Shri Karsandas B. Patel, JAMNAGAR V. The Additional Commissioner of Income Tax, Range-2, JAMNAGAR

ITA 521/RJT/2008

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1094 (ITAT-RAJKOT)
• Duration Of Justice: 6 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 29-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: MJ RANPURA
• Keywords: Revised return
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.521/RJT/2008 / ASSTT. YEAR: 2005-06 SHRI MANSUKHBHAI K. PATEL L/R. OF LATE SHRI KARSANDAS B. PATEL VIRANI BHUVAN, SUMMER CLUB ROAD OPP: JOLLY BUNGALOW, JAMNAGAR. VS ACIT, RANGE-2 JAMNAGAR. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.J. RANPURA, CA REVENUE BY : SHRI AVINASH KUMAR, DR / DATE OF HEARING : 21/05/2015 / DATE OF PRONOUNCEMENT: 29/05/2015 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A), JAMNAGAR DATED 11.7.2008 FOR ASSTT.YEAR 2005-06. 2. THE GROUND NO.1 AND 4 OF THE APPEAL ARE GENERAL IN NATURE, HENCE, REQUIRE NO ADJUDICATION BY US. 3. THE GROUND NO.2 OF THE APPEAL READS AS UNDER: 2. THE LD.CIT(A) ERRED ON FACTS AND ALSO IN LAW IN DISMISSING THE GROUND OF APPEAL RELATED TO AOS ACTION OF NOT MAKING COGNIZANCE OF REVISED RETURNS FILED BY THE APPELLAN T AND THEREBY TREATING THE SAME AS NON EST. THE REVIEWED RETURNS MAY KINDLY BE DIRECTED TO BE TAKEN INTO CONSIDERATION. 4. AT THE TIME OF HEARING, THIS GROUND OF APPEAL WA S NOT PRESSED BY THE AR OF THE ASSESSEE, HENCE, THE SAME IS DISMISSE D FOR WANT OF PROSECUTION. ITA NO.521/RJT/2008 2 5. THE GROUND NO.3 OF THE APPEAL READS AS UNDER: 3.0 THE LD.CIT(A) ERRED ON FACTS AS ALSO IN LAW IN UPHOLDING THE AOS ACTION OF DISALLOWANCE OF CLAIM OF DEDUCTION U /S.54EC OF THE ACT. THE DISALLOWANCE IS UNJUSTIFIED AND MAY KINDL Y BE DELETED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE THE ASSESSEE CLAIMS TO HAVE EARNED LON G-TERM CAPITAL GAIN OF RS.40 LAKHS ON SALE OF 63,000 SHARES OF SUZLON E NERGY LIMITED. THE ASSESSEE CLAIMED THE ENTIRE LONG-TERM CAPITAL GAINS OF RS.40 LAKHS AS EXEMPT UNDER SECTION 54 EC ON THE GROUND OF HIS MAK ING OF INVESTMENT OF RS.40 LAKHS IN RURAL ELECTRIFICATION CORPORATION LTD BONDS ON 23-3- 2005. THE ASSESSING OFFICER OBSERVED THAT THE AGREE MENT FOR SALE OF SHARES IN QUESTION WAS ENTERED INTO BETWEEN THE ASS ESSEE AND SUZLON CAPITAL LTD ON 10-08-2004. THE ASSESSING OFFICER TR EATED THE ABOVE DATE OF AGREEMENT I.E. 10-8-2004 AS THE DATE OF SALE AND THEREFORE HELD THAT THE ASSESSEE OUGHT TO HAVE MADE INVESTMENT BEFORE 1 0-2-2005 FOR CLAIMING EXEMPTION UNDER SECTION 54 EC OF THE ACT. ACCORDINGLY TO THE ASSESSING OFFICER THE ASSESSEE ACTUALLY MADE THE IN VESTMENT ON 23-3- 2005 WHICH IS AFTER SIX MONTHS FROM THE DATE OF SAL E OF SHARES IN QUESTION AND THEREFORE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 54 EC OF THE ACT. 7. ON APPEAL COMMISSIONER OF INCOME TAX APPEALS CON FIRMED THE ACTION OF THE ASSESSING OFFICER. 