TALPADY UMASHANKAR SHENAVA, MUMBAI V. DCIT CIR 6(1), MUMBAI

ITA 5530/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9518 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Capital asset
• Section: 143(3); 142(1)

Judgement Text

1 ITA 5530/UM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.5530/MUM/2015 (ASSESSMENT YEAR 2011-12) TALPADY UMASHANKER SHENAVA FLAT NO.1401, AWING, 14 TH FLOOR, LADY RATTAN TOWERS DAINIK SHIVKER MARG OFF DR E MOSES ROAD WORLI, MUMBAI 400 018 PAN : AGLPS5429C VS DY.CIT, CIR.6(1), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI MANDAR VAIDYA RESPONDENT BY SHRI V JUSTIN DATE OF HEARING 12-09-2017 DATE OF PRONOUNCEMENT 15-09-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-12, MUMBAI DATED 24-09-2015 AND IT PERTAINS TO AY 2011-12. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE EXEM PTION U/S. 54EC IS RESTRICTED TO RS. 50 LACS AND THAT THE LIMI T OF INVESTMENT OF RS.50 LACS U/S. 54EC, APPLIES TO A PA RTICULAR TRANSACTION OF CAPITAL GAIN AND NOT TO A FINANCIAL YEAR. 2 ITA 5530/UM/2015 2) THE LD. CIT(A) ERRED IN NOT GRANTING EXEMPTION U/S. 54EC TO THE EXTENT OF RS. 1 CRORE, EVEN THOUGH ALL THE CONDITIO NS U/S. 54EC WERE SATISFIED. 3) THE LD. CIT(A) FELL IN ERROR OF LAW IN NOT APPRECIA TING THE SETTLED POSITION THAT WHERE TWO VIEWS ARE POSSIBLE, THE VIEW IN FAVOUR OF THE ASSESSEE HAS TO BE ADOPTED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR AY 2011-12 ON 31-03-2013 DECLA RING TOTAL INCOME OF RS.1,76,70,960 AND THE SAME WAS PROCESSED U/S 143(1 ) OF THE I.T. ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 1 43(2) ALONGWITH NOTICE U/S 142(1) WITH A DETAILED QUESTIONNAIRE WAS DULY SERVE D ON THE ASSESSEE. IN RESPONSE TO NOTICES, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME, FURNISHED THE DETAILS AS CALLED FOR. THE ASSESSMENT WAS DULY COMPLETED U/S 143(3) ON 28-02-2014 AND DETERMINED T HE TOTAL INCOME AT RS.2,37,20,960 INTERALIA MAKING ADDITIONS TOWARDS D ISALLOWANCE OF EXEMPTION CLAIMED U/S 54EC TOWARDS INVESTMENT IN TAX EXEMPTIO N BONDS AND ADDITION TOWARDS UNRECONCILED DIFFERENCE IN SALE CONSIDERATI ON. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). HOWEVER, NONE APPEARED BEFORE CIT(A) TO JUSTIFY HI S CASE. THE CIT(A) DISPOSED OF THE APPEAL FILED BY THE ASSESSEE EXPARTE ON MERI TS AND UPHELD THE ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE OF EXEMPTION CL AIMED U/S 54EC AND UNRECONCILED DIFFERENCE IN SALE CONSIDERATION. AGG RIEVED BY THE ORDER OF 3 ITA 5530/UM/2015 CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD.CI T(A) ERRED IN RESTRICTING EXEMPTION U/S 54EC TO THE EXTENT OF RS. 50 LAKHS AS AGAINST TOTAL INVESTMENT MADE BY THE ASSESSEE OF RS.1 CRORE, EVEN THOUGH THE CONDITIONS PRESCRIBED U/S 54EC WERE SATISFIED. THE LD.AR FURT HER SUBMITTED THAT THERE IS NO RESTRICTION UNDER THE PROVISIONS OF SECTION 54EC TO LIMIT INVESTMENT TO THE EXTENT OF RS.50 LAKHS. HOWEVER, SUCH INVESTMENT SH OULD BE WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF THE ASSET. IN THIS CASE, THERE IS NO DISPUTE WITH REGARD TO THE DATE OF TRANSFER AND PER IOD OF INVESTMENT. THE AO RESTRICTED THE CLAIM BECAUSE AS PER THE PROVISIONS OF SECTION 54EC, THE ASSESSEE CAN ONLY INVEST UPTO RS.50 LAKHS, BUT NOT MORE THAN RS.50 LAKHS. IN THIS REGARD HE RELIED UPON THE DECISION OF ITAT, B-BENCH, MUMBA I IN THE CASE OF NEENA NARESH M SINGHI ITA NO.6182/MUM/2014 DATED 15-06-20 16. THE ASSESSEE ALSO RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COU RT IN THE CASE OF CIT VS CORAMONDEL INDUSTRIES LTD (2015) 370 ITRE 586 (MAD) . 4. THE LD.DR ON THE OTHER HAND SUBMITTED THAT AS PER T HE PROVISIONS OF SECTION 54EC, ASSESSEE CAN INVEST ONLY RS.50 LAKHS. THE AO HAS BROUGHT OUT CLEAR FACTS THAT THE ASSESSEE HAS MADE INVESTMENT O VER AND ABOVE RS.50 LAKHS WHICH HAS BEEN RESTRICTED TO RS.50 LAKHS, THEREFORE , THERE IS NO ERROR IN THE FINDINGS OF THE AO AND HIS ORDER SHOULD BE UPHELD. 4 ITA 5530/UM/2015 5. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED MATER IALS AVAILABLE ON RECORD. IN THE FACTS AND CIRCUMSTANCES OF THE CASE , WHETHER THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54EC IN RESPECT OF INVES TMENT IN TAX EXEMPTION BONDS OF RS.50 LAKHS IN ONE FINANCIAL YEAR AND FURT HER RS. 50 LAKHS INVESTED IN NEXT FINANCIAL YEAR, BUT WITHIN THE STIPULATED PERI OD OF SIX MONTHS FROM THE DATE OF SALE OF THE ASSET. THE LD.AR FOR THE ASSES SEE SUBMITTED, A SIMILAR ISSUE HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF ITA T, MUMBAI BENCH B IN THE CASE OF NEENA NARESH M SINGHI (SUPRA) WHEREIN T HE TRIBUNAL, AFTER CONSIDERING THE PROVISIONS OF SECTION 54EC AND ALSO BY RELYING RELYING UPON THE DECISION OF ANOTHER BENCH OF THE MUMBAI ITAT IN THE CASE OF MRS. LILAVATI M SAYANI VS ITO 49 TAXMANN.COM 579 (MUMBAI.TRIB.) OBS ERVED THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54EC UPTO RS.50 LAKHS IN A FINANCIAL YEAR. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW :- 3.4. WE HAVE GONE THROUGH THE JUDGMENTS RELIED UPON BEFORE US. IN THE CASE OF SHRI ASPI GINWALA (SUPRA), IT WA S HELD AS UNDER: 'WHILE GOING THROUGH THE PROVISO OF SECTION 54EC, W E FIND THAT THE PROVISO TO SECTION READS AS UNDER:- '[PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1ST DAY OF APRIL, 2007 IN THE LONG TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEE]' IT IS CLEAR FROM THIS PROVISO THAT WHERE ASSESSEE T RANSFERS HIS CAPITAL ASSET AFTER 30TH SEPTEMBER OF THE FINAN CIAL YEAR HE GETS AN OPPORTUNITY TO MAKE AN INVESTMENT OF RS. 50 LAKHS EACH IN TWO DIFFERENT FINANCIAL YEARS AND IS ABLE TO 5 ITA 5530/UM/2015 CLAIM EXEMPTION UPTO RS. 1 CRORE U/S 54EC OF THE AC T. SINCE THE LANGUAGE OF THE PROVISO IS CLEAR AND UNAMBIGUOUS, WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSEE IS ENTITLED TO GET EXEMPTION UPTO RS. 1 CR ORE IN THIS CASE. THIS VIEW OF OURS GETS SUPPORT FROM THE FOLLOWING FINDING OF THE HON BLE SUPREME COURT IN THE CASE OF IPCA LAB 266 ITR 521 (SC), WHEREIN IT HAS BEEN HELD BY T HE HON'BLE SUPREME COURT THAT - 'EVEN THOUGH A LIBERAL INTERPRETATION HAS TO BE GIVEN TO SUCH A PROVISION THE INTERPRETATION HAS TO BE AS PER THE WORDING OF THE SECTION. IF THE WORDING OF THE SECTION IS CLEAR, THEN BENEFITS WHICH ARE NOT AVAILABLE CANNOT BE CONFERRED BY IGNORING OR MISINTERPRETING WORDS IN THE SECTION' HERE THE SITUATION IS REVERSE. SINCE THE WORDING OF THE PROVISO TO SECTION 54EC IS CIEAR, THE BENEFITS WHIC H ARE AVAILABLE TO THE ASSESSEE CANNOT BE DENIED. IN VIEW OF ABOVE, IT IS HEREBY HELD THAT THE ASSESSEE IS ENTIT LED FOR EXEMPTION OF RS. 1 CRORE AS SIX MONTHS' PERIOD FOR INVESTMENT IN ELIGIBLE INVESTMENTS INVOLVED IS TWO FINANCIAL YEARS.' 3.5. SIMILARLY, THE SAME VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH IN THE CASE OF MRS. LILAVATI M. SA YANI (SUPRA). THUS, RESPECTFULLY FOLLOWING THESE JUDGMEN T AND IN ABSENCE OF ANY CONTRARY JUDGMENT HAVING BEEN BROUGH T BEFORE US, WE ALLOW THE AGGREGATE CLAIM OF THE ASSESSEE FOR RS . 1 CRORE SUBJECT TO THE DECISION TO BE TAKEN BY THE AO IN TERMS OF I SSUE SENT BACK TO THE FILE OF AO FOR VERIFICATION OF DATES. 6. A SIMILAR ISSUE HAS BEEN CONSIDERED BY THE HONBLE MADRAS HIGH COURT, IN CIT VS CORAMANDEL INDUSTRIES LTD (SUPRA) WHEREIN TH E HONBLE HIGH COURT OBSERVED THAT IT IS CLEAR FROM THE FIRST PROVISO TO SECTION 54EC(1) THAT THE TIME LIMIT FOR INVESTMENT IS SIX MONTHS FROM THE DATE OF TRANSFER AND EVEN IF SUCH INVESTMENT FALLS UNDER TWO FINANCIAL YEARS, THE BEN EFIT CLAIMED BY THE ASSESSEE 6 ITA 5530/UM/2015 CANNOT BE DENIED. IT WOULD HAVE MADE A DIFFERENCE IF THE RESTRICTION ON THE INVESTMENT IN BONDS TO RS.50 LAKHS IS INCORPORATED IN SECTION 54EC(1) OF THE ACT ITSELF. HOWEVER, THE AMBIGUITY HAS BEEN REMOVED BY THE LEGISLATURE WEF 01-04- 2015 IN RELATION TO AY 2015-16 AND SUBSEQUENT YEARS . IN YET ANOTHER CASE, THE HONBLE MADRAS HIGH COURT HAS TAKEN A SIMILAR VIEW AND OBSERVED THAT BEFORE AMENDMENT TO PROVISIONS OF SECTION 54EC(1) BY THE S ECOND PROVISO WEF AY 2015-16 AND SUBSEQUENT YEARS, THE LAW IS CLEAR IN R ESPECT OF INVESTMENT IN 54EC AND HENCE EVEN IF THE ASSESSEE INVESTS MORE THAN TH E PRESCRIBED AMOUNT IN ONE FINANCIAL YEAR OR TWO FINANCIAL YEAR, IF SUCH INVES TMENT IS WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF SALE AS PROVIDED IN SECTION 54EC(1), THEN, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54EC. 7. IN THIS VIEW OF THE MATTER AND CONSIDERING THE RATI O OF THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE ASSESS EE IS ELIGIBLE FOR INVESTMENT IN TAX EXEMPTION BOND U/S 54EC FOR THE ENTIRE AMOUN T IF SUCH INVESTMENT IS MADE WITHIN SIX MONTHS FROM THE DATE OF SALE. THER EFORE, WE DIRECT THE AO TO ALLOW EXEMPTION U/S 54EC TO THE TOTAL INVESTMENT MA DE BY THE ASSESSEE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER, 2017. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 15 TH SEPTEMBER, 2017 7 ITA 5530/UM/2015 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI