ASST CIT 16(2), MUMBAI V. FARDUN BURJOR DASTUR, MUMBAI

ITA 5201/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9845 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 04-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SHETH
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 5201 / MUM/20 1 5 ( ASSESSMENT YEAR : 2011 - 12 ) ASST. CIT 16(2) R.NO.479, 4 TH FLOOR, AAYAKAR BHAVAN M.K.ROAD, MUMBAI 400 020 VS. FARDU N BURJOR DASTUR, 2 - B PIL COURT, 111, M.K. ROAD CHURCHGATE, MUMBAI 400 020 PAN/GIR NO. AACPD3766C APPELLANT ) .. RESPONDENT ) REVENUE BY MS. POOJA SHETH ASSESSEE BY SHRI M.M.GOLVALA & HORMUZD JAMSHEDJI DATE OF HEARING 03 /08 /201 7 DATE OF PRONOUNCEME NT 23 / 08 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 5, MUMBAI DATED 07/08/2015 IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE IT ACT. 2. F OLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE. 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GIVING RELIEF IGNORING THE CLARIFICATORY AMENDMENT IN THE ACT IN SECOND PROVISO TO SECTION 54 EC(1) AND THE EXPLANATO RY NOTES TO THE PROVISIONS OF THE FINANCE (NO.2) ISSUED BY THE BOARD VIDE CIRCULAR NO. 1/2015 CLARIFYING THE CLARIFICATORY NATURE OF THE AMENDMENT. 2. THE APPELLANT PRAYS THAT ORDER OF THE CIT(A) ON THE ABOVE GROUNDS TO BE SET ASIDE AND THAT OF THE ASSESS ING OFFICER RESTORED. 3.RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 5201/MUM/2015 SHRI FARDUN BURJOR DASTUR 2 4. FACTS IN BRIEF ARE THAT ASSESSEE AN INDIVIDUAL WHO IS THE DOCTOR IN HIS PROFESSION. DURING THE YEAR UNDER CONSIDERATION, HE HAD SOLD A PROPERTY ON 14/10/2010 AMOUNTING RS.18 CRORES. THE SHARE OF ASSESSEE IN THE SAID TRANSACTION WAS RS.6 CRORES. HE HAD MADE AN, INVESTMENT OF RS.50 LAKHS EACH IN REC BONDS ON 2 4/3/2011 TO 6/4/2011. WITH A VIEW THE CLAIM OF EXEMPTION U/S. 54EC OF I.T. ACT. THE A.O. DISALLOWED THE CLAIM OF THE ASSE SSEE FOR ONE YEAR ON THE GROUND THAT ONLY ONE EXEMPTION ASSESSEE IS ELIGIBLE FOR THE SALE OF THE PROPER TY IN ANY OF THE FINANCIAL YEAR. 5. BY THE IMPUGNED ORDER, CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW. THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. JAICHANDER 370 ITR 570 WHEREIN IT WAS HELD THAT THE TIME OF SIX MONTHS FROM THE DATE OF TRANSFER FOR INVESTMENT, ASSESSEE ENTITLED TO EXEMPTION IN RESPECT OF INVESTMENT OF RS.50 LAKHS EACH IN TWO DIFFERENT FINANCIAL YEARS WITHIN TIME LIMIT. 7. HONBLE MADRAS HIGH COURT IN THE CASE OF COROMANDEL INDUSTRIES LTD., 370 ITR 586 ALSO TAKEN SAME VIEW AND HELD THAT AO WAS NOT JUSTIFIED IN RESTRICTING THE DEDUCTION OF RS. 50 LAKHS STATING THAT INTENTION OF LEGISLATURE WAS TO LIMIT THE INVESTMENT IN LONG TERM SPECIFIED ASSET TO RS.50 LAKHS ONLY. CO - ORDINATE BENCH IN THE CASE OF JNR SECURITIES BROKING LTD., IN ITA NO.6987/MUM/2013 VIDE ORDER DATED 08/07/2015 ALSO FOLLOWED THE PROPOSITION LAID DOWN BY MADRAS HIGH COURT IN THE CASE OF JAICHANDER . ITA NO. 5201/MUM/2015 SHRI