ITO WD 13(1)(3), MUMBAI V. H.R. TRADING CO., MUMBAI

ITA 4961/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75740 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 06-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Keywords: Capital asset; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , . . , BEFORE SHRI B R MITTAL, JM & SHRI B R BASKARAN , AM ./I.T.A. NO.4961/MUM/2012 ( ' ' ' ' ' '' ' / ASSESSMENT YEAR: 2009-10) THE THE INCOME TAX OFFICER WARD 13(1)(3), MUMBAI / VS. H R TRADING CO 1 ST FLOOR 7/11 GOPAL HOUSE KUMBHARWADA X LANE VADGADI MUMBAI 400 003 ./PAN :AAACT3936B ( % /APPELLANT ) ( &'% / RESPONDENT ) % ( / APPELLANT BY : SHRI SURENDRA KUMAR, DR &'% ( / RESPONDENT BY : SHRI VIJAY MEHTA ( + /DATE OF HEARING : 26.02.2014 ( + / DATE OF PRONOUNCEMENT :28 TH FEB 2014 / O R D E R PER B R BASKARAN, AM : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 7.5.2012 OF THE LD CIT(A) -24, MUMBAI AND IT RELATE S TO THE AY 2009-10. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD CIT( A) IN HOLDING THAT THE ASSESSEE IS ENTITLE TO CLAIM EXEMPTION OF RS. 39,80,000/- U/S 5 4EC OF THE ACT, BEING THE AMOUNT INVESTED IN RURAL ELECTRIFICATION BONDS, AGAI NST SHORT TERM CAPITAL GAIN COMPUTED U/S 50 OF THE ACT. 2 THE FACTS RELATING TO THE ISSUE ARE STATED IN BRI EF: THE ASSESSEE IS A COMMISSION AGENT. DURING THE YEAR UNDER CONSIDERAT ION HE SOLD A PROPERTY HR TRADING CO 2 DESCRIBED AS INDUSTRIAL GALA FOR A SUM OF RS. 55, 50,000/-. THE SAID ASSET FOUND PART OF BLOCK OF ASSET, ON WHICH THE DEPRECIATION H AD BEEN CLAIMED. THE ASSESSEE COMPUTED CAPITAL GAIN OF R. 39,80,000/- AND CLAIMED THE SAME AS DEDUCTION U/S 54EC OF THE ACT, SINCE IT HAD INVESTED RS.39,80,000/ - IN RURAL ELECTROCUTION BONDS SPECIFIED IN SEC. 54EC OF THE ACT. THE AO REJECTED THE SAID CLAIM AND THE LD CIT(A) ALLOWED THE SAME. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 3 WE HAVE HEARD THE RIVAL CONTENTION AND CAREFULLY PERUSED THE RECORDS. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FIRS T APPELLATE AUTHORITY HAS FOLLOWED THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ACE BUILDERS PVT LTD IN 281 ITR 210 FOR DECIDING THIS I SSUE IN FAVOUR OF THE ASSESSEE. HE FURTHER SUBMITTED THAT AN IDENTICAL ISSUE CAME B EFORE THE CONSIDERATION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S DELITE TIN INDUSTRIES IN ITA NO.1118 OF 2008 IN THE APPEAL FILED BY THE REVENUE AND THE HONBLE HIGH COURT DISMISSED THE APPEAL BY FOLLOWING THE DECISION RENDERED IN TH E CASE OF ACE BUILDERS (SUPRA). THEREAFTER, THE REVENUE CARRIED THE MATTER IN APPEA L BEFORE THE HONBLE SUPREME COURT AND THE SLP WAS DISMISSED BY THE HONBLE SUPR EME COURT. THE LD AR FILED COPIES OF THE ORDER OF THE HONBLE BOMBAY HIGH COUR T AS WELL AS THE HONBLE SUPREME COURT IN THE CASE OF DELITE TIN INDUSTRIES (SUPRA). 4. ON THE CONTRARY, THE LD DR PLACED RELIANCE ON TH E ASSESSMENT ORDER. 5. WE NOTICE THAT THE LD CIT(A) FOLLOWED THE BINDIN G DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ACE BUILDE RS (SUPRA) IN DECIDING THE ISSUE IN HR TRADING CO 3 FAVOUR OF THE ASSESSEE. FOR THE SAKE OF CONVENIENC E, WE EXTRACT BELOW THE OPERATIVE PART OF THE ORDER OF THE LD CIT(A): 2.3.2 HONBLE MUMBAI TRIBUNAL, F BENCH, IN ITS ORDER DT 7.1.2011 IN THE CASE OF ITO 3(3)(4), MUMBAI VS M/S VISUAL GRAPHICS P LTD IN ITA NO. 1691/MUM/2010 FOR THE AY 2006-07 HAS ALSO, RESPECTF ULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ACE BUILDERS (P) LTD (SUPRA), UPHELD THE ORDER OF THE LD CIT(A) GRANTING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54EC IN RESPECT OF CAPIT AL GAIN ARISING FROM SALE OF DEPRECIABLE LONG TERM CAPITAL ASSET. SIMILAR VIE W HAS BEEN TAKEN BY THE HONBLE ITAT, MUMBAI B BENCH IN DCIT 12(2), MUMBA I VS BHARAT ENTERPRISES (ITA NO. 1764/MUM/2010 FOR THE AY 2006-0 7) IN THEIR ORDER DT 30.6.2011. IN INCOME TAX APPEAL NO. 1118 OF 2008 IN THE CASE OF THE COMMISSIONER OF INCOME TAX 20 VS M/S DELITE TIN IND USTRIES ON IDENTICAL ISSUE, HONBLE BOMBAY HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE DEPARTMENT HOLDING THAT THE ISSUE WAS SQUARELY COVE RED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF TH E COURT IN CIT VS ACE BUILDERS P LTD REPORTED IN 281 ITR 210(BOM). I ALS O FIND THAT THE PETITION FOR SPECIAL LEAVE TO APPEAL (CIVIL).. CC JUDGMENT A ND ORDER DT 26.9.2008 IN ITA O. 1118/2008 OF THE HIGH COURT OF BOMBAY HAS BE EN DISMISSED BY THE HONBLE SUPREME COURT IN THEIR ORDER DATED 21.8.200 9. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF ACE BUILDERS (P) LTD (SUPRA), I HOLD THAT THE ASSES SEE WOULD BE ENTITLED TO THE CLAIM OF EXEMPTION U/S 54EC OF THE I T ACT 1961 OF RS. 39,80,000/-. THE ACTION OF THE AO OF DISALLOWING THE CLAIM OF THE AS SESSEE U/S 54EC OF THE I T ACT, 1961 IS, THEREFORE, NOT UPHELD. THIS GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED. 5.1 SINCE THE LD CIT(A) HAS FOLLOWED THE BINDING DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY REASO N TO INTERFERE WITH HIS ORDER. 6 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. / ( / ( ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEB 2014 . ( 28TH FEB 2014 ( SD/- SD/- ( B R MITTAL ) ( B R BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 6 DATED 28 TH , FEB 2014 .../ RAJ , SR. PS HR TRADING CO 4 ( &9 :9 ( &9 :9 ( &9 :9 ( &9 :9/ COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. ;() / THE CIT(A)- 4. ; / CIT 5. 9 &, , / DR, ITAT, MUMBAI 6. ' / GUARD FILE. / BY ORDER, '9 & //TRUE COPY// / // / ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI