Shri Pramukhbhai Maganbhai Patel, Ahmedabad V. The Income tax Officer,Ward-10(4), Ahmedabad

ITA 2536/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6931 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 19-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH S CHHAJE D
• Keywords: Capital asset
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HON'BLE SHRI G.D.AGRAWAL, V.P. & HONBL E SHRI T.K. SHARMA, J.M. ) I.T.A. NO. 2536/AHD./2010 ASSESSMENT YEAR : 2007-2008 PRAMUKHBHAI MAGANBHAI PATEL, AHMEDABAD -VS - I.T.O., WARD-10(4), ABAD (PAN : AOBPP 7616Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHESH S. CHHAJE D RESPONDENT BY : SHRI K. MADHUSUDAN, SR. D.R O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 30.06.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XVI, A HMEDABAD UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFICER CONFIRMING DISALLOW ANCE OF DEDUCTION CLAIMED UNDER SECTION 54EC AMOUNTING TO RS.4,50,000/- FOR THE ASSESSMENT YEAR 2007-2008. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED THE RETURN OF INCOME ON 18.0 7.2007 DECLARING TOTAL INCOME AT RS.1,56,745/-. THE ASSESSING OFFICER FRAMED THE ASS ESSMENT UNDER SECTION 143(3) ON 17.08.2009 AT TOTAL INCOME OF RS.6,06,745/- WHEREIN HE OBSERVED THAT THE BONDS OF REC WERE PURCHASED ON 23.01.07, WHEREAS AS PER THE ACT, THE ASSESSEE WAS SUPPOSED TO PURCHASE THE BONDS BY 29.10.2006 I.E. WITHIN SIX MONTHS FROM THE DATE OF SALE OF RESIDENTIAL HOUSE ON 29.04.2006. HE, THEREFORE, DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 54EC ON THE GROUND THAT THE BONDS WERE PURCHASED BEYOND THE PRE SCRIBED DATE. 3. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS), THE ASSESSEE FILED THE FOLLOWING SUBMISSIONS: THE LD ASSESSING OFFICER HAS DISALLOWED THE ASSESSE ES CLAIM OF RS.4,50,000/- U/S.54EC. THE ASSESSEE SOLD HIS ORIGINAL ASSET ON 29-4-2006 AND WAS REQUIRED TO INVEST IN THE CAPITAL GAIN TAX BOND OF RECL BEFORE 29-10-2006. CONSIDERING THE 2 ITA NO. 2536-AHD-2010 EXTENSION OF LIMITATION OF 6 MONTHS, THE ASSESSEE WAS REQUIRED TO INVEST INTO THE SAID BONDS UPTO 31-12-2006. HOWEVER THE ISSUE OF RECL C APITAL GAIN TAX BOND WAS NOT OPENED UPTO 31-12-06. THE SAID ISSUE WAS OPENED IN JANUARY, 2007 AND THE ASSESSEE MADE INVESTMENT ON 23-1-07. THE ASSESSEE HAS KEPT READY THE AMOUNT TO BE INVESTED IN BOND. SINCE, THERE WAS NO CAPITAL GAIN TAX BOND OPEN FOR INVESTMENT, THE ASSESSEE HAD NO OTHER CHOICE EXCEPT TO WAIT FOR THE OPENING OF THE SAID ISSUE OF BOND. THUS, IT WAS NOT UNDER THE CONTROL OF THE ASSESSEE TO INVES T IN THE SAID BOND BEFORE 31-12- 2006. THE ASSESSING OFFICER DISALLOWED THE CLAIM U /S.43EC AND ADDED RS.4.50 LACS TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSING OF FICER DID NOT CONSIDER THE SAID FACT REGARDING NON-AVAILABILITY OF BOND UPTO 31-12-2006 . 3.1 AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE D ISALLOWANCE OF RS.4,50,000/- OBSERVING THAT NOTIFICATION NO.380 OF 2006 DATED 22 .12.2006 & NOTIFICATION NO. 142 & 143 OF 2006 DATED 29-6-2006 NOWHERE EXPLAINED THE DATE OF INVESTMENT IN REC BONDS HAS BEEN EXTENDED BY SIX MONTHS AS CLAIMED BY THE ASSESSEE. HE ACCORDINGLY TOOK THE VIEW THAT SINCE THE INVESTMENTS IN REC BONDS WERE MADE BEYOND THE P RESCRIBED TIME LIMIT, THE ASSESSING OFFICER IS JUSTIFIED IN NOT ALLOWING THE DEDUCTION UNDER SECTION 54EC OF THE I.T. ACT, 1961. AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, SHRI MAHESH S. CH HAJED, APPEARED ON BEHALF OF THE ASSESSEE AND FILED A PAPER BOOK, INTER ALIA , CONTAINING NOTIFICATION OF CAPITAL GAINS. HE DREW OUR ATTENTION TO LAST PARA OF THE SAID NOTIFICATION , WHICH READS AS UNDER: FURTHER, WITH A VIEW TO REMOVING THE HARDSHIP CAUSE D TO TAXPAYERS BECAUSE OF NON- AVAILABILITY OF THE BONDS, THE CENTRAL BOARD OF DI RECT TAXES, HAS ISSUED AN ORDER UNDER SECTION 119(2)(C) OF INCOME TAX ACT, 1961 ON 26.12.2006 EXTENDING THE TIME LIMITATION FOR MAKING THE INVESTMENTS UNDER SECTIO N 54EC UP TO 31.3.2007 IN CASE OF PERSONS WHERE THE LONG-TERM CAPITAL ASSET WAS TRAN SFERRED BETWEEN 29.09.2005 AND 30.09.2006 (BOTH DATES INCLUSIVE). 4.1 THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THA T THE ORIGINAL RESIDENTIAL HOUSE WAS SOLD ON 29.04.2006 AND AS PER THE AFORESAID NOTIFIC ATION IN CASE CAPITAL ASSET WAS TRANSFERRED BETWEEN 29.09.2005 AND 30.09.2006 (BOTH DATES INCLU SIVE), INVESTMENT CAN BE MADE UP TO 31.3.2007. IN THE PRESENT CASE, THE ASSESSEE MADE T HE INVESTMENT ON 23.01.2007. IT IS WELL 3 ITA NO. 2536-AHD-2010 WITHIN THE EXTENDED TIME. THE LD. CIT(A) ERRED IN N OT ALLOWING THE DEDUCTION UNDER SECTION 54EC IN RESPECT OF INVESTMENT AMOUNTING TO RS.4,50, 000/- MADE IN REC BONDS. 5. SHRI K. MADHUSUDAN, SR.D.R., APPEARING ON BEHALF OF THE REVENUE, COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD . COUNSEL OF THE ASSESSEE. 6. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND NOTIFICATION ON CAPITAL GAINS TAX BONDS : PIB PRESS RELEASE, DATED 27- 12-2006 BY THE ASSESSEE AT PAGE 11 OF THE PAPER BOO K. IT IS PERTINENT TO NOTE THAT INVESTMENT MADE BY THE ASSESSEE IN REC BONDS ON 23-01-2007 IS WITHIN THE TIME PRESCRIBED IN THE AFORESAID PIB PRESS RELEASE DATED 27-12-2006. IN TH ESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT BOTH THE DEPARTMENTAL AUTHORITIES BELOW CLEARL Y ERRED IN DENYING THE ASSESSEE EXEMPTION CLAIMED UNDER SECTION 54EC AMOUNTING TO RS.4,50,000 /-. 6.1 IN VIEW OF THE FOREGOING, WE SET ASIDE BOTH THE ORDERS OF THE DEPARTMENTAL AUTHORITIES BELOW ON THIS ISSUE AND DIRECT THE ASSESSING OFFICE R TO RE-COMPUTE THE INCOME OF THE ASSESSEE, AFTER ALLOWING THE DEDUCTION UNDER SECTIO N 54EC IN RESPECT OF INVESTMENT OF RS.4,50,000/- MADE IN REC BONDS ON CAPITAL GAINS TA X BONDS ON 23-01-2007. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER PRONOUNCED IN THE COURT ON 08.04.2011. SD/- SD/- (G.D.AGRAWAL) (T.K. SHARMA) VICE PRESIDENT JUDICIAL MEMBER DATED : 08/04/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIST RAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S. 4 ITA NO. 2536-AHD-2010