Smt. Neena Krishna Menon, Bangalore V. CIT, Bangalore

ITA 578/BANG/2014

• Counselvise Citation: 57821114 RSA 2014
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K KOTRESH
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.578/BANG/2014 ASSESSMENT YEAR : 2009-10 SMT. NEENA KRISHNA MENON, C/O. V.M.G. MENON, TF 101, BENSON HARMONY, 49/3, BENSON CROSS, A ROAD, BENSON TOWN, BANGALORE 560 052. PAN: AHPPN 4835N VS. THE COMMISSIONER OF INCOME TAX, BANGALORE-IV, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K. KOTRESH, C.A. RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT-II(DR) DATE OF HEARING : 03.03.2015 DATE OF PRONOUNCEMENT : 05.03.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 18.3.2014 OF THE COMMISSIONER OF INCOME TAX-IV, BANGALORE PASSED U/S. 263 OF THE ACT RELATING TO ASSESSMENT YEAR 2009-10. 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH THE ORDE R U/S. 263 OF THE ACT WAS PASSED BY THE CIT WERE AS FOLLOWS. THE ASS ESSEE IS AN INDIVIDUAL. ITA NO. 578/BANG/2014 PAGE 2 OF 11 SHE FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.1,32,59,530. DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2009- 10, THE ASSESSEE SOLD HER SHARE IN A PROPERTY AND DERIVED LONG TERM CAPIT AL GAIN ON SUCH SALE OF RS.2,28,57,608. THE TRANSFER RESULTING IN CAPITAL GAIN TOOK PLACE ON 3.12.08. THE ASSESSEE INVESTED CAPITAL GAINS IN RE C BONDS AND CLAIMED DEDUCTION U/S. 54EC(1) OF RS.1 CRORE. THE ASSESSEE PURCHASED REC BONDS WORTH RS.50 LAKHS ON 31.3.2009 AND ANOTHER RS . 50 LAKHS ON 31.5.2009. BOTH THESE PURCHASES OF REC BONDS WERE MADE WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER. TH E DEDUCTION CLAIMED U/S. 54EC OF THE ACT WAS ALLOWED BY THE AO IN HIS ORDER DATED 22.11.2011 PASSED U/S. 143(3) OF THE ACT. 3. THE LD. CIT, IN EXERCISE OF HIS POWERS U/S. 263 OF THE ACT, WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE AO WAS ERRONEO US AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDING TO HIM, TH E MAXIMUM AMOUNT OF DEDUCTION THAT OUGHT TO HAVE BEEN ALLOWED U/S. 54EC WAS ONLY RS.50 LAKHS AND THE AO FELL INTO ERROR IN ALLOWING DEDUCTION OF A SUM OF RS.ONE CRORE. THE ASSESSEE IN REPLY TO THE SHOW CAUSE NOTICE U/S. 263 OF THE ACT, SUBMITTED AS FOLLOWS:- THE FIRST CONDITION MENTIONED IN 54EC(L) IS THAT T HE INVESTMENT HAS TO BE MADE WITHIN A PERIOD OF SIX MONTHS FROM T HE DATE OF TRANSFER OF CAPITAL ASSET. SINCE, THE DATE OF TRANS FER IN THE GIVEN CASE IS 03/12/2008, SIX MONTHS PERIOD ELAPSE ON 03/ 06/2009. ASSESSEE HAD PURCHASED REC BONDS WORTH OF RS. 50 L AKHS ON 31/03/2009 AND ANOTHER RS.50 LAKHS ON 31/05/2009. B OTH THESE PURCHASES WERE WITHIN THE SIX MONTHS PERIOD. ITA NO. 578/BANG/2014 PAGE 3 OF 11 THE SAID PROVISION MENTIONS THAT INVESTMENT ON WHIC H AN ASSESSEE COULD CLAIM EXEMPTION UNDER SECTION 54EC(1 ) SHALL NOT EXCEED RS.50 LAKHS DURING A FINANCIAL YEAR. SO, THE EXEMPTION PROVISION HAS TO BE CONSTRUED NOT TRANSACTION-WISE BUT FINANCIAL YEAR WISE. ACCORDINGLY, THE ASSESSEE IS ENTITLED TO CLAIM EXEM PTION OF SECTION 54EC IN RESPECT OF TOTAL INVESTMENT IN REC BONDS OF RS.ONE CRORE. 4. THE LD. CIT WAS OF THE VIEW THAT THE LAW INDICAT ES THAT THE USE OF THE PHRASE DURING ANY FINANCIAL YEAR IS CLOSELY LINKE D TO THE FIRST PART OF THE PROVISO, WHICH LAYS DOWN THE OPERATIVE TIME FOR THE STIPULATION AS ON OR AFTER THE FIRST DAY OF APRIL 2007. ACCORDING TO TH E CIT THE PHRASE DURING ANY FINANCIAL YEAR MEANS DURING ANY FINANCIAL YEAR AFTER THE FIRST DAY OF APRIL 2007. THEREFORE ACCORDING TO CIT THE INTENTIO N OF LAW WAS TO IDENTIFY ANY ONE OF THE FINANCIAL YEARS FOLLOWING 1.4.2007, AND DID NOT INTEND TO INCLUDE THEREIN MORE THAN ONE FINANCIAL YEAR SIMULT ANEOUSLY. THE CIT REFERRED TO THE DECISION OF THE ITAT JAIPUR BENCH I N ACIT V. SRI RAJKUMAR JAIN & SONS HUF [2012] 19 TAXMANN.COM 27 (JAIPUR TR IB) . THE TRIBUNAL IN THE AFORESAID DECISION TOOK THE VIEW THAT THE MAXIM UM ALLOWABLE DEDUCTION U/S. 54EC OF THE ACT IS ONLY A SUM OF RS.50 LAKHS. THE CIT ACCORDINGLY DIRECTED THE AO TO DISALLOW THE CLAIM FOR DEDUCTION U/S. 54EC TO THE EXTENT OF RS.50 LAKHS. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE H AS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. ITA NO. 578/BANG/2014 PAGE 4 OF 11 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WHO BROUGHT TO OUR NOTICE THE DECISION OF THE BANGA LORE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI VIVEK JAIRAZBHOY V. DCIT, ITA NO.236/BANG/2012 DATED 14.12.2012 WHEREIN ON IDENTICAL FACTS, THIS TRIBUNAL HELD THAT THE BENEFIT OF SECTION 54EC IN A CASE SUCH AS THE PRESENT CASE AT RS.1 CRORE SHOULD BE ALLOWED. 7. THE LD. DR RELIED ON THE ORDER OF CIT. 8. THE PROVISIONS OF SECTION 54EC(1) READ AS FOLLOW S:- CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN CE RTAIN BONDS. 54EC. (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFE R OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANS FERRED BEING HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGIN AL ASSET) AND THE ASSESSEE HAS, AT ANY TIME WITHIN A PERIOD OF SIX MO NTHS AFTER THE DATE OF SUCH TRANSFER, INVESTED THE WHOLE OR ANY PA RT OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISI ONS OF THIS SECTION, THAT IS TO SAY, ( A ) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UND ER SECTION 45; ( B ) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF T HE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF T HE LONG-TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL G AIN, SHALL NOT BE CHARGED UNDER SECTION 45 : ITA NO. 578/BANG/2014 PAGE 5 OF 11 PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1ST DAY O F APRIL, 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. (EMPHASIS SUPPLIED) 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THE ORDER OF CIT U/S. 263 OF THE ACT CANNOT BE SUST AINED. IDENTICAL ISSUE HAD DIRECTLY COME UP FOR CONSIDERATION BEFORE THE COORD INATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI VIVEK JAIRAZBHOY (SUPRA) AND THE SAME WAS DEALT WITH AS FOLLOWS:- 9.4 THE ISSUES NOW BEFORE US FOR ADJUDICATION ARE THE FOLLOWING : (I) WHETHER THE PROVISO TO SECTION 54EC OF THE ACT RESTRICTS THE EXEMPTION TO RS.50 LAKHS OR DOES IT MERELY RESTRICT THE INVESTMENT THAT CAN BE MADE IN A SINGLE FINANCIAL YEAR TO RS.5 0 LAKHS? (II) IF THE ANSWER TO THE ABOVE IS THAT IT IS THE I NVESTMENT THAT IS RESTRICTED AND NOT THE EXEMPTION, THEN IN VIEW OF T HE FACT THAT NHAI HAD ALLOTTED THE BONDS ONLY ON 30.6.2008 IN RE SPECT OF THE SECOND INVESTMENT OF RS.50 LAKHS, WHICH IS BEYOND T HE PERIOD OF SIX MONTHS FROM THE DATE OF SALE OF PROPERTY, CAN I T BE SAID THAT THE SECOND INVESTMENT OF RS.50 LAKHS IS SAID TO HAV E BEEN MADE OUTSIDE THE PERIOD OF SIX MONTHS AND NO EXEMPTION I S TO BE ALLOWED UNDER SECTION 54EC OF THE ACT IN RESPECT OF THE SAME. 9.5 THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACE D RELIANCE ON THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CA SE OF ASPI GINWALA & OTHERS VS. ACIT IN ITA NOS.3226 & 3227/AH D/2011 DT.30.3.2012 WHEREIN ON SIMILAR FACTS I.E INVESTMEN T OF RS.50 LAKHS EACH WAS MADE IN TWO DIFFERENT FINANCIAL YEAR S BUT WITHIN THE PERIOD OF SIX MONTHS FROM THE DATE OF SALE, IT WAS HELD IN PARA 8 OF THE SAID ORDER THAT THE ASSESSEE IS ENTITLED T O EXEMPTION OF RS.1 CRORE AS THE SIX MONTHS PERIOD FOR INVESTMENT IN ELIGIBLE INVESTMENTS INVOLVED IN TWO FINANCIAL YEARS. ITA NO. 578/BANG/2014 PAGE 6 OF 11 9.6 THE LEARNED DEPARTMENTAL REPRESENTATIVE HOWEVE R PLACED BEFORE US AN EARLIER JUDGMENT, CONTRARY TO THE DECI SION OF THE AHMEDABAD BENCH OF THE ITAT, RENDERED BY THE ITAT, JAIPUR BENCH IN THE CASE OF ACIT VS. RAJ KUMAR JAIN & SONS IN ITA NO.648/JP/2011 DT.30.1.2012 WHEREIN THE TRIBUNAL ON SIMILAR FACTS, WAS OF THE VIEW THAT A LIBERAL INTERPRETATIO N WILL LEAD TO DISCRIMINATION ADVERSELY AFFECTING THOSE WHO SELL A PROPERTY AT ANY TIME FROM APRIL TO SEPTEMBER OF A FINANCIAL YEA R VIS--VIS THOSE WHO SELL PROPERTY IN THE PERIOD OCTOBER TO MA RCH OF THE SAME FINANCIAL YEAR. IN THIS VIEW OF THE MATTER, TH EY CAME TO THE CONCLUSION THAT FOR THE INVESTMENT TO BE MADE WITHI N A PERIOD OF SIX MONTHS, THE EXEMPTION UNDER SECTION 54EC OF THE ACT IS TO BE RESTRICTED TO RS.50 LAKHS ONLY. 9.7 THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RE LIANCE ON CIRCULAR NO.3/2008 DT.12.3.2008 ISSUED BY CBDT, BEI NG AN EXPLANATORY NOTE ON THE PROVISIONS RELATING TO DIRE CT TAXES IN FINANCE ACT, 2007. IN THE SAID PARA 28.2 THEREOF TH E REASON FOR IT TO SET A LIMIT ON THE QUANTUM OF INVESTMENT BY A PE RSON IN A FINANCIAL YEAR, READS AS UNDER : 28.2 THE QUANTUM OF INVESTIBLE BONDS ISSUED BY NHAI AND REC BEING LIMITED, IT WAS FELT NECESSARY TO ENSURE THAT THE BENEFIT WAS AVAILABLE TO ALL THE INVESTORS. FOR THIS PURPOSE, IT WAS NECESSARY TO ENSURE THAT THE LIMITED NUMBER OF BONDS AVAILABLE FOR SUBSCRIPTION IS ALSO AVAILABLE FOR SMALL INVESTORS. THEREFORE, WITH A VIEW TO ENSURE EQUITABLE DISTRIBUTION OF BENEFITS AMONGST PROSPECTIVE INVESTORS, THE GOVERNMENT DECIDED TO IMPOSE A CEILING ON THE QUANTUM OF INVESTMENT THAT COULD BE MADE IN SUCH BONDS. ACCORDINGLY, THE SAID SECTION HAS BEEN AMENDED SO AS TO PROVIDE FOR A CEILING ON INVESTMENT BY AN ASSESSEE IN SUCH LONG-TERM SPECIFIED ASSETS. INVESTMENTS IN SUCH SPECIFIED ASSETS TO AVAIL EXEMPTION UNDER SECTION 54EC, ON OR AFTER 1 ST DAY OF APRIL, 2007 WILL NOT EXCEED FIFTY LAKH RUPEES IN A FINANCIAL YEAR. IT IS CLEAR FORM THE CIRCULAR NO.3/2008 OF CBDT (SU PRA) THAT THE GOVERNMENT ONLY INTENDED TO RESTRICT THE INVESTMENT IN A PARTICULAR FINANCIAL YEAR AND THUS HAS FIXED A LIMI T OF RS.50 LAKHS AS PERMISSIBLE INVESTMENT IN A PARTICULAR FINANCIAL YEAR. IT ALSO ITA NO. 578/BANG/2014 PAGE 7 OF 11 APPEARS CLEAR THAT THE GOVERNMENT DID NOT INTEND TO RESTRICT THE MAXIMUM AMOUNT OF EXEMPTION PERMISSIBLE UNDER SECTI ON 54EC OF THE ACT. THE FACT THAT THE LEGISLATURE HAS CONSC IOUSLY USED THE WORDS IN A FINANCIAL YEAR IN THE PROVISO TO SECTION 54EC OF THE ACT ALSO FORTIFIES THE SAME. IF THE LEGISLATURE WAN TED TO RESTRICT THE EXEMPTION ITSELF TO RS.50 LAKHS IT COULD HAVE S IMPLY DISPENSED WITH USING THE WORDS IN A FINANCIAL YEAR . 9.8 THE JUDICIAL DECISIONS RELIED UPON BY THE LEAR NED COUNSEL FOR THE ASSESSEE ALSO SUPPORT THE STAND OF THE ASSE SSEE. THE HON'BLE APEX COURT WHILE DECIDING THE CASE OF VIKRA NT TYRES LTD VS. FIRST ITO REPORTED IN 247 ITR 821 HAVE ALREADY LAID DOWN THE LAW ON INTERPRETING OF STATUTES BY HOLDING THEREOF THAT :- IT IS SETTLED PRINCIPLE IN LAW THAT THE COURTS WH ILE CONSTRUING REVENUE ACTS HAVE TO GIVE A FAIR AND REASONABLE CONSTRUCTION TO THE LANGUAGE OF A STATUTE WITHOUT LEANING TO ONE SIDE OR THE OTHER, MEANING THEREBY THAT NO TAX OR LEVY CAN BE IMPOSED ON A SUBJECT BY AN ACT OF PARLIAMENT WITHOUT THE WORDS OF THE STATUTE CLEARLY SHOWING AN INTENTION TO LAY THE BURDEN ON THE SUBJECT. IN THIS PROCESS, THE COURTS MUST ADHERE TO THE WORDS OF THE STATUTE AND THE SO CALLED EQUITABLE CONSTRUCTION OF THOSE