8. BEFORE US THE AUTHORISED REPRESENTATIVE OF THE A SSESSEE FILED A COPY OF SALE AGREEMENT PLACED ON PAGE NUMBERS 5 TO 8 OF THE PAPER BOOK AND SUBMITTED THAT THE ACTUAL SALE OF SHARES W AS ON 5-3-2005. THUS THE INVESTMENT MADE IN RURAL ELECTRIFICATION C ORPORATION LTD BONDS ON 23-3-2005 BEING WITHIN THE PERIOD OF SIX MONTHS THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION AS PROVIDED UNDER SECTION 54 EC OF THE ACT. ITA NO.521/RJT/2008 3 9. ON THE OTHER HAND THE DEPARTMENTAL REPRESENTATIV E SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 10. DURING THE COURSE OF THE HEARING THE BENCH ASKE D THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE TO SHOW THE DATE OF INVESTMENT IN RURAL ELECTRIFICATION CORPORATION LTD BONDS WAS ON 23-3-2 005. THE AUTHORISED REPRESENTATIVE IN RESPONSE FILED COPY OF APPLICATIO N FORM OF RURAL ELECTRIFICATION CORPORATION LTD DATED 23-3-2005 WHI CH WAS DULY RECEIPTED BY BANK AND THE RELEVANT CHEQUE OF RS.40 LAKHS WAS CLEARED FROM THE BANK OF THE ASSESSEE ON 29.3.2005 WHICH WA S ALSO SUPPORTED BY THE STATEMENT OF BANK ACCOUNT NUMBER 03410400001 0928 MAINTAINED WITH IDI BANK LTD. FILED BEFORE US. FRO M THE ABOVE WE FIND THAT IT IS UNDISPUTABLE THAT THE ASSESSEE MADE INVE STMENT IN RURAL ELECTRIFICATION CORPORATION LTD BONDS OF RS. 40 LAK HS ON 23-3-2005. THUS THE ONLY ISSUE WHICH REQUIRES ADJUDICATION IS THE DATE ON WHICH THE ASSESSEE SOLD THE SHARES IN QUESTION TO SUZLON CAPI TAL LTD. 11. WE FIND THAT THE CLAUSE 1 AND 2 OF AGREEMENT DA TED 10-8-2004 ENTERED INTO BY THE ASSESSEE WITH THE SAID SUZLON C APITAL LTD READS AS UNDER: 1. SUZLON CAPITAL LTD HEREBY AGREES TO PURCHASE FR OM THE VIRANI FAMILY AND THE VIRANI FAMILY AGREES TO SELL TO SUZL ON CAPITAL LTD THE SHARES OF SUZLON ENERGY LTD AT A SALE CONSIDER ATION OF RS. 20, 05, 41, 600/-(RUPEES TWENTY CRORES FIVE LACS FORTY ONE THOUSAND SIX HUNDRED ONLY) (THE SALE CONSIDERATION OF RS.20,05,41,600/- AS HEREBY AND HEREIN AGREED UPON IS HEREINAFTER REFERRED TO AS THE CONSIDERATION). 