M/s. Emco Tiles Company, Ahmedabad V. The Income Tax Officer, Ward-5(3)(1), Ahmedabad

ITA 2313/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6325 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 08-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI DR
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice; Benefit of exemption

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD .. , , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ! ' ./ I.T.A. NO.2313/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) M/S.EMCO TILES COMPANY B-2, SHUBH SHANTI APARTMENT OPP. ASHOK NAGAR CLUB ANAND NAGAR, PALDI AHMEDABAD-380 007 / VS. THE ITO WARD-5(3)(10 AHMEDABAD $ ./ %!&! ./ PAN/GIR NO. : AAAFE 3041 K ( ' $' / APPELLANT ) .. ( ($' / RESPONDENT ) ' $' ) / APPELLANT BY : SHRI S.N. DIVATIA, AR ($' * ) / RESPONDENT BY : MS. RICHA RASTOGI, DR + , * - / DATE OF HEARING 10/11/2017 ./0 * - / DATE OF PRONOUNCEMENT 10/ 01 /2018 ! 1 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL FILED AT THE INSTANCE OF THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS )-5, AHMEDABAD [CIT(A) IN SHORT] DATED 08/07/2016 IN THE MATTER OF ASSESSMENT ORDER UNDER S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS 'THE ACT') DATED 24/08/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. ITA NO.2313/AHD /2016 M/S. EMO TILES COMPANY VS. ITO ASST.YEAR 2012-13 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1.1. THE ORDER PASSED U/S.250 ON 08.07.2016 BY CIT (A)-5, ABAD UPHOLDING THE DISALLOWANCE OF EXEMPTION U/S.54EC OF RS.14 LAKHS MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO T HE IMPUGNED ADDITIONS. 2.1. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AN D ON FACTS IN CONFIRMING THE DISALLOWANCE OF EXEMPTION U/S.54EC O F RS.14 LAKHS. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE DIS ALLOWANCE OF EXEMPTION U/S.54EC OF RS.14 LAKHS. 3.1. THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT SI NCE THE INVESTMENT IN REC CEG BOND WAS MADE IN NAME OF THE PARTNERS OF THE APPELLANT FIRM OUT OF THE PARTNERSHIP FUNDS AND APPEARED IN THE BOOKS OF THE FIRM, THE SAID INVESTMENT WAS THE ASSE TS OF THE APPELLANT FIRM U/S.14 OF THE INDIA PARTNERSHIP ACT, 1932 AND AS SUCH THE EXEMPTION U/S.54EC WAS ADMISSIBLE. 2. BRIEFLY STATED, THE ASSESSEE IS A PARTNERSHIP FI RM AND ENGAGED IN MANUFACTURING AND JOB WORK OF TILES. IT FILED ITS R ETURN OF INCOME FOR A.Y. 2012-13 WHICH INTER ALIA INCLUDED LONG TERM CAPITAL GAIN (LTCG) OF RS. 10,90,024/- IN RESPECT OF SALE OF LAND AT SANAND GU JARAT. THE ASSESSEE INTER ALIA CLAIMED EXEMPTION OF RS. 14 LAKHS U/S. 5 4EC IN RESPECT OF INVESTMENT MADE IN BONDS AGAINST THE LONG TERM CAPI TAL GAINS. HOWEVER ITA NO.2313/AHD /2016 M/S. EMO TILES COMPANY VS. ITO ASST.YEAR 2012-13 - 3 - THE ASSESSING OFFICER DENIED EXEMPTION U/S. 54EC ON THE GROUND THAT THE BONDS HAVE BEEN PURCHASED IN THE NAME OF THE PARTNE RS OF THE ASSESSEE FIRM INSTEAD OF THE ASSESSEE FIRM ITSELF. IN FIRST APPEAL THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND D ENIED THE EXEMPTION CLAIMED U/S. 54EC OF THE ACT. 3. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE MR. S.N. DIVATIA SUBMITTED THAT WHILE THE REC BONDS U/S. 54E C WERE BROUGHT IN THE NAME OF THE PARTNERS, THE PAYMENTS WERE MADE OU T OF SALE PROCEEDS CREDITED WITH THE FIRM. THE LEARNED AUTHORIZED REPR ESENTATIVE FURTHER SUBMITTED THAT THE BONDS APPEAR IN THE BOOKS OF ACC OUNT OF THE FIRM NOTWITHSTANDING THE PURCHASES MADE IN THE NAME OF T HE PARTNERS AND ARE THUS PROPERTY OF THE FIRM. FOR THIS PURPOSE HE RELI ED UPON THE BALANCE SHEET OF THE FIRM PLACED ON RECORD. THE AUTHORIZED REPRESENTATIVE NEXT SUBMITTED THAT THE INTEREST INCOME RECEIVED FROM RE C BONDS HAVE ALSO BEEN CREDITED AND ACCOUNTED FOR IN THE BOOKS OF THE FIRM. THE LEARNED AUTHORIZED REPRESENTATIVE THUS SUBMITTED THAT THE I NCOME ARISING FROM REC BONDS ARE ALSO ASSESSED AS INCOME IN THE HANDS OF THE FIRM. THE LEARNED AUTHORIZED REPRESENTATIVE NEXT RELIED UPON SECTION 14 OF THE INDIAN PARTNERSHIP ACT, 1932 FOR THE PROPOSITION TH AT PROPERTY OF THE PARTNERSHIP FIRM INCLUDES PROPERTY HELD BY THE PART NERS ON BEHALF OF THE ITA NO.2313/AHD /2016 M/S. EMO TILES COMPANY VS. ITO ASST.YEAR 2012-13 - 4 - FIRM. THE LEARNED AUTHORIZED REPRESENTATIVE RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAMAL WAHAL (2013) 30 TAXMANN.COM 34 DELHI TO SUPPORT CLAIM OF EXEMPTI ON. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND RELIED UPON THE ORDER OF THE LEARNED CIT(A) AND POINTED OU T THAT THE ASSESSEE FIRM WAS ELIGIBLE TO APPLY IN THE NAME OF THE PARTN ERSHIP FIRM ITSELF AND THEREFORE THERE WAS NO REASON FOR THE FIRM TO PURCH ASE THE REC BONDS IN THE NAME OF PARTNERS. THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT NO INTERFERENCE WITH ORDER OF THE LD . CIT(A) IS CALLED FOR, WHERE THE INVESTMENTS HAS BEEN MADE IN THE NAME OF PERSON OTHER THAN ASSESSEE WHICH IS NOT CONSONANCE WITH THE MANDATE OF SECTION 54EC OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE LIMITED CONTROVERSY IN THE PRESENT CASE ARISES ON ACCOUNT O F INVESTMENT MADE IN THE NAME OF PARTNERS INSTEAD OF THE ASSESSEE FIRM W HILE AVAILING THE EXEMPTION U/S. 54EC OF THE ACT. WE FIND THAT THE BO NDS HAVE BEEN DULY DECLARED IN THE BOOKS OF ACCOUNT OF THE FIRM AND IN TEREST THEREON HAS ALSO BEEN ACCOUNTED FOR BY THE FIRM ITSELF. THEREFORE TH E INVESTMENT MADE IN THE NAME OF PARTNERS ARE IN SUBSTANCE AND IN EFFECT BELONG TO THE PARTNERSHIP FIRM IN SYNC WITH SECTION 14 OF THE PAR TNERSHIP ACT. ITA NO.2313/AHD /2016 M/S. EMO TILES COMPANY VS. ITO ASST.YEAR 2012-13 - 5 - 7. THE PROVISION OF SECTION 54EC BEING BENEFICIAL I N NATURE, WE ARE INCLINED TO GRANT LIBERAL CONSTRUCTION AS PER THE GUIDANCE AVAILABLE IN THE JUDICIAL PRECEDENTS RENDERED IN KAMAL WAHAL (SUPRA) . THUS WE FIND MERIT IN THE PLEA OF THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED TO GRANT BENEFIT OF EXEMPTION AVAILABLE U/S. 54EC ON INVESTM ENT MADE IN THE NAME OF THE PARTNERS AS CLAIMED. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 10 / 0 1 /201 8 SD/- SD/- (.. ) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 10 / 01 /2018 MUKUL ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. ' $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 456- ! ! 7- / CONCERNED CIT 4. ! ! 7- ( ' ) / THE CIT(A)-5 5. 89 -+56 , ! ' '56 0 , ': 4 / DR, ITAT, AHMEDABAD 6. ; , / GUARD FILE. ' / BY ORDER, ( 8- - //TRUE COPY// (/ )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD