) VS. ITO, 126 TTJ 345 (NAGPU R), CHANCHAL KUMAR SIRKAR VS. ITO, (2012) 16 ITR (TRIBU NAL) 91 (KOLKATA). WE ARE IN AGREEMENT WITH THIS LEGAL PROPOSITION BE ING LAID DOWN BY THE HONBLE COURTS BUT TO RESOLVE THIS CONTROVERSY WE FEEL THAT A LITTLE MORE DELIBERATION IS REQUIRED IN STEAD OF DECIDING ONLY ON THE BASIS OF THIS THUMB-RULE. ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 13 - 5.5 WHILE DEALING WITH THIS TYPE OF INCENTIVE PROVI SIONS WE MAY LIKE TO MENTION THAT IT IS NEITHER A QUESTION OF LIBERAL INTERPRETATION OF STATUTE OR A LITERAL INTERPRETATION OF STATUTE, BUT IT IS A MATTER OF PURPOSIVE CONSTRUCTION OF STATUTE OR CONSTRUCTIVE INTERPRETATION OF STATUTE . A TRUE INTENTION OF THE ENACTMENT IS REQUIRED TO BE CONSIDERED BY A COURT O F LAW. IN THE PRESENT CASE, THE INTENTION IS TO ATTRACT INVESTMEN T TO BE USED FOR THE DEVELOPMENT OF INFRASTRUCTURE ETC. THE QUESTION AS TO WHETHER A STATUTE IS MANDATORY OR DIRECTORY, DEPENDS UPON THE INTENT OF THE LEGISLATOR AND NOT UPON THE LANGUAGE IN WHICH IT IS CLOTHED. THE MEANING AND INTENTION OF THE LEGISLATOR IS TO JUDGE D BY THE LANGUAGE, BUT THESE ARE TO BE CONSIDERED NOT ONLY F ROM PHRASEOLOGY OF THE PROVISION, BUT ALSO BY CONSIDERING ITS NATUR E, ITS DESIGN, AND THE CONSEQUENCES WHICH WOULD FOLLOW FROM CONSTRUING IT THE ONE WAY OR THE OTHER. THEREFORE, WE HAVE EXAMINED THE GENERAL CLAUSES ACT, 1897 WHERE THE MONTH SHALL MEAN A MONTH RECKONED ACCORDING TO BRITISH CALENDAR. THIS CONTROVERSY HAS EARLIER BEEN ADDRESSED BY CERTAIN HIGHER FORUM AND THEN IT WAS D ECIDED THAT THE QUESTION WHETHER MONTH MEANS A LUNAR MONTH OR A CALENDAR MONTH WOULD DEPEND ON INTENTION FOR THE USAGE OF T HE TERM MONTH. IN BRITISH CALENDAR A MONTH IS A UNIT OF PE RIOD USED IN A CALENDAR. IT MAY NOT BE OUT OF CONTEXT TO MENTION T HAT THIS SYSTEM WAS INVENTED BY MESOPOTAMIA. AN AVERAGE LENGTH OF A MONTH IS 29.53 DAYS; BUT IN A CALENDAR YEAR THERE ARE 7 MONT HS WITH 31 DAYS, 4 MONTHS HAVING 30 DAYS AND ONE MONTH HAS 28/29 DAY S. IT CAN BE POSSIBLE THAT UNDER COMMON PARLANCE PROBABLY IT MEA NT A LUNAR ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 14 - MONTH BUT IN CALCULATING THE SPECIFIED NUMBER OF MO NTHS THAT HAD ELAPSED AFTER OCCURRENCE OF A SPECIFIED EVENT THEN A GENERAL RULE IS THAT THE PERIOD OF A MONTH ENDS ON THE LAST DAY. TH EREFORE, A MONTH ENDS BY THE LAST DATE OF THAT MONTH. ONE OF THE ITA T BENCH, MUMBAI IN THE CASE OF YAHYA E. DHARIWALA, 49 SOT 458 (MUM) HAS ALSO OPINED THAT QUOTE SIX MONTHS PERIOD SHOUL D BE RECKONED FROM THE END OF THE MONTH IN WHICH THE TRANSFER TAK ES PLACE UNQUOTE. THEREAFTER IN THE CASE OF AQUATECH ENGINEERS, 36 CCH 167 (MUM TRIB.) , AGAIN IT WAS DECIDED TO GRANT THE EXEMPTION OF INVESTMENT U/S.54EC IF THE SAME HAS BEEN MADE BY TH E END OF THE MONTH. 5.6 IN CERTAIN OTHER CONTEXT FEW HONBLE HIGH COURTS HAVE ALSO TAKEN A VIEW THAT A MONTH IS TO BE RECKONED ACCORDING BRITISH CALENDAR. WE HAVE NOTED THAT IN THE CASE OF CIT VS. SLM MANIKLAL INDUSTRIES, 274 ITR 485, THE HONBLE JURISDICTIONAL HIGH COURT HAS OPINED THAT THE ISSUE OF INTERPRETATION OF THE TERM MONTH IS NO LONGER RES INTEGRA BECAUSE IN THE CASE OF CIT VS. KADRI MILLS (CAIMBATORE LTD.), 106 ITR 846 (MADRAS) IT WAS LAID DOWN THAT THE MONTH TO BE REC KONED ACCORDING TO BRITISH CALENDAR. THE ISSUE BEFORE THE HONBLE COURT WAS THAT WHETHER THE TRIBUNAL WAS RIGHT IN LAW AND ON FACTS IN CANCELING THE PENALTY LEVIED U/S. 271(1)(A), OBSERV ING THAT MONTH MEANT CALENDAR MONTH AND NOT THE LUNAR MONTH OF 28 OR 30 DAYS. THIS ISSUE WAS DEALT AT SOME LENGTH BY HONBLE MADR AS HIGH COURT IN THE CASE OF CIT VS. KADRI MILL CAIMBATORE LTD., 106 ITR 846 (MAD.). IN THIS CASE, THE OBSERVATION OF THE HONBL E COURT WAS THAT IT ACT, 1961 ITSELF DOES NOT DEFINE THE WORD MONTH HOWEVER ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 15 - SECTION 3 OF GENERAL CLAUSES ACT, 1987 DEFINE THE W ORD MONTH MEANS A MONTH RECKONED ACCORDING TO BRITISH CALENDA R. IN THIS CONTEXT A DECISION OF HONBLE CALCUTTA HIGH PRONOUN CED IN THE CASE OF BRIJLAL LOHIA & MAHABIR PRASAD KHEMKA 124 ITR 485 HAS ALSO BEEN GENERALLY CITED WHEREIN IT WAS HELD T HAT THE WORDS HOWEVER CONSIDERING MONTH DURING WHICH THE DEFAULT CONTINUED AS APPEARED IN SECTION 271(1)(A) REFER ONLY TO A MO NTH DURING THE WHOLE OF WHICH THE DEFAULT CONTINUED AND NOT TO A M ONTH DURING WHICH ONLY PART OF WHICH DEFAULT CONTINUED. LIKEWIS E IN THE CASE OF HARNAND RAI RAMANAND 159 ITR 988 (RAJ.) ,AND B.V.ASWATHAIAH & BROTHERS 155 ITR 422( KAR.) IT WAS HELD THAT A MONTH IS A BRITISH CALENDAR MONTH . 6. THE SUBTLE QUESTION IS THAT WHETHER THE WORD M ONTH REFERS IN THIS SECTION A PERIOD OF 30 DAYS OR IT REFERS TO THE MONTHS ONLY. SECTION 54EC, IF WE READ AGAIN PRESCRIBES THAT AN I NVESTMENT IS REQUIRED TO BE MADE WITHIN A PERIOD OF SIX MONTHS. WHETHER THE INTENTION OF THE LEGISLATOR WAS TO COMPUTE SIX CALE NDAR MONTHS OR TO COMPUTE 180 DAYS. TO RESOLVE THIS CONTROVERSY, W E ARE GUIDED BY A DECISION OF HONBLE ALLAHABAD HIGH COURT PRONO UNCED IN THE CASE OF MUNNALAL SHRI KISHAN MAINPURI, 167 ITR 415 WHERE ANSWERING THE DISPUTE IN RESPECT OF LAW OF LIMITATI ON THE HONBLE COURT HAS CLEARLY HELD THAT THERE IS NOTHING IN THE CONTEXT OF SECTION 256(2) TO WARRANT THE CONCLUSION THAT THE WORD MON TH IN IT REFERS TO A PERIOD OF 30 DAYS, THEREFORE, REFERS TO SIX MO NTHS IN SECTION 256(2) IS TO SIX CALENDAR MONTHS AND NOT 180 DAYS. RATHER, IN THIS CITED DECISION AN INTERESTING OBSERVATION OF THE CO URT WAS THAT ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 16 - WHILE COMPARING THE PRECEDENTS THE CONTEXTUAL SETTI NG IS TO BE EXAMINED AND IF ENTIRELY DISTINCT AND DIFFERENT THE N DO NOT WARRANT TO APPLY UNIVERSALLY. EVEN IN THE CASE OF TAMAL LAH IRI VS. KUMAR P. N. TAGORE, 1978 AIR 1811/1979 SCC (1) 75, IT WAS OPINED WHILE INTERPRETING SECTION 533 OF BANGALORE MUNICIP AL ACT, 1932 THAT THE EXPRESSION SIX MONTHS IN THE SAID SECTION MEANS SIX CALENDAR MONTHS AND NOT 180 DAYS. A COPY OF THE JUD GMENT IS PLACED BEFORE US. THE PURPOSE OF MENTIONING THIS PL ANK OF ARGUMENT IS THAT AFTER SCRUTINIZING FEW MORE SECTIO NS OF THE ACT IT IS EVIDENT THAT ON SOME OCCASION THE LEGISLATURE HA D NOT USED THE TERMS MONTH BUT USED THE NUMBER OF DAYS TO PRESC RIBE A SPECIFIC PERIOD. FOR EXAMPLE IN SECTION 254(2A) FIRST PROVISO IT IS PRESCRIBED THAT THE TRIBUNAL MAY PASS AN ORDER GRAN TING STAY BUT FOR A PERIOD NOT EXCEEDING ONE HUNDRED AND EIGHTY D AYS. THIS IS AN IMPORTANT DISTINCTION MADE IN THIS STATUTE WHILE SU BSCRIBING THE LIMITATION/ PERIOD. THIS DISTINCTION THUS RESOLVES THE PRESENT CONTROVERSY BY ITSELF. 7. SO THE LOGICAL CONCLUSION IS THAT IN THE ABSENCE OF ANY DEFINITION OF THE WORD MONTH IN THE ACT, THE DE FINITION OF GENERAL CLAUSES ACT 1897 SHALL BE APPLICABLE AND BY DOING SO THERE IS NO ATTEMPT ON OUR PART TO INTERPRET THE LA NGUAGE OF SEC. 54EC , WHAT TO SAY A LIBERAL OR LITERAL INTERPRETAT ION. WE HEREBY HOLD THAT THE LEGISLATURE HAS IN ITS WISDOM HAS CHO SEN TO USE THE WORD MONTH. THIS WAS DONE BY KEEPING IN MIND THE DEFINITION AS PRESCRIBED IN GENERAL CLAUSES ACT 1857. THEREFORE W E HAVE ALSO READ THE WORD MONTH WITHIN THE RECOGNIZED WAYS OF ITA NO.1973/AHD/2012 ALKABEN B. PATEL VS. ITO WARD 14(2), AHMEDABAD A.Y. 2009- 10 - 17 - INTERPRETATION. RATHER WE HAVE ALSO SEEN BOTH; THE CONVENTIONAL AS WELL AS LEXICON MEANING. HERE THERE IN NO ATTEMPT T O SUPPLY CASUS- OMISSUS BUT REPLICATED AS PER THE LANGUAGE USED. 7.1 IN THE PRESENT CASE THERE IS NO DISPUTE ABOUT THE INVESTMENT WHICH HAD ACTUALLY BEEN MADE BY THE ASSESSEE. THE S AID INVESTMENT HAD BEEN MADE IN THE MONTH OF DECEMBER, 2008. HOWEVER, ALLEGED TO BE FEW DAYS LATE FROM THE DATE OF TRANSFER IN THE MONTH OF JUNE, 2008. IT IS NOT THE CASE OF THE REVENUE THAT THE APPELLANT HAD ALTOGETHER FUDGED THE DATES. ONCE THE PURPOSE OF THE INTRODUCTION OF THE SECTION WAS SERVED BY MAKING TH E INVESTMENT IN THE SPECIFIED ASSETS THEN THAT PURPOSE HAS TO BE KE PT IN MIND WHILE GRANTING INCENTIVE. 7.2 WE HEREBY HOLD THAT THE INVESTMENT IN QUE STION QUALIFIES FOR THE DEDUCTION U/S 54EC. RESULTANTLY ASSESSEES GROUNDS ARE HEREBY ALLOWED. THE QUESTION REFERRED IS ANSWERED I N FAVOUR OF THE ASSESSEE. SD/- SD/- SD/- (N.S. SAINI) (G.C. GUPTA) (MUKUL KR. SHRAWAT) ACCOUNT MEMBER VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 25/03/2014 PRABHAT KR. KESARWANI, SR. P.S .