Lt.Col.Virender Singh, Gurgaon V. ITO, Ward-4(4), Gurgaon

ITA 4436/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2882 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 04-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R MISHRA
• Keywords: Capital asset; Additional evidence; Cost of acquisition; Reasonable cause; Benefit of exemption
• Section: 2(14); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.4436/DEL/2017 ASSESSMENT YEAR : 2007-08 LT. COL. VIRENDER SINGH, I-7051, DAVINDER VIHAR, SECTOR-56, GURGAON, HARYANA. VS. ITO, WARD- 4(4), GURGAON, HARYANA. PAN : AKJPS0190E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADV. DEPARTMENT BY : SHRI B. R. MISHRA, SR.DR DATE OF HEARING : 13-02-2018 DATE OF PRONOUNCEMENT : 16-03-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 19.05.2017 OF CIT(A)-1, GURGAON RELATING TO ASSESSM ENT YEAR 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL. HE HAD SOLD HIS LAND SITUATED AT VILLAGE BAKKARWALA, DELHI TO M/S PRABHU RAM BUILDWELL PVT. LTD. FOR A CONSIDERATION OF RS.1,80, 20,833/- IN WHICH THE ASSESSEE HAD 1/3 RD SHARE. THE ASSESSEES SHARE CAME TO RS.60,06,944/ - AND AFTER ALLOWING THE INDEXED COST OF ACQUISITION, THE LONG TERM CAPI TAL GAINS WORKED OUT TO RS.41,39,905/-. THE ASSESSEE CLAIMED THAT HE HAD P URCHASED CAPITAL GAIN TAX EXEMPTION BONDS ISSUED BY THE RURAL ELECTRIFICATION CORPORATION LTD. AMOUNTING TO RS.42 LAKHS ON 27.10.2007 AND CLAIMED DEDUCTION U/S 54EC OF THE 2 ITA NO.4436/DEL/2017 I.T. ACT. THE ASSESSING OFFICER POINTED OUT THAT T HE ASSESSEE HAD TRANSFERRED HIS CAPITAL ASSETS ON 10.10.2006 AND THE INVESTMENT FOR PURCHASE OF RURAL ELECTRIFICATION BOND WERE REQUIRED TO BE MADE WITHI N SIX MONTHS FROM THE TRANSFER OF THE CAPITAL ASSETS. SINCE INVESTMENT W AS MADE BEYOND THIS PERIOD, THE ASSESSING OFFICER DID NOT ALLOW THE DEDUCTION U /S 54EC OF THE I.T. ACT. 3. IN APPEAL, THE LD. CIT(A) DISMISSED THE APPEAL O F THE ASSESSEE. THE ASSESSEE THEREAFTER FILED THE APPEAL BEFORE THE TRI BUNAL. BEFORE THE TRIBUNAL, THE ASSESSEE TOOK AN ADDITIONAL GROUND OF APPEAL THAT T HE LAND SOLD BY THE ASSESSEE WAS NOT A CAPITAL ASSET AND THEREFORE THE CAPITAL G AIN ARISING ON THE TRANSFER OF LAND WAS NOT TAXABLE. THE ASSESSEE ALSO FILED CERT AIN ADDITIONAL EVIDENCES WITH REGARD TO THIS ADDITIONAL GROUND OF APPEAL. THE TR IBUNAL ADMITTED THE ADDITIONAL EVIDENCE AND ADDITIONAL GROUND OF APPEAL AND RESTOR ED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER VIDE ORDER DATED 27.06.2014 BY OB SERVING AS UNDER :- WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. ON A PERUSAL OF THE SAME, WE ARE OF THE VIEW THAT T HE GROUND RAISED BY THE ASSESSEE IN TERMS OF NATURE OF LAND U/S 2(14) OF THE ACT IS A L EGAL GROUND, AS SUCH IN THE INTEREST OF SUBSTANTIAL JUSTICE