R.KushalBai, CHENNAI V. ITO, CHENNAI

ITA 30/CHNY/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7742 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Keywords: Reopening of assessment; Capital asset; Difference of opinion; Validity of assessment; Change of opinion; Reassessment proceedings
• Section: 148; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 30/MDS/2016 / ASSESSMENT YEAR : 2010-2011 SMT. R. KUSHAL BAI, NO.18, VENGAEESWARAR NAGAR, IST MAIN ROAD, VADAPALANI, CHENNAI 600 026. VS. THE INCOME TAX OFFICER, BUSINESS WARD III(4) CHENNAI 600 034. [PAN AGDPK 6832D] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. PHILIP GEORGE, ADVOCATE $% ! ' # /RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. & ' ' ( / DATE OF HEARING : 01-03-2016 ) ' ' ( / DATE OF PRONOUNCEMENT : 18-03-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE FILED APPEAL AGAINST ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-14, CHENNAI IN ITA NO.125/CIT(A)-14/2014-15, DATED 8.10.2015 FOR THE A SSESSMENT YEAR ITA NO.30/MDS/2016. :- 2 -: 2010-2011 PASSED U/S.143(3) R.W.S. 147 AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS (I ) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE RE- ASSESSMENT ORDER OF THE ASSESSING OFFICER AS VALID ASSESSMENT. (II) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN U PHOLDING THE ORDER OF ASSESSING OFFICER DENYING EXEMPTION U/S.5 4EC OF THE ACT. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS A N INDIVIDUAL AND IS IN THE BUSINESS OF MONEY LENDING AND FILED RETURN OF INCOME ON 26.03.2011 ADMITTING TOTAL INCOME OF ?14,22,870/- I NCLUDING LONG TERM CAPITAL GAINS OF ?9,43,688/- AFTER CLAIMING EX EMPTION OF ?1,00,00,000/- U/S. 54EC OF THE ACT. THE ASSESSME NT WAS COMPLETED U/S.143(3) OF THE ACT ON 31.12.2012 WITH ASSESSED I NCOME OF ?18,74,810/-. SUBSEQUENTLY, THE LD.AO HAS REASON T O BELIEVE THAT THERE IS ESCAPEMENT OF INCOME AND ISSUED NOTICE U/S .148 OF THE ACT. IN RESPONSE TO NOTICE, THE ASSESSEE FILED DETAILS A ND REQUESTED TO TREAT RETURN OF INCOME FILED ON 26.03.2011 IN RESPONSE TO NOTICE U/S.148 OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE OF ASSES SEE APPEARED FROM TIME TO TIME AND FILED SUBMISSIONS OBJECTING THE RE OPENING OF ASSESSMENT WERE EARLIER ASSESSMENT WAS COMPLETED U/ S.143(3) OF THE ITA NO.30/MDS/2016. :- 3 -: ACT AND THE ASSESSEE OFFERED CORRECT INCOME AND TH ERE IS NO SUPPRESSION OF FACTS AND CHALLENGED VALIDITY OF R EASSESSMENT. THE ASSESSING OFFICER CONSIDERED THE SUBMISSIONS AND OB JECTION OF REOPENING OF ASSESSMENT. THE ASSESSEE SOLD IMMOVA BLE PROPERTY DURING FINANCIAL YEAR 2009-2010 FOR ?1,14,56,523/- AND AFTER COST INFLATION INDEX AND COST OF IMPROVEMENTS OF THE PR OPERTY. THE LONG TERM CAPITAL GAINS CALCULATED AT ?1,09,43,688/- AN D CLAIMED EXEMPTION U/S.54EC OF THE ACT BY INVESTMENT IN REC BONDS ?50, 00,000/- ON 15.3.2010 AND ?50,00,000/- ON 13.05.2010 TOTAL AGG REGATING TO ?1,00,00,000/- FURTHER THE SAID INVESTMENTS ARE MA DE WITHIN PERIOD OF SIX MONTHS FROM THE DATE OF SALE OF PROPERTY, AND BALANCE LTCG OF ?9,43,688/- IS OFFERED TO TAX. THE ISSUE IN DISPU TE BEING ASSESSEE