ACIT, New Delhi V. Sh Sanjeev Chopra, New Delhi

ITA 2491/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3468 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 25-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Capital asset
• Section: 143(3); 54EC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G : NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A.NO.2491/DEL/2010 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX, SHRI SANJEEV CH OPRA, CIRCLE 47(1), NEW DELHI. VS. C-1A, 56-C, JANAKPUR I, NEW DELHI. PAN: ABTPC1499D (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. ANUSHA KHURANA, SR. DR . RESPONDENT BY : SHRI SAN JAY AGGARWAL, ADVOCATE. O R D E R PER C.L. SETHI, JUDICIAL MEMBER. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 15 .03.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SECTION 143(3) OF THE INCOME- TAX ACT, 1961 (THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE REVE NUE REVOLVING AROUND ONLY ONE ISSUE REGARDING THE DISALLOWANCE OF DEDUCT ION OF RS.10,00,000/- UNDER SECTION 54EC, ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN:- 2 1) DELETING THE ADDITION OF RS.10,00,000/- AND CONS EQUENTLY ALLOWING THE ASSESSEE TO BE ELIGIBLE FOR EXEMPTION U/S. 54EC NOT APPRECIATING THE FACT THAT THE DATE OF SUBMITTING T HE APPLICATION FOR THE PURCHASE OF THE BONDS, THE ISSUE UNDER DISP UTE, CANNOT BE READ AS DATE OF MAKING PAYMENT FOR INVESTMENT. 2) THAT THE CBDTS CIRCULAR NO. 261 DATED 08.08.79 IS IN CONTEXT OF PAYMENT OF GOVERNMENT DUES, WHICH IS NOT THE CASE HERE BEING A PAYMENT OF OBTAINING BONDS TO GET EXEM PTION U/S. 54EC OF THE I.T. ACT, 1961. 3) THAT EVEN OTHERWISE, THE CENTRAL GOVERNMENT ACCO UNT (RECEIPTS & PAYMENTS) RULES, 1983 HAVE BEEN FRAMED, WHICH PROVIDE THAT PAYMENT OF GOVERNMENT DUES TENDERED IN FORM OF CHEQUE/DRAFT SHALL BE THE DATE OF WHICH IT WAS CLEA RED AND ENTERED IN THE RECEIPT SCROLL AND IN THE PRESENT CA SE, THE CHEQUE WAS ENCASHED ON 03.10.2005 WHICH IS BEYOND THE DUE DATE. 3. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, T HE ASSESSEE CLAIMED A DEDUCTION OF RS.10,00,000/- U/S. 54EC ON ACCOUNT OF INVESTMENT MADE IN BOND OF NATIONAL HOUSING BANK, AGAINST LONG-TERM CA PITAL GAIN OF RS.38,74,500/- ARISING FROM SALE OF SHARES SOLD BY THE ASSESSEE. IT WAS NOTICED BY THE AO FROM THE BANK ACCOUNT OF THE ASSE SSEE WITH STANDARD CHARTERED BANK THAT INVESTMENT IN THIS NATIONAL HOU SING BOND WAS MADE BY THE ASSESSEE ON OCTOBER 03, 2005. THE CAPITAL ASSE T I.E. SHARES OF THE COMPANY GIVING RISE TO THE CAPITAL GAIN, WERE SOLD BY THE ASSESSEE ON 01.04.2005. THE ASSESSING OFFICER THEREFORE, CONCL UDED THAT THE INVESTMENT WAS NOT MADE WITHIN THE TIME OF SIX MONTHS FROM THE DATE OF TRANSFER OF CAPITAL ASSETS BEING SHARES OF THE COMPANY. HE THE REFORE, HELD THAT ONE OF 3 THE CONDITIONS ENUMERATED IN SECTION 54EC WAS NOT S ATISFIED. THE AO THEREFORE, ASKED THE ASSESSEE TO SHOW CAUSE AS TO W HY DEDUCTION CLAIMED UNDER SECTION 54EC ON ACCOUNT OF INVESTMENT MADE IN BOND OF NATIONAL HOUSING BANK SHOULD NOT BE DISALLOWED. IN REPLY, TH E ASSESSEE VIDE LETTER- DATED 22.12.2008, SUBMITTED THAT THE ASSESSEE SUBMI TTED APPLICATION FORM FOR PURCHASE OF BONDS ALONG WITH CHEQUE DATED 26.9.2005 WITH CANARA BANK ON 29 TH SEPTEMBER, 2005, AND SINCE THE ASSESSEE HAD MADE I NVESTMENT VIDE APPLICATION DATED 29 TH SEPTEMBER, 2005, THE INVESTMENT WAS WITHIN THE PRESCRIBED TIME LIMIT OF SIX MONTHS. THE ASSESSEE THEREFORE, CLAIMED BEFORE THE AO THAT THE CLAIM OF DEDUCTION UNDER SEC. 54EC WAS ALLOWABLE. THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AS THE AO WAS OF THE VIEW THAT THE ACTUAL DATE OF INVESTMENT WOULD BE 3. 