WORDS OF THE STATUTE IS NOT PERMISSIBLE. THE TASK OF THE COURT IS TO CONSTRUE THE PROVISIONS OF THE TAXING ENACTMENTS ACCORDING TO THE ORDINARY AND NATURAL MEANING OF THE LANGUAGE USED AND THEN TO APPLY THAT MEANING TO THE FACTS OF THE CASE AND IN THAT PROCESS IF THE TA X PAYER IS BROUGHT WITHIN THE NET HE IS CAUGHT, OTHERWISE HE HAS TO GO FREE. IN THE CASE OF CWT VS. HASHMATUNNISA BEGUM REPORTED IN 176 ITR 98 (SC), THE HON'BLE APEX COURT HELD THAT WHILE INTERPRETING STATUTES, LITERAL CONSTRUCTION HAS TO BE APPLIED RE GARDLESS OF RESULTS AND THAT ONLY IN A SITUATION WHERE TWO VIEWS ARE RE ASONABLY POSSIBLE, SHOULD REFERENCE BE GIVEN TO THAT VIEW WH ICH PROMOTES CONSTITUTIONALITY AND NOT WHERE THE STATUTE CAN BE READ ONLY IN A PARTICULAR WAY. THE FOLLOWING DECISIONS OF THE HON'BLE APEX COURT HAVE LAID DOWN THE PROPOSITION THAT PROVISIONS FOR DEDUC TION, ITA NO. 578/BANG/2014 PAGE 8 OF 11 EXEMPTION OR RELIEF ARE TO BE CONSTRUED LIBERALLY I N ORDER TO ADVANCE THE OBJECTIVE AND NOT TO FRUSTRATE IT. (I) CIT VS. GWALIOR RAYON SILK MANUFACTURING CO. LTD. (196 ITR 149)(SC) (II) CIT VS. VEGETABLE PRODUCTS LTD. ( 88 ITR 192) (III) BAJAJ TEMPO LTD. VS. CIT (196 ITR 188)(SC) 1 7 TAKING INTO CONSIDERATION THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, THE CBDTS CIRCULAR NO.3 /2008, AND THE PRINCIPLES LAID DOWN BY THE HON'BLE APEX COURT FOR INTERPRETING STATUTES, WE ARE OF THE CONSIDERED VIE W THAT IT WOULD BE IN THE FITNESS OF THINGS, TO FOLLOW THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF ASPI GINWALA & OTHER S (SUPRA) RELIED ON BY THE ASSESSEE AND HOLD THAT THE ASSESSE E IS ENTITLED TO TOTAL DEDUCTION UNDER SECTION 54EC OF THE ACT SPREA D OVER A PERIOD OF TWO FINANCIAL YEARS @ RS.50 LAKHS EACH ON INVESTMENTS MADE IN SPECIFIED INSTRUMENTS WITHIN A PERIOD OF SI X MONTHS FROM THE DATE OF SALE OF THE PROPERTY. 10. IT MAY ALSO BE MENTIONED THAT SECTION 54EC HAS BEEN AMENDED BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 1.4.2015 AS FOL LOWS:- THE FOLLOWING SECOND PROVISO SHALL BE INSERTED AFT ER THE EXISTING PROVISO TO SUB-SECTION (1) OF SECTION 54EC BY THE FINANCE (NO. 2) ACT, 2014, W.E.F. 1-4-2015 : PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN ASSESSEE IN THE LONG-TERM SPECIFIED ASSET, FROM CAPITAL GAINS ARISI NG FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERR ED AND IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAK H RUPEES. ITA NO. 578/BANG/2014 PAGE 9 OF 11 11. THE PURPOSE OF INSERTION OF THE ABOVE PROVISO I S EXPLAINED IN THE EXTRACT FROM THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) BILL, 2014, WHICH IS REPRODUCED BELOW:- CAPITAL GAINS EXEMPTION ON INVESTMENT IN SPECIFIED BONDS THE EXISTING PROVISIONS CONTAINED IN