IN ORDER TO DECIDE THE ISSUE OF TAXABILITY OF THE SPECIFIC INCOME STATED TO HAVE ARISEN AS A RESULT OF SALE OF A SPEC IFIC LAND THE ISSUE IS GERMANE AND GOES TO THE ROOT OF THE MATTER, THE SAME IS DIRECTE D TO BE ADMITTED. CONSIDERING THE PLEA OF ADDITIONAL EVIDENCE, WE ALSO HOLD THAT THE SAME IS RELEVANT AND CRUCIAL FOR DETERMINING THE ISSUE AS SUCH THE SAME IS ALSO DIRE CTED TO BE ADMITTED. THE PRAYER OF THE LD. SR. DR, MR. SAMEER SHARMA THAT THE ISSUE HA S TO BE RESTORED TO THE AO HAS MERIT AS THE FACTS NECESSARILY ARE REQUIRED TO BE L OOKED INTO AT THE STAGE OF THE ASSESSING OFFICER. ACCORDINGLY, WE DEEM IT APPROPR IATE AFTER ADMITTING THE ADDITIONAL GROUND AND THE ADDITIONAL EVIDENCE TO RESTORE THE I SSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO ADJUDICATE UPON THEREON BY WAY OF A SPEAKING ORDER IN ACCORDANCE WITH LAW. THE ADDITIONAL EVIDE NCE FILED BY THE ASSESSEE NEEDLESS TO SAY SHALL BE TAKEN INTO CONSIDERATION WHILE DECI DING THE ISSUE. THE ASSESSEE WOULD BE AT LIBERTY TO PLACE WHATEVER OTHER EVIDENCE IT H AS IN ITS POSSESSION ORDER TO SUPPORT ITS CLAIM. IN THE RESULT, THE APPEAL OF THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES. 3 ITA NO.4436/DEL/2017 4. AS THE TRIBUNAL HAD RESTORED THE SPECIFIC ISSUE OF ADDITIONAL GROUND TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO C ONSIDER THE ADDITIONAL EVIDENCE, THE ASSESSING OFFICER GAVE AN OPPORTUNITY TO THE AS SESSEE TO SUBMIT EVIDENCE WITH REGARD TO THE CLAIM THAT THE LAND SOLD WAS NOT A CAPITAL ASSET. THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE SPE CIFICALLY ASKING HIM TO FURNISH THE EVIDENCE WITH REGARD TO THE DISTANCE OF THE ASSESSEES LAND FROM THE NEAREST MUNICIPAL LIMIT. THE ASSESSEE FAILED TO FU RNISH THE NECESSARY REQUISITE DOCUMENTS EXCEPT THE LETTER ISSUED BY THE TEHSILDAR , ACCORDING TO WHICH, LAND SOLD BY THE ASSESSEE WAS AGRICULTURAL LAND WHICH CA ME UNDER THE RURAL VILLAGE BAKKARWALA AND WHICH WAS MORE THAN 8 KM. FROM THE U RBANIZED VILLAGE PEERAGARHI. SINCE THERE WAS NO MENTION OF THE DIST ANCE OF THE LAND SOLD BY THE ASSESSEE FROM THE NEAREST MUNICIPAL LIMITS IN THE L ETTER, THE ASSESSING OFFICER HELD THAT THE LAND WAS NOT A CAPITAL ASSET AND ACCO RDINGLY HELD THAT THE TRANSFER OF THIS LAND AMOUNTING TO RS.41,39,905/- IS CHARGEA BLE TO TAX. 5. BEFORE THE LD. CIT(A), THE ASSESSEE TOOK A PLEA THAT THE LAND IS MORE THAN 8 KM. FROM THE URBANIZED VILLAGE PEERAGARHI. HOWEV ER, THE LD. CIT(A) DISMISSED THE ABOVE CONTENTION OF THE ASSESSEE ON T HE GROUND THAT IN VIEW OF THE PROVISIONS OF SECTION 2(14), THE LAND SOLD BY THE A SSESSEE FALLS WITHIN THE SCOPE OF THE TERM CAPITAL ASSET SINCE THE SAID LAND IS SITUATED WITHIN THE LIMIT OF MUNICIPAL LIMIT OF DELHI AND WAS WITHIN THE JURISDI CTION OF MUNICIPALITY AND THE 4 ITA NO.4436/DEL/2017 LAND WAS NOT RURAL AGRICULTURAL LAND BUT WAS A CAPI TAL ASSETS WITHIN THE MEANING OF SECTION 2(14) OF THE I.T. ACT. 6. SO FAR AS ARGUMENT OF THE ASSESSEE THAT HE HAS I NVESTED IN RURAL ELECTRIFICATION BOND U/S 54EC IS CONCERNED, HE HELD THAT THIS WAS ALREADY CONSIDERED BY THE LD. CIT(A), WHO DISMISSED THE APP EAL OF THE ASSESSEE AND UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER. THE ASSESSEE HAD FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A). THE ASSESSEE HAD ALSO RAISED AN ADDITIONAL GROUND BEFORE THE TRI BUNAL THAT THE LAND SOLD BY THE ASSESSEE WAS NOT A CAPITAL ASSET. UNDER THESE CIRCUMSTANCES THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S 54EC IS BEYOND HIS JU RISDICTION. HE ACCORDINGLY DISMISSED THE GROUND RAISED BY THE ASSESSEE. 7. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BA D, BOTH IN THE EYES OF LAW AND ON FACTS. 2. (I) WITHOUT PREJUDICE TO THE ABOVE AND IN THE AL TERNATE LD. CIT(A) HAS BEEN ERRED, BOTH ON FACTS AND IN LAW, IN CONFIR MING THE ACTION OF THE AO IS NOT ALLOWING EXEMPTION U/S 54EC, DESPITE THE ASSESSEE FULFILLING ALL THE ELIGIBILITY CONDITION. (II) THAT THE ABOVE SAID HAS BEEN DONE REJECTING TH E CONTENTION OF THE ASSESSEE THAT THE INVESTMENT IN SPECIFIED BONDS HAVING NOT BEEN MADE WITHIN THE PRESCRIBED PERIOD WAS FOR THE REASO N BEYOND THE CONTROL OF THE ASSESSEE. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS OF APPEAL. 5 ITA NO.4436/DEL/2017 8. LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 8 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH TO THE APPLICATION DATED 23.07.2007 FOR PURCHASE OF RURAL ELECTRIFICATION BONDS WITH BENEFIT OF SECTION 54EC OF THE I.T. ACT. REFERRING TO PAGE 9 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE RURAL ELECTRIFICATION BONDS CERTIFICATE ISSUED BY T HE RURAL ELECTRIFICATION CORPORATION LIMITED. HE SUBMITTED THAT IN THE INST ANT CASE LAND WAS SOLD ON 25.10.2006 FOR A CONSIDERATION OF RS.1.80 CRORES IN WHICH THE ASSESSEE HAD 1/3 RD SHARE. THE SHARE OF THE ASSESSEE CAME TO RS.6,06,9 54/- AND THE LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE ON THE SALE OF THE PROP ERTY WAS RS.41,905/-. HE SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 54E C, THE DUE DATE OF INVESTMENT WAS UPTO 25.04.2007. HE SUBMITTED THAT AS MENTIONE D EARLIER THE BONDS WERE NOT AVAILABLE IN THE MARKET BETWEEN 31.03.2007 TO 0 2.07.2007 AND THE ASSESSEE INVESTED IN SUCH RURAL ELECTRIFICATION BONDS WHEN T HEY WERE AVAILABLE, THEREFORE, THE ASSESSEE IS ENTITLED TO BENEFIT U/S 54EC OF THE I.T. ACT. 9. REFERRING TO THE DECISION OF THE HONBLE KARNATA KA HIGH COURT IN THE CASE OF DR. (SMT.) SUJATHA RAMESH VS. CBDT IN WRIT PETIT ION NO.54672/2015 ORDER DATED 24.10.2017, HE SUBMITTED THAT THE HON'BLE HIG H COURT