10.2005 I.E., THE DATE ON WHICH THE CHEQUE WAS CLEARED FROM THE ASSESSEES BA NK ACCOUNT. THE AO, THEREFORE, DISALLOWED THE ASSESSEES CLAIM OF DEDUC TION OF RS. 10,00,000/- U/S. 54EC OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE CIT(A). BEFORE THE LEARNED CIT(A) THE ASSESSEE SUBMITTED AS UNDER:- THE LD. ACIT HAS ERRED IN DISALLOWING THE EXEMPTIO N U/S. 54EC OF RS 10,00,000/- ON THE GROUND THAT THE CHEQU E NOF INVESTMENT WAS CLEARED TWO DAYS AFTER THE END OF 6 MONTHS PERIOD; IN THIS MANNER, HE ERRED IN TAKING THE DAT E OF INVESTMENT AS MENTIONED IN THE SECTION 54EC AS TH E DATE OF CLEARING OF CHEQUE 4 THE LD. ACIT HAS ERRED IN OVERLOOKING AND NOT CONSI DERING THE CBDTS CIRCULAR NO. 261 DATED 08.08.79 WHERE IN IT IS STATED THAT :- IN TERMS OF RULE 80 OF THE COMPILATION OF THE TREASURY RULES, IF A CHEQUE OR DRAFT TENDERED IN PAYMENT OF GOVERNMENT DUES AND ACCEPTED UNDER THE PROVISIONS O F RULE 79 (IBID) IS HONOURED ON PRESENTATION ON PRESENTATI ON THE PAYMENT IS DEEMED TO HAVE BEEN MADE ON THE DATE ON WHICH IT WAS OVER TO THE GOVERNMENT BANKERS. THE APPELLANT HAS RELIED ON THE CASE OF KANGOLD (IN DIA) LTD. VS. 1998 IT2-FJX-1489-GUJ WHERE IT HAS BEEN HELD TH AT- WHAT IS RELEVANT HERE IS PAYMENT AND NOT ENCASHMEN T OF THE CHEQUE, IT IS SETTLED LEGAL POSITION THAT IN CASE O F PAYMENT BY CHEQUE, THE PAYMENT IS DEEMED TO HAVE BEEN MADE ON THE DATE OF DELIVERY OF THE CHEQUE AND NOT ON THE DATE OF ENCASHMENT WHEN THE CHEQUE IS HONOURED.' 4.1 AFTER CONSIDERING THE AOS ORDER AND ASSESSEES SUBMISSIONS, THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AND OBSERVING AS UNDER:- 5. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A PPELLANT CAREFULLY AND THE CASE LAW RELIED UPON BY HIM. MORE OVER THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT B Y THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX, BO MBAY SOUTH, BOMBAY VS. OGALE GLASS WORKS LIMITED, 25 ITR 529 WHEREIN IT HAS BEEN HELD THAT- THE POSITION, THEREFORE, IS THAT IN ONE VIEW OF TH E MATTER THERE WAS, IN THE CIRCUMSTANCES OF THIS CASE, AN IMPLIED AGREEMENT UNDER WHICH THE CHEQUES WERE ACCEPTED UNCONDITIONAL LY AS PAYMENT AND ON ANOTHER VIEW, VIEW EVEN IF CHEQUES W ERE TAKE CONDITIONALLY, THE CHEQUES NOT HAVING BEEN DISHONOU RED BUT HAVING BEEN CASHED, THE PAYMENT RELATED BACK TO THE DATES OF 5 THE RECEIPT OF THE CHEQUES AND IN LAW THE DATES OF PAYMENTS WERE DATES OF THE DELIVERY OF THE CHEQUES. 5. BEING AGGRIEVED WITH THE CIT(A)S ORDER, THE DEP ARTMENT HAS PREFERRED THIS APPEAL BEFORE US. 6. THE LD. DR REITERATED THE REASONS GIVEN BY THE A O IN REJECTING THE ASSESSEES APPLICATION AND CONTENDED THAT SINCE THE CHEQUE WAS ACTUALLY CLEARED ON 03.10.2005, THE DATE OF INVESTMENT IN TH E BOND IS TO BE TAKEN AS 03.10.2005, WHICH IS UNDOUBTEDLY BEYOND THE PERIOD OF SIX MONTHS. HE MADE A REFERENCE TO THE CENTRAL GOVERNMENT ACCOUNT (RECE IPTS AND PAYMENTS) RULES, 1983. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, REITERATED THE SUBMISSIONS THAT WERE MADE BEFORE THE CIT(A), WHICH HAS ALSO BEEN REPRODUCED ABOVE HEREIN. THE LD. COUNSEL FOR THE AS SESSEE ALSO SUPPORTED THE REASONING GIVEN BY THE LD. CIT(A) IN DELETING THE A DDITION. 8. RIVAL CONTENTIONS OF BOTH THE PARTIES HAVE BEEN CONSIDERED AND ORDERS OF THE AUTHORITIES BELOW HAVE BEEN CAREFULLY PERUSE D. 9. AN IDENTICAL ISSUE HAD COME FOR CONSIDERATION BE FORE THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH `F NEW DELHI IN TH E CASE OF ACIT VS. SHRI RAMESH KUMAR PUNJABI IN ITA NO.1101/DEL/2010 WHERE THE TRIBUNAL VIDE ORDER DATED 21 ST MAY, 2010 [TO WHICH ONE OF US (JUDICIAL MEMBER) WA S A PARTY], HAS DECIDED THIS ISSUE BY OBSERVING AND HOL DING AS UNDER:- 6 11. IN THE PRESENT CASE, WE ARE CONCERNED ABOUT THE DATE ON WHICH THE INVESTMENT IN BOND CAN BE SAID TO HAVE BE EN MADE BY THE ASSESSEE. THE PAYMENT MADE BY THE ASSESSEE IS T OWARDS PURCHASE OF BOND OF NATIONAL HOUSING BANK VIDE APPL ICATION SUBMITTED AT DESIGNATED BANK I.E., CANARA BANK, CAP ITAL MARKET, NEW DELHI. IT IS NOT THE PAYMENT OF ANY GOV ERNMENT DUES, SUCH AS PAYMENT OF INCOME TAX, SALES TAX OR E XCISE DUTY OR ANY OTHER DUES PAYABLE TO THE GOVERNMENT. THEREFORE , RULES FRAMED WITH REGARD TO THE PAYMENT OF GOVERNMENT DUE S IS NOT APPLICABLE TO THE PRESENT CASE. IN THE PRESENT CASE , THE PAYMENT IS IN THE COURSE OF A CONTRACTUAL AGREEMENT BETWEEN THE INVESTOR AND BOND ISSUING AUTHORITY. IT IS NOT IN DISPUTE TH AT, ON 29.09.2005, THE ASSESSEE SUBMITTED APPLICATION FOR PURCHASE OF SPECIFIED BOND ENCLOSING THEREWITH CHEQUE NO. 07936 0 DATED 26.09.2005. IT IS ALSO NOT IN DISPUTE THAT THE AFOR ESAID CHEQUE WAS ULTIMATELY HONOURED AND ENCASHED. IT IS NOT THE CASE OF THE DEPARTMENT THAT ON THE DAY, WHEN THE CHEQUE WAS PRE SENTED TO CANARA BANK, THE ASSESSEE HAD NO SUFFICIENT MONEY A VAILABLE IN THE BANK ACCOUNT TO HONOUR THE CHEQUE. THE APPLICAT ION SO SUBMITTED BY THE ASSESSEE WAS ACCEPTED BY THE DESIG NATED BANK ON 29.09.2005 ITSELF. MERE BECAUSE THE BANK HAD TAK EN SOME TIME TO ENCASH THE CHEQUE, THAT, BY ITSELF, CANNOT BE A CRITERIA TO SAY THAT THE AMOUNT WAS NOT ACTUALLY PAID ON 29.09. 2005 BUT ON 03.10.2005, WHEN THE CHEQUE WAS CLEARED. IN ORDER T O AVAIL THE BENEFIT OF SECTION 54EC, THE CAPITAL GAIN HAVE TO B E INVESTED IN A LONG TERM CAPITAL GAIN SPECIFIED WITHIN A PERIOD OF SIX MONTHS OF THE DATE OF THE TRANSFER OF CAPITAL ASSET. IT IS , THUS, CLEAR THAT FOR THE PURPOSE OF THE PROVISIONS OF SECTION 54EC, THE DATE OF THE INVESTMENT IS RELEVANT. SINCE, IN THE PRESENT C ASE, THE ASSESSEE HAD MADE AN APPLICATION FOR PURCHASE OF SP ECIFIED BONDS ON 29.09.2005 ALONGWITH CHEQUE, AND THAT APPL ICATION WAS RECEIVED BY DESIGNATED CANARA BANK ON THAT DATE ITSELF, AND THE ASSESSEE HAD SUFFICIENT BALANCE IN THE BANK ACCOUNT ON THAT DATE TO HONOUR THE CHEQUE, AND THE CHEQUE WAS ULTIMATELY HONOURED AND ENCASHED IN DUE COURSE OF TIME, IT SHA LL BE DEEMED THAT THE ASSESSEE HAD MADE THE INVESTMENT IN SPECIFIED BOND ON 9.09.2005, WHICH IS UNDOUBTEDLY WITHIN A PE RIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF SHARES SOLD ON 01.04.2005. WE, THEREFORE, UPHELD THE ORDER OF THE CIT(A) IN DI RECTING THE 7 AO TO ALLOW THE ASSESSEES CLAIM OF DEDUCTION OF RS . 40,00,000/- U/S. 54EC OF THE ACT ON ACCOUNT OF INVE STMENT MADE IN SPECIFIED BONDS. 9.1 THE FACTS OF THE PRESENT CASE ARE QUITE IDENTIC AL AND SIMILAR TO THAT IN THE CASE OF SHRI RAMESH KUMAR PUNJABI. RESPECTFULL Y, FOLLOWING OUR ORDER DATED 21 ST MAY, 2010 IN THE CASE OF SHRI RAMESH KUMAR PUNJABI , WE UPHOLD THE ORDER OF CIT(A) AND REJECT THIS GROUND RAISED B Y THE REVENUE. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2010. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: JULY, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.