CLAIMED DEDUCTION UNDER PROVISIONS OF LAW AND COMPL IED THE CONDITIONS OF INVESTMENT IN REC BONDS WITHIN SIX MONTHS FROM T HE DATE OF TRANSFER, AND SUCH INVESTMENT IS FALLING IN TWO FI NANCIAL YEARS BEING THE REASON FOR THE ASSESSING OFFICER TO ISSUE N OTICE U/S.148 OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE SUBSTANTIAT ED HIS ARGUMENTS THAT ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT AND RELIED ON THE DECISION OF AHMEDABAD TRIBUNAL IN THE CASE OF ASPI GINWALA AND OTHERS VS. ACIT 2010 44(2) ITCL 488 WHERE IT WAS HELD THAT EXEMPTION U/S.54EC OF THE ACT ALLOWED THOUGH INVESTMENT IN C APITAL GAIN ITA NO.30/MDS/2016. :- 4 -: EXEMPTIONS BONDS FALL IN TWO FINANCIAL YEARS BEING WITHIN THE PERIOD OF SIX MONTHS FROM THE SALE OF CAPITAL ASSET. THE PRO VISION OF SEC. 54EC ARE AMENDED WITH EFFECTIVE FROM 1.4.2015 APPLICAB LE FROM ASSESSMENT YEAR 2015-16 AND PROSPECTIVE IN NATURE W ERE THE LIMIT OF ?50,00,000/- INVESTMENT IS RESTRICTED TO ONE FINANC IAL YEAR ONLY. THE ASSESSEE MADE INVESTMENT AS PER LAW APPLICABLE PRIO R TO AMENDMENT OF PROVISO. BUT THE LD. ASSESSING OFFICER RELIED O N CBDT CIRCULAR NO.3/2008 AND PRESUMED THAT PERMISSIBLE INVESTMENT IN ONE FINANCIAL YEAR IS ?50,00,000/-. THE LD. AUTHORISED REPRESENT ATIVE SUPPORTED THE CASE WITH THE TRIBUNAL DECISION IN THE CASE OF SRI RAM INDUBAL VS. ITO WHICH THE LD. ASSESSING OFFICER DISTINGUISHED DEPA RTMENT HAS NOT ACCEPTED THE TRIBUNAL DECISION AND FILED AN APPEAL U/S.260A OF THE ACT IN HONBLE HIGH COURT OF MADRAS. AS PER THE PROV ISIONS OF SEC. 54EC OF THE ACT, THE CAPITAL GAINS NOT TO BE CHARGED ON INVESTMENTS MADE ON OR AFTER 1 ST APRIL, 2007 IN CAPITAL GAIN BONDS BY THE ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED ?50,00,000/-. T HE ASSESSING OFFICER ON HIS OWN UNDERSTANDING INTERPRETED THE SE CTION AND COMPLETED REASSESSMENT WITH ADDITION OF EXCESS CLA IM OF ?50,00,000/- AND CONFIRMED THE REASSESSMENT PROCEEDINGS AS VALID AND PASSED THE ORDER U/S.143(3) R.W.S 147 DATED 30.10.2014. AGGRIE VED BY THE ORDER, ITA NO.30/MDS/2016. :- 5 -: THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONE R OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE ARGUED THE FACTS AND GROUNDS ON THE VALIDITY OF REASSESSMENT PROCEEDINGS AND DISALLOWANCE OF ?50,0 0,000/- AS EXCESS CLAIM U/S. 54EC OF THE ACT AND SUPPORTED WITH THE T RIBUNAL DECISIONS AND JUDICIAL CITATIONS. THE LD. COMMISSIONER OF IN COME TAX (APPEALS) ON PERUSAL OF FACTS AND PROVISIONS OF LAW AND CBDT CIRCULAR ANALYZED THE CLAIM OF THE ASSESSEE ON PROVISIONS OF SEC. 54 EC AND INTERPRETED THAT THE INVESTMENTS MADE ON OR AFTER FIRST DAY OF APRIL, 2007 IN LONG TERM SPECIFIED ASSETS BY AN ASSESSEE DURING ANY FIN ANCIAL YEAR DOES NOT EXCEED ?50,00,000/-. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO RELIED ON THE MEANING OF ANY AS PER OXFORD ADVANCE LEARNERS DICTIONARY AND INTERPRETED THE PROVISIONS AND OBSER VED AT PAGE NO. 8 OF ORDER AS UNDER:- IN MY OPINION ANY MEANS ANY ONE FY YEAR ONLY AND NOT THE TWO F.Y. HENCE, I RESPECTFULLY DIFFER FROM THE JUDGMENTS GIVEN BY HONOURABLE HIGH COURT IN CASES REFERRED ABOVE AND HELD THAT ASSESSEE GET BENEFIT O F ONLY 50 LACS INVESTED IN FY 2010-11 AND BALANCE OF ?50 LACS INVESTED IN SUBSEQUENT F.Y. 2011-12 NEEDS TO B E DISALLOWED. HENCE, I UPHELD THE ORDER OF THE ASSES SING OFFICER AND THE ASSESSEES GROUND OF APPEAL ON THIS ACCOUNT IS DISMISSED. ITA NO.30/MDS/2016. :- 6 -: AND DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER, THE ASSESSEE ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITE RATED THE SUBMISSIONS MADE IN ASSESSMENT PROCEEDINGS AND APP ELLATE PROCEEDINGS AND THE PROVISIONS OF LAW, CBDT CIRCU LAR AND JUDICIAL DECISIONS. THE LD. AUTHORISED REPRESENTATIVE CHALL ENGED THE RE- ASSESSMENT PROCEEDINGS WERE THE COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN UPHOLDING THE JURISDICTION OF A SSESSING OFFICER IN REOPENING OF ASSESSMENT AND ALSO THERE IS NO NEW SE T OF FACTS WERE BROUGHT ON RECORD TO ISSUE NOTICE AND BUT ONLY MER E CHANGE OF OPINION AND NO ESCAPEMENT OF INCOME. THE ASSESSEE FILED LIST OF DATES OF EVENTS IN RESPECT OF SALE OF PROPERTY, ISSUE OF NOTICE U/SEC. 148 OF THE ACT AND OBJECTIONS. THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 31.12.2012 WERE ASSESSEE HAS DISCLOSED LONG TERM CAPITAL GAINS AND PRODUCED PURCHASE DEED AND S ALE DEED, REC BONDS AND COPIES OF BANK STATEMENTS WHICH THE ASSES SING OFFICER HAS VERIFIED AND PASSED THE ASSESSMENT ORDER. THEREF ORE, NOTICE ISSUED FOR RE-ASSESSMENT PROCEEDINGS IS ONLY A CHANGE OF OPINION AND OWN EVALUATION OF INTERPRETATION OF SECTION AND PRAYED FOR CANCELLING THE ORDER. ITA NO.30/MDS/2016. :- 7 -: 6. ON THE SECOND GROUND , THE LD. AUTHORISED REPRESENT ATIVE EXPLAINED THAT THERE IS NO DISPUTE ON THE LONG TERM CAPITAL GAINS CALCULATION AND INVESTMENTS BY THE ASSESSEE EXCEPT UNDERSTANDING THE PROVISIONS OF SEC.54EC (1) OF THE ACT WERE ASSESSEE HAS MADE INVESTMENTS IN REC BONDS OF ?50,00,000/- EACH ON 15 .03.2010 AND 13.05.2010 IN TWO FINANCIAL YEARS. THE LD. ASSESSIN G OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) HAS EXPRESSED THEIR OWN OPINION IN INTERPRETING THE DEFINITION AND THE DICT IONARY MEANING OF ANY IN THE PROVISIONS FURTHER ASSESSING OFFICER SUO-MOTU TOOK THE DECISION BY DISTINGUISHING JUDICIAL DECISION AND RE STRICTED ?50,00,000/- IS FOR ONE FINANCIAL YEAR ONLY AND EXCESS CLAIM WAS DISALLOWED. THE PROVISIONS OF SEC. 54EC OF THE ACT ARE BENEFICIAL P ROVISION AND TO BE CONSTRUED LIBERALLY. THE INVESTMENT BY THE ASSESSEE IN SEC. 54EC BONDS WITHIN THE PERIOD OF SIX MONTHS FROM DATE OF SALE OF PROPERTY IS AS PER LAW AND SUPPORTED THE SUBMISSIONS WITH THE JURISDICTIONAL HIGH COURT DECISIONS AND PRAYED FOR ALLOWING THE APPEAL. 7. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES, CBDT CIRCULAR SPIR IT OF AMENDMENT OF SEC. 54EC VEHEMENTLY OPPOSED THE GROUNDS OF THE A SSESSEE. 8. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD, JUDICIAL DECISIONS AND CIRCULAR OF THE REVE NUE. THE ARGUMENT ITA NO.30/MDS/2016. :- 8 -: OF THE LD. AUTHORISED REPRESENTATIVE ON RE-ASSESSME NT PROCEEDINGS ON THE ISSUE OF NOTICE U/S148 IS ONLY DUE TO CHANGE OF OPINION AND NO NEW SET OF FACTS AND THE PROVISIONS U/S.54EC IN INV ESTMENT IN BONDS IS AS UNDER:- PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1 ST DAY OF APRIL, 2007 IN THE LONG TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES THIS PROVISION HAS BEEN AMENDMENT BY FINANCE ACT, 2 014 W.E.F. 1.04.2015 AS UNDER:- PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN ASSESSEE IN THE LONG TERM SPECIFIED ASSET, FROM CAP ITAL GAINS ARISING FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL YEAR IN WHICH THE ORIG INAL ASSET OR ASSETS ARE TRANSFERRED AND IN THE SUBSEQUE NT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEEES . ON COMBINED READING OF BOTH THE PROVISIONS, THE LE GISLATIVE INTENT IN THE SUBSEQUENT AMENDMENT IS TO RESTRICT THE INVESTM ENT OF ?50,00,000/- TO ONE FINANCIAL YEAR ONLY. THERE W AS AMBIGUITY AND CONFUSION ON INTERPRETING THE PROVISIONS AS THE COM MISSIONER OF INCOME TAX (APPEALS) HAS EXAMINED THE ISSUE ON THE INTERPRETING THE WORD ANY REFERRING TO DICTIONARY MEANING BECAUS E THERE WAS NO CERTAINTY WAS VISUALIZED CONSIDERING THE PROVISIONS , CBDT CIRCULARS AND FACTS OF THE CASE. THE ASSESSING OFFICER PASSED OR DER U/S.143(3) ON ITA NO.30/MDS/2016. :- 9 -: 30.10.2014 AND REFERRED THAT THE ASSESSEE HAS PRODU CED PURCHASE AND SALE OF INVESTMENT DETAILS BUT HAS NOT GIVEN ANY FI NDINGS ON INVESTMENT ISSUE IN ASSESSMENT ORDER. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE APPARENT FACTS AND AMENDMENT OF TH E SECTION 54EC AND INTERPRETATION OF WORDS THE RE-ASSESSMENT PROCE EDINGS ARE IN ACCORDANCE WITH LAW AND WE ARE NOT INCLINED TO INTE RFERE WITH THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSU E OF VALIDITY OF ASSESSMENT AND UPHOLD THE SAME. 9. ON THE SECOND GROUND, THE ASSESSEE HAS INVESTED LONG TERM CAPITAL GAINS WITHIN SIX MONTHS FROM THE DATE OF TR ANSFER OF ASSET IN RURAL ELECTRIFICATION CORPORATION BONDS UNDER SEC.5 4EC OF THE ACT AND COMPLIED WITH THE PROVISIONS IN MARCH, 2010 ?50,00, 000/- AND ?50,00,000/- IN MAY, 2010 BOTH FALLS WITHIN SIX MON THS FROM DATE OF TRANSFER OF ASSET AND THERE IS NO DISPUTE ABOUT THE INVESTMENT. THE ASSESSING OFFICER TRIED TO MAKE A DISTINCTION OF PR OVISIONS FOR RESTRICTING INVESTMENT OF ?50,00,000/- ONLY IN ONE FINANCIAL YE AR. THE ASSESSEE HAS INVESTED IN TWO INSTALLMENTS FALLING IN TWO FIN ANCIAL YEARS AND AVAILED TAX EXEMPTION. AMENDMENT OF PROVISION OF S EC.54EC IN FINANCE ACT, 2014 ARE PROSPECTIVE AND APPLY FROM 01 .04.2015 APPLICABLE FROM ASSESSMENT YEAR 2015-16 ONWARDS. WE CONSIDERING ITA NO.30/MDS/2016. :- 10 -: THE FACTS AND AMENDMENT OF PROVISIONS RELY ON THE J URISDICTIONAL HIGH COURT DECISION OF CIT VS. C. JAICHANDER 370 ITR 579 (MAD) AND CIT VS. CORAMANDEL INDUSTRIES LTD 370 ITR 586 (MAD) AND SETASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION AND ALLOW THIS GROUND IN FAVOUR OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 18 TH DAY OF MARCH, 2016 AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) # $% / ACCOUNTANT MEMBER ( & . ' ( ) (G. PAVAN KUMAR) ) $% / JUDICIAL MEMBER *& / CHENNAI + / DATED: 18TH MARCH, 2016. KV , ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 2. $% ! / RESPONDENT 3. 1' () / CIT(A) 4. 1' / CIT 5. /4 5 $'6 / DR 6. 5 7 8 & / GF