IN THE SAID DECISION HAS HELD THAT IN CASE THE INVESTMENT COULD NOT BE M ADE BY THE ASSESSEE WITHIN THE PRESCRIBED PERIOD DUE TO BONA-FIDE REASON, THE BENEFIT OF EXEMPTION U/S 54EC SHOULD STILL BE MADE AVAILABLE TO THE ASSESSEE . REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO V S. PHANSALKAR SUMAN 6 ITA NO.4436/DEL/2017 JAISHRIKRISHNA VIDE ITA NO.2118/PN/2012 ORDER DATED 27.12.2013, HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THA T THE ASSESSEE CANNOT BE DENIED THE BENEFIT OF EXEMPTION U/S 54EC ON ACCOUNT OF PUR CHASE OF RURAL ELECTRIFICATION BONDS AFTER THE SPECIFIED DATE AS T HE SAME WERE NOT AVAILABLE BETWEEN 01.04.2008 TO 26.05.2008. THE GROUND BY TH E REVENUE THAT THE BONDS WERE AVAILABLE UPTO 31.03.2008 HAS GOT NO MERITS IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT WHEREIN IT HAS BEEN HELD THAT THE TIME GIVEN BY THE STATUTE TO INVEST BONDS U/S 54EC IS 06 MONTHS FROM THE DATE OF SALE AND, THEREFORE, THE ASSESSEE IS ENTITLED IN LAW TO WAIT TILL THE LAST DATE TO INVEST IN THE BONDS. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) AL LOWING THE BENEFIT OF DEDUCTION U/S 54EC WAS UPHELD AND THE GROUNDS RAISE D BY THE REVENUE WERE DISMISSED. 10. HE ALSO REFERRED TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CELLO PLAST VS. DCIT VIDE ITA NO.2200/M UM/2009 ORDER DATED 19.01.2010 WHICH HAS BEEN UPHELD BY THE HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. CELLO PLAST IN ITA NO.3731 OF 2010 ORDER DATED 27.07.2012. HE ALSO RELIED ON VARIOUS OTHER DECISIONS. 11. LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE LD. CIT(A). 12. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE T O BE DECIDED IN THE INSTANT APPEAL IS REGARDING THE BENEFIT OF DEDUCTION U/S 54 EC ON ACCOUNT OF PURCHASE OF 7 ITA NO.4436/DEL/2017 RURAL ELECTRIFICATION BONDS AFTER THE SPECIFIED TIM E. I FIND IN THE INSTANT CASE THE ASSESSEE SOLD THE CAPITAL ASSET ON 25.10.2006 AND, THEREFORE, FOR CLAIMING DEDUCTION U/S 54EC, HE SHOULD HAVE MADE THE INVESTM ENT ON OR BEFORE 25.04.2007 I.E. WITHIN SIX MONTHS FROM THE DATE OF EARNING OF THE CAPITAL GAIN. HOWEVER, IN THE INSTANT CASE THE ASSESSEE HAS INVES TED IN RURAL ELECTRIFICATION BONDS ON 23.07.2007. THE SUBMISSION OF THE LD. COU NSEL FOR THE ASSESSEE THAT THE RURAL ELECTRIFICATION BONDS WERE NOT AVAILABLE BETWEEN 31.03.2007 TO 02.07.2007 COULD NOT BE CONTROVERTED BY THE LD. DR. UNDER THESE CIRCUMSTANCES, IT HAS TO BE ADJUDICATED AS TO WHETH ER THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 54EC WHEN SUCH BONDS WERE NOT PURCHAS ED DURING THE TIME LIMIT AS PRESCRIBED U/S 54EC BUT WERE PURCHASED SUBSEQUEN T TO THE DATE WHEN SUCH BONDS WERE MADE AVAILABLE IN THE MARKET. 