FARDUN BURJOR DASTUR 3 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON' BLE MADRAS HIGH COURT IN THE CASE OF JAICHANDER, 370 ITR 0579, WHEREIN THE HON'BLE HIGH COURT HELD AS UNDER : - ON A PLAIN READING OF THE ABOVE SAID PROVISION, WE ARE OF THE VIEW THAT SECTION 54EC(L) OF THE ACT RESTRICTS THE TIME LIMIT FOR THE PERIOD OF INV ESTMENT AFTER THE PROPERTY HAS BEEN SOLD TO SIX MONTHS. THERE IS NO CAP ON THE INVESTMENT TO BE MADE IN BONDS. THE FIRST PROVISO TO SECTION 54EC(L) OF THE ACT SPECIFIES THE QUANTUM OF INVESTMENT AND IT STATES THAT THE INVESTMENT SO MADE ON OR AFTER 1.4.200 7 IN THE LONG - TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. IN OTHER WORDS, AS PER THE MANDATE OF SECTION 54EC(1) OF THE ACT,THE TIME LIMIT FOR INVESTMENT IS SIX MONTHS AND THE BENEFIT THAT FLOWS FROM THE FIRST PROVISO IS THAT IF THE ASSESSEE MAKES THE INVESTMENT OF RS.50,00,000/ - IN ANY FINANCIAL YEAR, IT WOULD HAVE THE BENEFIT OF SECTION 54EC(1) OF THE ACT. (PARA 7) THE LEGISLATURE NOTICING THE AMBIGUITY IN THE ABOVESAID PROVISION, BY FINANCE (NO.2) ACT , 2014, WITH EFFECT FROM 1.4.2015, INSERTED AFTER THE EXISTING PROVISO TO SUB - SECTION (1) OF SECTION 54EC OF THE ACT, A SECOND PROVISO, WHICH READS AS UNDER: 'PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN ASSESSEE IN THE LONG - TERM SPECIFIED ASSET, FROM CAPITAL GAINS ARISING'. FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AN D IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES.' (PARA 8) IN ANY EVENT, FROM A READING OF SECTION 54EC(1) AND THE FIRST PROVISO, IT IS CLEAR THAT THE TIME LIMIT FOR INVESTMENT IS SI X MONTHS FROM THE DATE OF TRANSFER AND EVEN IF SUCH INVESTMENT FALLS UNDER TWO FINANCIAL YEARS, THE BENEFIT CLAIMED BY THE' ASSESSEE CANNOT BE ITA NO.6987/13 DENIED. IT WOULD HAVE MADE A DIFFERENCE, IF THE RESTRICTION ON THE INVESTMENT IN BONDS TO RS.50,00 ,000/ - IS INCORPORATED IN SECTION 54EC(1) OF THE ACT ITSELF. HOWEVER, THE AMBIGUITY HAS BEEN REMOVED BY THE LEGISLATURE WITH EFFECT FROM 1.4.2015 IN RELATION TO THE ASSESSMENT YEAR 2015 - 16 AND THE SUBSEQ UENT YEARS' 9 . SIMILAR ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE CASE OF DR. KUMAR M. DHAWALE, ITA NO.7585/MUM/2012, ORDER DATED 9 - 1 - 2015 FOR THE A.Y.2009 - 2010. ITA NO. 5201/MUM/2015 SHRI FARDUN BURJOR DASTUR 4 10 . IN VIEW OF THE ABOVE DISCUSSION, RESP ECTFULLY FOLLOWING THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF JAICHANDER (SUPRA), AS WELL AS DECISION OF COORDINATE BENCH IN THE CASE OF DR. KUMAR M. DHAWALE (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING FURTHER CL AIM OF EXEMPTION IN RESPECT OF INVESTMENT MADE IN SUBSEQUENT FINANCIAL YEAR AMOUNTING TO RS.50 LAKHS U/S.54EC OF THE I.T.ACT. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 08 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 08 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDEN T. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//