SUB-SECTION (1 ) OF SECTION 54EC OF THE ACT PROVIDE THAT WHERE CAPITAL GAIN ARI SES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET AND THE ASSES SEE HAS, WITHIN A PERIOD OF SIX MONTHS, INVESTED THE WHOLE OR PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE PROPORTIONATE CAPITAL GAINS SO INVESTED IN THE LONG TERM SPECIFIED ASSET, OUT OF T HE WHOLE OF THE CAPITAL GAIN, SHALL NOT BE CHARGED TO TAX. THE PROV ISO TO THE SAID SUB-SECTION PROVIDES THAT THE INVESTMENT MADE IN TH E LONG-TERM SPECIFIED ASSET DURING ANY FINANCIAL YEAR SHALL NOT EXCEED FIFTY LAKH RUPEES. HOWEVER, THE WORDINGS OF THE PROVISO HAVE CREATED A N AMBIGUITY. AS A RESULT THE CAPITAL GAINS ARISING DURING THE YE AR AFTER THE MONTH OF SEPTEMBER WERE INVESTED IN THE SPECIFIED A SSET IN SUCH A MANNER SO AS TO SPLIT THE INVESTMENT IN TWO YEARS I .E., ONE WITHIN THE YEAR AND SECOND IN THE NEXT YEAR BUT BEFORE THE EXPIRY OF SIX MONTHS. THIS RESULTED IN THE CLAIM FOR RELIEF OF ON E CRORE RUPEES AS AGAINST THE INTENDED LIMIT FOR RELIEF OF FIFTY LAKH RUPEES. ACCORDINGLY, IT IS PROPOSED TO INSERT A PROVISO IN SUB-SECTION (1) SO AS TO PROVIDE THAT THE INVESTMENT MADE BY AN ASS ESSEE IN THE LONG-TERM SPECIFIED ASSET, OUT OF CAPITAL GAINS ARI SING FROM TRANSFER OF ONE OR MORE ORIGINAL ASSET, DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AND IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAK H RUPEES. THIS AMENDMENT WILL TAKE EFFECT FROM 1 APRIL, 2015 AND WILL, ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 2 015-16 AND SUBSEQUENT ASSESSMENT YEARS . [CLAUSE 23] (EMPHASIS SUPPLIED) ITA NO. 578/BANG/2014 PAGE 10 OF 11 12. IT CAN BE SEEN FROM THE ABOVE STATUTORY AMENDME NT AND THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) BILL, 2014 THAT THE LEGISLATURE HAS ACCEPTED THE AMBIGUITY IN THE LANGUAGE OF THE P ROVISO, BUT HAS AMENDED THE LAW WITH PROSPECTIVE EFFECT I.E., FROM A.Y. 2015-16. IT IS THEREFORE CLEAR THAT FOR AY PRIOR TO AY 2015-16, ON INTERPRETATION OF THE PROVISIONS IT IS POSSIBLE FOR AN ASSESSEE CLAIM DED UCTION OF RS.1 CRORE BY INVESTING RS.50 LACS IN EACH OF THE FINANCIAL YEARS , BUT WITHIN 6 MONTHS FROM THE DATE OF TRANSFER. IN THE GIVEN CIRCUMSTANCES, IT CANNOT BE SAID THAT THE VIEW ENTERTAINED BY THE AO WAS NOT A POSSIBLE VIEW. IN THE CIRCUMSTANCES, THE JURISDICTION U/S.263 OF THE ACT COULD NOT HAVE BEEN EXERCISED BY THE CIT. 13. FOR THE REASONS STATED ABOVE, THE ORDER U/S. 26 3 IS HEREBY QUASHED. 14. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MARCH , 2015 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 5 TH MARCH , 2015 . /D S/ ITA NO. 578/BANG/2014 PAGE 11 OF 11 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR/ SENIOR PRIVATE SECRETARY ITAT, BANGALORE.