13. I FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CA SE OF PHANSALKAR SUMAN JAIKRISHNA (SUPRA) UNDER IDENTICAL FACTS AND CIRCUM STANCES HAS ALLOWED THE CLAIM OF DEDUCTION U/S 54EC BY OBSERVING AS UNDER :- 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS D ECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE ASSESSING OFFICER DENIED TH E CLAIM OF EXEMPTION U/S.54EC ON THE GROUND THAT THE ASSESSEE HAS PURCHASED THE RURA L ELECTRIFICATION BONDS ON 30-06- 2008 AS AGAINST THE STATUTORY DUE DATE OF 04-05-200 8 OR BEFORE THAT DATE. THE SUBMISSION BEFORE THE ASSESSING OFFICER THAT ISSUE OF NHAI AND REC BONDS WERE OPEN UPTO 31-03-2008 AND WERE NOT OPEN DURING THE P ERIOD WHEN THE ASSESSEE WAS SUPPOSED TO INVEST AND THAT THE NEW ISSUES WERE RE- OPENED IN CASE OF NHAI ON 26-05- 2008 AND IN CASE OF REC ON 28-05-2008 HAS NOT BEEN CONTROVERTED BY THE REVENUE. THUS, BETWEEN IST APRIL 2008 TO 26TH MAY 2008 SPECI FIED BONDS WERE NOT AVAILABLE IN THE MARKET AND NEW ISSUES WERE OPENED IN CASE OF NH AI ON 26-05-2008 AND IN CASE OF 8 ITA NO.4436/DEL/2017 REC ON 28-06-2008. THE ASSESSEE HAS INVESTED IN THE PURCHASE OF RURAL ELECTRIFICATION BONDS ON 30-06- 2008. 5.1 WE FIND UNDER SOMEWHAT SIMILAR CIRCUMSTANCES TH E MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CELLO PLAST (SUPRA) HA S ALLOWED THE CLAIM OF EXEMPTION U/S.54EC ON THE GROUND THAT THERE WAS A REASONABLE CAUSE IN NOT PURCHASING THE SPECIFIED BONDS WITHIN THE STATUTORY TIME ALLOWED A S THEY WERE NOT AVAILABLE IN THE MARKET AND THE ASSESSEE IMMEDIATELY PURCHASED THE B ONDS AS SOON AS THEY WERE AVAILABLE AND THEREFORE THE ASSESSEE WAS ELIGIBLE F OR EXEMPTION U/S.54EC. WE FIND ON FURTHER APPEAL BY THE REVENUE THE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. CELLO PLAST REPORTED IN 253 CTR (BOMBAY) 246 HAS OB SERVED AS UNDER : '17. THE SUBMISSIONS ARE NOT WELL FOUNDED. THE REC BONDS COULD NOT BE PURCHASED AS THEY WERE NOT AVAILABLE THROUGHOUT THE PERIOD OF SIX MONTHS COMMENCING FROM THE DATE OF THE SALE OF THE FACTORY BY THE RESPONDENTS AND EVEN THEREAFTER TILL THE EXTENDED DATE OF 31/12/200 6 UNDER THE CBDT CIRCULAR. THAT THE BONDS WERE AVAILABLE FOR A LIMITED TIME DU RING THIS PERIOD BETWEEN 1/7/2006 TO 31/8/2008, MAKES NO DIFFERENCE. THE RES PONDENTS HAD TIME TILL 21/9/2006, TO INVEST IN THESE BONDS TO AVAIL THE BE NEFIT UNDER SECTION 54EC. SECTION 54EC ENTITLES A PERSON TO AVAIL OF THE RIGH T CONFERRED THEREBY AT ANY TIME DURING THE PERIOD OF SIX MONTHS FROM THE DATE OF SALE OF THE ASSET. THE RESPONDENTS CANNOT BE DEPRIVED OF THIS RIGHT CONFER RED BY THE ACT FOR NO FAULT OF THEIRS. THUS, THE AVAILABILITY OF THE BONDS ONLY FOR A LIMITED TIME DURING THIS PERIOD CANNOT PREJUDICE THE ASSESSEE'S RIGHT TO EXE RCISE THE SAME UPTO THE LAST DATE. THE BONDS WERE ADMITTEDLY NOT AVAILABLE EXCEP T DURING THE SAID PERIOD. 