2. THE SHARES AGREED TO BE SOLD BY THE VIRANI FAMIL Y TO SUZLON CAPITAL LTD. INCLUDES AND SHALL INCLUDE ANY BONUS S HARES AS MAY BE ISSUED AND ALLOTTED BY SUZLON ENERGY LTD. TO ITS SHAREHOLDERS INCLUDING TO THE VIRANI FAMILY ANY TIME AFTER THE D ATE OF THIS AGREEMENT AND TILL FULL AND FINAL CONSIDERATION HAS BEEN RECEIVED BY THE VIRANI FAMILY FROM SUZLON CAPITAL LTD. AND A CCORDINGLY SUCH ALLOTMENT OF BONUS SHARES, IF ANY, WOULD NOT IN ANY WAY EFFECT THE CONSIDERATION. ITA NO.521/RJT/2008 4 12. THUS A READING OF CLAUSE 1 SHOWS THAT ON 10-8-2 004 THE ASSESSEE HAS AGREED TO SELL SHARES IN QUESTION AND SUZLON CA PITAL LTD. ON THAT DATE AGREED TO PURCHASE THE SHARES. THUS THE CONTRA CT ON 10-8-2004 WAS AN AGREEMENT OF SALE AND NOT AN INSTRUMENT OF A CTUAL SALE ON THAT DATE. THE ABOVE VIEW GETS FORTIFIED ON READING OF C LAUSE 2 OF THE SAID AGREEMENT EXTRACTED HEREINABOVE WHICH CLEARLY ENVIS AGES THAT THE SALE WILL TAKE PLACE ON THE DATE OF RECEIPT OF CONSIDERA TION AND WHAT WILL BE SOLD ON THAT DATE WILL BE THE PRESENT SHARES OF 63, 000 NUMBERS IN SUZLON ENERGY LTD. ALONG WITH ALL THE BONUS SHARES WHICH MAY BE RECEIVED BY THE ASSESSEE UP TO THE DATE OF RECEIPT OF CONSIDERATION. IF THE SHARES WERE ACTUALLY SOLD BY THE ASSESSEE ON TH E DATE OF AGREEMENT I.E. 10-8-2004, QUESTION OF RECEIVING OF BONUS SHAR ES BY THE ASSESSEE AFTER THAT DATE DOES NOT ARISE BECAUSE AFTER THAT D ATE OF THE SALE M/S SUZLON CAPITAL LTD. WOULD BE THE OWNER OF SHARES AN D M/S SUZLON CAPITAL LTD. WOULD HAVE RECEIVED BONUS SHARES IF ANY IN RES PECT OF THOSE 63,000 SHARES AND NOT THE ASSESSEE. 13. THUS THE AGREEMENT DATED 10-8-2004 WAS AN AGREE MENT FOR SALE BY VIRTUE OF WHICH THE ASSESSEE AGREED TO TRANSFER 63,000 SHARES ALONG WITH BONUS SHARES RECEIVED THEREON BY THE ASSESSEE UP TO THE DATE OF RECEIPT OF CONSIDERATION TO M/S SUZLON CAPITAL LTD. FOR A CONSIDERATION WHICH WAS FIXED ON 10-8-2004. THUS IT WAS AN AGREEM ENT FOR MAKING SALE OR TRANSFER ON THE DATE OF RECEIPT OF CONSIDER ATION BY THE ASSESSEE. 14. IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT P ART CONSIDERATION OF RS.72,66,000/-WAS RECEIVED BY THE ASSESSEE ON 5-3-2 005 AND FINAL CONSIDERATION OF THE BALANCE AMOUNT OF RS.1,08,99,0 00/-WAS RECEIVED BY THE ASSESSEE ON 29-3-2005. THUS AS PER THE AGREE MENT THE ASSESSEE ACTUALLY SOLD 63,000 SHARES ON 5-3-2005 AND THEREFO RE THE INVESTMENT IN RURAL ELECTRIFICATION CORPORATION LTD BONDS ON 2 3-3-2005 BY THE ASSESSEE WAS WITHIN SIX MONTHS FROM THE DATE OF SAL E OF THE SAID SHARES. HENCE THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 54 EC FOR ITA NO.521/RJT/2008 5 RS.40 LAKHS. WE THEREFORE SET ASIDE THE ORDERS OF T HE LOWER AUTHORITIES AND ALLOW THE CLAIM OF THE ASSESSEE. THUS THE GROUN D OF APPEAL OF THE ASSESSEE IS ALLOWED. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 29 TH MAY, 2015 AT RAJKOT. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 29/5/2015