18. LEX NOT COGIT IMPOSSIBILA (LAW DOES NOT COMPEL A MAN TO DO THAT WHICH HE CANNOT POSSIBLY PERFORM) AND IMPOSSIBILUM NULLA OBLIGNTO EST (LAW DOES NOT EXPECT A PARTY TO DO THE IMPOSSIBLE) ARE WELL KNOWN MAXIMS IN LAW AND WOULD SQUARELY APPLY TO THE PRESENT CASE. THE STATUE VIZ. SECTION 54EC OF THE ACT PROVIDES FOR EXEMPTION FROM TAX TO LONG TERM CAPITA L GAIN PROVIDED THE SAME IS INVESTED IN BONDS OF RURAL ELECTRIFICATION CORPORAT ION LIMITED OR NATIONAL HIGHWAY AUTHORITY OF INDIA. HOWEVER, AS THE BONDS W ERE NOT AVAILABLE, IT WAS IMPOSSIBLE FOR THE RESPONDENT-ASSESSEE TO INVEST IN THEM WITHIN SIX MONTHS OF THE SALE OF THEIR FACTORY BUILDING. THEREFORE, IN T HE CIRCUMSTANCE ONE WOULD HAVE TO INTERPRET SECTION 54EC OF THE ACT TO ENSURE THAT IT DOES NOT LEAD TO INJUSTICE. THE APEX COURT IN THE MATTER OF DIRECTOR ATE OF ENFORCEMENT VS. DEEPAK MAHAJAN REPORTED IN 1994(3) SCC 440 OBSERVED AS UNDER: 'THOUGH THE FUNCTION OF THE COURT IS ONLY TO EXPOUN D THE LAW AND NOT LEGISLATE, NONE THE LESS THE LEGISLATURE CANNOT BE ASKED TO SI T TO RESOLVE THE DIFFICULTIES IN THE IMPLEMENTATION OF ITS INTENTION AND THE SPIRIT OF THE LAW. IN SUCH CIRCUMSTANCES, IT IS THE DUTY OF THE COURT TO MOULD OR CREATIVELY INTERPRET THE LEGISLATION BY LIBERALLY INTERPRETING THE STATUE'. THEREFORE, IN THE PRESENT FACTS, THE SIX MONTHS PRO VIDED FOR INVESTING IN BONDS MAY BE REASONABLY EXTENDED IN VIEW OF THE NON AVAIL ABILITY OF BONDS TILL 22/1/2007. 19. THE CONTENTION OF THE APPELLANT REVENUE THAT RU RAL ELECTRIFICATION BONDS WERE AVAILABLE UPTO 3/8/2006 AND THE RESPONDE NT ASSESSEE SHOULD HAVE PURCHASED THE BONDS BEFORE 3/8/2006 IS NOT SUSTAINA BLE AS THE TIME GIVEN BY THE STATUE TO INVEST IN BONDS UNDER SECTION-54EC OF THE ACT IS SIX MONTHS FROM 9 ITA NO.4436/DEL/2017 THE DATE OF SALE AND, THEREFORE, THE RESPONDENT WAS ENTITLED IN LAW TO WAIT TILL 21/9/2006 TO INVEST IN THE BONDS. 20. THERE REMAINS AN IMPORTANT ASPECT OF SOME DIFFI CULTY TO BE CONSIDERED VIZ. THE EXTENT TO AND PRECISE PERIOD DURING WHICH THE EXTENSION OUGHT TO BE GRANTED TO AVAIL THE BENEFIT OF THE PROVISIONS OF S ECTION 54EC WHEN THE BONDS REFERRED TO THEREIN ARE NOT AVAILABLE. THESE ASPECT S WOULD HAVE TO BE DETERMINED, BASED ON TWO FACTORS - THE DURATION WHE N THE BONDS WERE NOT AVAILABLE, AND THE PERIOD DURING WHICH TO WIT THE P OINT OF TIME DURING THE SIX MONTHS OR THE EXTENDED PERIOD, IF ANY, WHEN THEY WE RE NOT AVAILABLE. FOR INSTANCE, THE BONDS MAY NOT HAVE BEEN AVAILABLE AT THE COMMENCEMENT OF THE SIX MONTHS PERIOD OR FOR A BROKEN PERIOD OR PERIODS DURING THE SIX MONTHS OR TOWARDS THE END OF THE SIX MONTHS. 21. IT IS DIFFICULT TO LAY DOWN ANY PARTICULAR RULE IN THIS REGARD. WE THINK IT BOTH PRUDENT AND PROPER TO CONSIDER ONLY THE CASE B EFORE US AND ONLY TO THE EXTENT WHERE THE BONDS WERE NOT AVAILABLE PRIOR TO THE EXPIRY OF THE SIX MONTH PERIOD, INCLUDING THE LAST DAY. A PERSON IS ENTITLE D, AS WE HAVE HELD EARLIER, TO INVEST IN THE SAID BONDS UPTO THE LAST AVAILABLE DA TE. IF THAT BE SO, IT MUST FOLLOW THAT THE EXTENSION OUGHT TO BE GRANTED AT LE AST FOR THE PERIOD PRIOR TO THE EXPIRY OF SIX MONTHS WHEN THE BONDS WERE NOT AV AILABLE AND UPTO THE DATE ON WHICH THEY WERE ULTIMATELY MADE AVAILABLE. IN AN Y EVENT, IN SUCH A CASE AN ASSESSEE WOULD BE ENTITLED TO A REASONABLE EXTENSIO N WHICH MUST THEN BE DECIDED, DEPENDING UPON THE FACTS OF EACH CASE. A P ERSON CANNOT BE EXPECTED TO MAKE THE INVESTMENT ON THE FIRST POSSIBLE DATE O N WHICH THE BONDS WERE MADE AVAILABLE AFTER THE EXPIRY OF THE SIX MONTHS P ERIOD OR ANY EXTENDED DATE PRESCRIBED BY THE CBDT. DURING THE PERIOD THE BONDS WERE UNAVAILABLE A PERSON IS LIKELY TO INVEST THE AMOUNT ELSEWHERE. TO EXPECT OR REQUIRE HIM NOT TO DO SO WOULD BE UNJUST FOR REASONS TOO OBVIOUS TO STATE. HE CANNOT THEN BE EXPECTED AT A DAY'S NOTICE TO BREAK THE INVESTMENT AND TRANSFER THE SAME TO THE BONDS STIPULATED IN SECTION 54EC. 22. IN THE PRESENT CASE, THE BONDS WERE NOT AVAILAB LE FROM 4/8/2006 TO 22/1/2007. THE LAST DATE FOR INVESTMENT IN THE NORM AL COURSE WOULD HAVE BEEN 21/9/2006 WHICH WAS EXTENDED UPTO 31/12/2006. THE R ESPONDENTS OUGHT TO BE ENTITLED TO AN EXTENSION OF THE NUMBER OF DAYS BETW EEN 4/8/2006 TO 21/9/2006 AT THE VERY LEAST AND, IN ANY EVENT, TO A REASONABL E EXTENSION. THE RESPONDENTS ADMITTEDLY INVESTED IN THE BONDS ON 31/1/2007 I.E. WITHIN NINE DAYS OF THEIR BEING AVAILABLE ONCE AGAIN FROM 22/1/2007. CONSIDER ING THAT THE BONDS WERE NOT AVAILABLE FOR SUCH A LONG PERIOD, AN EXTENSION OF MERELY NINE DAYS IS EXTREMELY REASONABLE IN THE PRESENT FACTS. 23. THE FIRST TWO GROUNDS ARE, THEREFORE, REJECTED. AT THE COST OF REPETITION, WE MAKE IT CLEAR THAT WE HAVE NOT EXPRESSED ANY OPINION AS TO THE EXTENT AND SPECIFIC PERIOD OF EXT ENSION IN ANY OTHER SITUATION, INCLUDING WHERE THE BONDS MAY NOT HAVE BEEN AVAILAB LE ONLY FOR A DAY OR TWO PRIOR TO THE EXPIRY OF THE SIX MONTHS PERIOD. 24. THIRDLY, MR. SURESH KUMAR SUBMITTED THAT THE RE SPONDENT IN ANY CASE COULD HAVE PURCHASE THE BONDS OF THE NATIONAL HIGHW AY AUTHORITY WHICH WAS AN ALTERNATIVE MODE OF INVESTMENT PROVIDED FOR AVAI LING THE BENEFIT OF SECTION 54EC. AS THE RESPONDENT-ASSESSEE HAS NOT CHOSEN TO PURCHASE THE BONDS OF 10 ITA NO.4436/DEL/2017 NATIONAL HIGHWAY AUTHORITY OF INDIA IT CANNOT CLAIM THE BENEFIT OF SECTION 54EC OF THE SAID ACT AND THE AMOUNT OF RS.49.36 LAC S IS CORRECTLY CHARGEABLE TO CAPITAL GAIN TAX. 25. THIS SUBMISSION IS ALSO NOT WELL FOUNDED. SECTI ON 54EC OF THE ACT HAVING GIVEN THE RESPONDENT A CHOICE OF INVESTING E ITHER IN THE BONDS OF RURAL ELECTRIFICATION CORPORATION LIMITED OR THE NATIONAL HIGHWAY AUTHORITY, THE REVENUE CANNOT INSIST THAT THE RESPONDENT OUGHT TO HAVE INVESTED ITS CAPITAL GAIN ON SALE OF PROPERTY IN THE BONDS OF THE NATION AL HIGHWAY AUTHORITY. 26. THE STATUE ITSELF PROVIDES THAT THE ASSESSEE, W HO IS SUBJECT TO LONG TERMS CAPITAL GAIN TAX, CAN AVAIL OF EXEMPTION UNDE R SECTION 54EC OF THE ACT IF HE INVESTS IN BONDS OF EITHER THE NATIONAL HIGHWAY AUTHORITY OF INDIA OR THE RURAL ELECTRIFICATION CORPORATION LIMITED. THE CHOI CE OF INVESTING IN ONE OF THE TWO ORGANIZATIONS IS WITH THE RESPONDENT AND TH E APPELLANT REVENUE CONTRARY TO THE STATUE CANNOT FORCE THE RESPONDENT TO INVEST ONLY IN THE BONDS OF ONE IN PREFERENCE TO THE OTHER. THE CHOICE OF WH ICH BONDS TO PURCHASE IS ENTIRELY WITH THE RESPONDENT AND IN CASE THE BONDS OF RESPONDENT'S CHOICE ARE NOT AVAILABLE AS IS PROVED IN THE PRESENT CASE, THE TIME TO INVEST IN THE BONDS GET AUTOMATICALLY EXTENDED TILL THE BONDS ARE AVAIL ABLE IN THE MARKET AND THE ASSESSEE CAN PURCHASE THE SAME. 27. IN VIEW OF THE ABOVE WE ANSWER QUESTION (A) IN THE NEGATIVE I.E. IN FAVOUR OF THE APPELLANT REVENUE AND AGAINST THE RES PONDENT. SO FAR AS QUESTIONS (B) AND (C) ARE CONCERNED THE SAME ARE AN SWERED IN FAVOR OF THE RESPONDENT ASSESSEE AND AGAINST THE APPELLANT-REVEN UE.' 5.2 SINCE THE FACTS IN THE IMPUGNED CASE IS IDENTIC AL TO THE FACTS OF THE CASE CITED (SUPRA), THEREFORE, RESPECTFULLY FOLLOWING THE DECI SION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CELLO PLAST (SUPRA) WE HOLD THAT THE ASSESSEE IN THE INSTANT CASE CANNOT BE DENIED THE BENEFIT OF EXEMPTION U/S.54EC ON ACCO UNT OF PURCHASE OF RURAL ELECTRIFICATION BONDS AFTER THE SPECIFIED DATE AS T HE SAME WERE NOT AVAILABLE BETWEEN 01-04-2008 TO 26-05-2008. THE GROUND BY THE REVENUE THAT THE BONDS WERE AVAILABLE UPTO 31-03-2008 AND THE ASSESSEE COULD HAVE PURCHAS ED THE SAME BEFORE 31-03-2008 HAS GOT NO MERITS IN VIEW OF THE DECISION OF THE JU RISDICTIONAL HIGH COURT CITED (SUPRA) WHEREIN IT HAS BEEN HELD THAT THE TIME GIVE N BY THE STATUTE TO INVEST BONDS U/S.54EC OF THE ACT IS 6 MONTHS FROM THE DATE OF SA LE AND THEREFORE THE ASSESSEE IS ENTITLED IN LAW TO WAIT TILL THE LAST DATE TO INVES T IN THE BONDS. IN THIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS I SSUE AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 14. SINCE IN THE INSTANT CASE THE FACTS ARE IDENTIC AL TO THE FACTS DECIDED BY THE PUNE BENCH OF THE TRIBUNAL TO WHICH I AM A PARTY, T HEREFORE, FOLLOWING THE SAID DECISION I HOLD THAT THE ASSESSEE IS ENTITLED TO DE DUCTION U/S 54EC OF THE I.T. 11 ITA NO.4436/DEL/2017 ACT. IN VIEW OF THE ABOVE DISCUSSIONS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH MARCH, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 16-03-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI