MR.LEMES E. D'SOUZA, MUMBAI V. ITO WARD 21(3)(3), MUMBAI

ITA 5802/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1279 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADEV
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Capital asset; Cost of acquisition; Date of conversion
• Section: 45(2); 80C; 143(3); 54B; 54F

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.5802 /MUM/2013 ( / ASSESSMENT YEARS : 2009-10) MR. LEMES E. D SOUZA, ALK BRICKS FACTORY COMPANY, BEHIND SAKINAKA, MOTOR TRAINING SCHOOL, OPP. JANSEVA DECOILERS, SAKINAKA, MUMBAI 400 072. / V. ITO WARD 21(3)(3), ROOM NO. 507, 5 TH FLOOR, C-11, PRATYAKSHAKAR BHAVAN, B.K.C. BANDRA, MUMBAI 400 051. ./ PAN :AADPD7091 H ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SH RI M. SUBRAMANIAN REVENUE BY : SHRI RAJESH KUMAR YADEV / DATE OF HEARING : 22-03-2017 / DATE OF PRONOUNCEMENT : 10-04-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 5802/MUM/2013 IS DIRECTED AGAINST THE APPELLATE ORDER DATED 15 TH JULY, 2013 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 22, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2009-10, THE APPE LLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDE R DATED 26 TH DECEMBER, 2011 PASSED BY THE LEARNED ASSESSING OFFICER (HEREI NAFTER CALLED THE AO) U/S 143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALL ED THE ACT). ITA 5802/MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (HER EINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE OR DER OF AO AND DISMISSING THE APPEAL. 2. THE LEARNED CIT(APPEAL) HAS ERRED IN NOT APPRECIA TING THE FACT THAT ASSESSEE HAS RIGHTLY INVESTED IN RURAL ELECTRIFIC ATION AND HIGHWAY AUTHORITY BOND WELL WITHIN SIX MONTHS FROM THE DATE O F RECEIPT OF THE AMOUNT AND IN THAT WAY HE HAD DONE EVERYTHING POSSIBL E ON HIS PART TO COMPLY WITH REQUIREMENTS OF SECTION 54EC OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LO WER AUTHORITIES ERRED IN FAILING TO APPRECIATE THAT IN CAS E OF 'DEEMED TRANSFER' OF PROPERTY UNDER SECTION 2(47)(V) OF THE ACT INVOLVING FULL PAYMENT OF THE CONSIDERATION AMOUNT IN A SPREAD OVER M ANNER. THE DATE OF TRANSFER FOR THE PURPOSE OF ALLOWING TIME FOR INVESTING THE CONSIDERATION AMOUNT IN SPECIFIED ASSETS SHOULD BE TH E ACTUAL DATE OF RECEIPT OF EACH INSTALLMENT OF THE PAYMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT (APPEAL) ERRED IN NOT TAKING INTO CONSIDERATION THE VARIOUS JUDICIAL DECISION AS CITED BEFORE HIM. A) MAHESH NEMICHAND GANESHWADE V/S. ITO (ITAI PUNE) B) CHANCHAL KUMAR SIRCAR V/S. ITO (2012) 18 TAXMAN C OM 304 (KOLKATA- TRIB.) 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE LEARNED CIT(A) ERRED IN CONFIRMING THE ASSESSMENT OF LONG TE RM GAIN OF RS. 24,85,420/-. 6. WITHOUT PREJUDICE TO THE ABOVE, APPELLANT ADD THAT THE SALE OF TDR (TRANSFER OF DEVELOPMENT RIGHT) IS NOT TAXABLE, EV EN THOUGH IT IS CAPITAL ASSETS. RELYING ON THE DECISION OF SUPREME C OURT IN CASE OF B. C. SRINIVAS SHETTY, WHEREIN IT HAS BEEN HELD THAT WHE RE IN RESPECT OF CAPITAL ASSETS IT IS NOT POSSIBLE TO DETERMINE THE COST O F ACQUISITION OR COST OF IMPROVEMENT THEN CAPITAL GAIN ON TRANSFER OF S UCH CAPITAL ASSETS CANNOT BE BROUGHT TO TAX UNDER SECTION 45 OF THE ACT. RELIANCE IS ALSO PUT ON THE FOLLOWING CASE LAWS:- A) JETHALAL D. MEHTA V. DCIT ITA 5802/MUM/2013 3 B) KAILASH JYOTI NO. 2 CHS LTD. V. DEPARTMENT OF INCO ME TAX 23/01/2013. C) SHRI ISHVARLAL MANMOHANDAS KANOJIA D) SHANTA P. TANWANI DAT MUMBAI. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRANSPORT OPERATOR. THE A.O. OBSERVED THAT THE ASSESSEE HAD SOLD TDR FOR AN AMOUNT OF RS. 1,45,92,750/- VIDE AGREEMENT DATED 06-08-2008 AND L ONG TERM CAPITAL GAINS TO THE TUNE OF RS. 47,35,420/- WERE COMPUTED BY THE ASSESSEE AS PER PROVISIONS OF THE ACT. IT WAS OBSERVED BY THE AO TH AT THE ASSESSEE HAS PURCHASED A FLAT OF RS. 22,50,000/- FOR WHICH EXEMP TION U/S 54F OF 1961 ACT WAS CLAIMED AND THE BALANCE AMOUNT OF CAPITAL GAIN OF RS. 24,85,420/- WAS CLAIMED TO BE INVESTED IN NHAI/REC BONDS ON 26-03-2 009 AND EXEMPTION U/S 54EC OF 1961 ACT WAS CLAIMED BY THE ASSESSEE. T HE DATE OF AGREEMENT FOR TRANSFER OF TDR WAS DATED 06-08-2008. THE AO OBSERV ED THAT THE LAST DATE OF MAKING INVESTMENT IN REC/NHAI BONDS FOR CLAIMING EX EMPTION U/S 54EC OF 1961 ACT WAS WITHIN 6 MONTHS OF DATE OF TRANSFER OF TDR ON 06-08-2008 WHICH SHOULD HAVE BEEN DONE ON OR BEFORE 06-02-2009 , WHILE IN THE INSTANT CASE THE ASSESSEE HAD INVESTED IN REC BONDS ON 26-0 3-2009 WHICH IS BEYOND 6 MONTHS FROM THE DATE OF TRANSFER OF TDR ON 06-08- 2008. THE AO OBSERVED THAT THE ASSESSEE IS NOT ENTITLED FOR CLAIMING EXEM PTION U/S 54EC OF 1961 ACT AS THE INVESTMENTS IN REC/NHAI BONDS WERE MADE BEYO ND SIX MONTHS FROM THE DATE OF TRANSFER OF TDR. THE AO OBSERVED THAT ASSESSEE HAD CLAIMED THAT THE SAID PAYMENTS ON SALE OF TDR WERE RECEIVED ON D IFFERENT DATES STARTING FROM 07.08.2008 TO 15.11.2008. THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED TO HAVE INVESTED IN RESIDENTIAL FLAT FOR CL AIMING EXEMPTION U/S 54F OF 1961 ACT TO THE TUNE OF RS. 22,50,000/- WHICH WAS A LLOWED BY THE AO . BUT THE INVESTMENTS MADE IN BONDS OF NATIONAL HIGHWAY A UTHORITY OF INDIA TO THE TUNE OF RS. 21,50,000/- WAS MADE ON 26-03-2009 WHIL E INVESTMENT IN REC BONDS OF RS. 22,00,000/- WAS MADE ON 26-03-2009 WHI CH WAS BEYOND THE PERIOD OF 6 MONTHS FROM THE DATE OF TRANSFER ON 06- 08-2008 WHICH IS NOT IN ITA 5802/MUM/2013 4 CONSONANCE OF PROVISIONS OF SECTION 54EC OF 1961 AC T AND HENCE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54EC OF 1961 ACT WAS REJ ECTED BY THE AO , ALTHOUGH AO OBSERVED THAT THE INVESTMENT IN NHAI BO NDS/ REC BONDS WERE MADE WITHIN 6 MONTHS OF RECEIPT OF LAST PAYMENT BY ASSESSEE TOWARDS SALE CONSIDERATION ON TRANSFER OF TDR , WHICH WAS LAST R ECEIVED ON 15-11-2008 AND HENCE IN NUTSHELL THE EXEMPTION TO THE TUNE OF RS. 24,85,420/- CLAIMED BY THE ASSESSEE U/S 54EC OF 1961 WAS DENIED TO THE ASSESSEE AND WAS BROUGHT TO TAX BY THE AO AS BEING MADE BEYOND SIX M ONTHS AFTER THE DATE OF TRANSFER OF TDR BEING IN VIOLATION OF PROVISIONS OF SECTION 54EC OF 1961 ACT, VIDE ASSESSMENT ORDER DATED 26-12-2011 PASSED BY TH E AO U/S 143(3) OF 1961 ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 26-12-20 11 PASSED BY A.O. U/S 143(3) OF 1961 ACT , THE ASSESSEE FILED FIRST APPEA L BEFORE THE LD. CIT(A) . 5. THE ASSESSEE SUBMITTED BEFORE LEARNED CIT(A) THA T IT HAS SOLD TDR FOR RS. 1,45,92,750/- VIDE AGREEMENT DATED 06-08-2008 AS AG AINST WHICH PAYMENTS WERE RECEIVED AS DETAILED HEREUNDER : DATE AMOUNT 07.08.2008 19,92,750 26.09.2008 35,00,000 03.10.2008 35,00,000 25.10.2008 21,00,000 08.11.2008 15,00,000 15.11.2008 20,00,000 TOTAL 1,45,92,750 THUS, IT WAS SUBMITTED BY THE ASSESSEE THAT LAST PA YMENT TOWARDS SALE CONSIDERATION ON TRANSFER OF TDR WAS RECEIVED ON 15 -11-2008 AND PERIOD OF 6 ITA 5802/MUM/2013 5 MONTHS SHOULD BE RECKONED FROM THIS DATE FOR ALLOWI NG EXEMPTION U/S 54EC OF 1961 ACT. THE ASSESSEE SUBMITTED THAT IT MADE F OLLOWING INVESTMENTS FOR CLAIMING EXEMPTION U/S 54EC OF 1961 ACT WHICH IS WI THIN TIME PRESCRIBED UNDER 1961 ACT IF RECKONED FROM THE LAST DATE OF RE CEIVING THE PAYMENT ON 15- 11-2008 UNDER AN AGREEMENT FOR TRANSFER OF TDR DATE D 06-08-2008 : DATE OF PAYMENT PARTICULAR AMT . SECTION 22.10.2008 FLAT 22,75,000 54F 26.03.2009 NATIONAL HIGHWAY BOND 21,50,000 54EC 26.03.2009 RURAL ELECTRIFICATION BOND 22,00,000 54 EC ======== TOTAL 66,25,000 ======== IT WAS SUBMITTED BY ASSESSEE BEFORE LEARNED CIT(A) THAT DISPUTE IS ONLY WITH RESPECT TO ALLOWABILITY OF EXEMPTION U/S 54EC OF 19 61 ACT AND UNLESS PAYMENTS ARE RECEIVED TOWARDS SALE CONSIDERATION OF TDR, THE ASSESSEE IS NOT IN A POSITION TO MAKE INVESTMENTS IN REC/NHAI BONDS AND HENCE PERIOD OF SIX MONTHS FOR MAKING INVESTMENT IN REC/NHAI BONDS SHOULD BE RECKONED FROM THE LAST DATE OF RECEIPT OF CONSIDERATION BY T HE ASSESSEE WHICH WAS 15- 11-2008 , ON SALE OF TDR . THE ASSESSEE RELIED UPON CIRCULAR NO 791 DATED 02- 06-2000 ISSUED BY CBDT, WHICH STIPULATES AS UNDER: 442. WHETHER THE DATE OF TRANSFER, AS REFERRED TO IN SECTION 54E OF THE ACT, IS THE DATE OF CONVERSION OF THE CAPITAL A SSET INTO STOCK-IN- TRADE OR THE DATE ON WHICH THE STOCK-IN-TRADE IS SO LD OR OTHERWISE TRANSFERRED BY THE ASSESSEE 1. SECTION 2( 47 ) OF THE INCOME-TAX ACT PROVIDES THAT ANY CONVERSI ON OF CAPITAL ASSETS INTO STOCK-IN-TRADE SHALL BE REGARDE D AS A TRANSFER. THIS TRANSFER ARISES IN THE YEAR IN WHICH SUCH CONV ERSION TAKES PLACE AND, ACCORDINGLY, CAPITAL GAIN WOULD NORMALLY ARISE IN THAT VERY YEAR. HOWEVER, SECTION 45(2) OF THE ACT POSTPONES THE ASS ESSMENT OF SUCH ITA 5802/MUM/2013 6 CAPITAL GAINS TO THE YEAR IN WHICH THE STOCK-IN-TRA DE IS ACTUALLY SOLD OR OTHERWISE TRANSFERRED BY THE ASSESSEE. 2. IN ORDER TO QUALIFY FOR DEDUCTION UNDER SECTION 54 E OF THE ACT, THE INVESTMENT IN SPECIFIED ASSETS WAS REQUIRED TO BE M ADE WITHIN SIX MONTHS FROM THE DATE OF TRANSFER. A QUESTION HAD AR ISEN AS TO WHETHER THE DATE OF TRANSFER, AS REFERRED TO IN SEC TION 54E OF THE ACT, IS THE DATE OF CONVERSION OF THE CAPITAL ASSET INTO STOCK-IN-TRADE OR THE DATE ON WHICH THE STOCK-IN-TRADE IS SOLD OR OTH ERWISE TRANSFERRED BY THE ASSESSEE. 3. THE BOARD HAD EARLIER ISSUED A CIRCULAR NO. 560 DA TED 18-5-1990, IN CONSULTATION WITH MINISTRY OF LAW, CLARIFYING TH AT FOR PURPOSES OF SECTION 54E OF THE ACT, THE DATE OF TRANSFER IN SUC H CASES IS THE DATE ON WHICH THE CAPITAL ASSET IS CONVERTED BY THE ASSE SSEE INTO STOCK-IN- TRADE AND NOT THE DATE ON WHICH SUCH STOCK-IN-TRADE IS SOLD OR OTHERWISE TRANSFERRED BY THE ASSESSEE. SECTION 54E BECAME INOPERATIVE FOR TRANSFERS MADE ON OR AFTER 1-4-1992 . 4. SECTIONS 54EA, 54EB AND 54EC ALSO PROVIDE DEDUCTIO N FROM LONG- TERM CAPITAL GAIN IF THE SALE PROCEEDS/LONG-TERM CA PITAL GAIN IS INVESTED IN SPECIFIED ASSETS WITHIN A PERIOD OF 6 M ONTHS FROM THE DATE OF TRANSFER. IT IS NOT POSSIBLE FOR AN ASSESSE E TO MAKE THE REQUIRED INVESTMENT UNDER THE AFORESAID SECTIONS AT THE POINT OF CONVERSION OF CAPITAL ASSET INTO STOCK-IN-TRADE BEC AUSE THE RIGHT TO COLLECT SALES CONSIDERATION IN SUCH CASES ARISES ON LY AT THE POINT OF SALE OR TRANSFER OTHERWISE OF STOCK-IN-TRADE. THE B OARD HAS CONSIDERED THE MATTER AFRESH IN CONSULTATION WITH T HE MINISTRY OF LAW AND HAS DECIDED THAT THE PERIOD OF 6 MONTHS FOR MAKING INVESTMENTS IN SPECIFIED ASSETS FOR THE PURPOSE OF SECTIONS 54EA, 54EB AND 54EC SHOULD BE TAKEN FROM THE DATE SUCH ST OCK-IN-TRADE IS SOLD OR OTHERWISE TRANSFERRED, IN TERMS OF SECTI ON 45(2) OF THE ACT. CIRCULAR : NO. 791, DATED 2-6-2000. THE ASSESSEE ALSO RELIED UPON THE DECISION OF ITAT, PUNE IN THE CASE OF MAHESH NEMICHAND GANESHWADE V. ITO (2012) 73 DTR (P UNE) (TRIB.) 1 AND DECISION OF ITAT, KOLKATTA IN THE CASE OF CHANCHAL KUMAR SIRCAR V. ITO (2012) 18 TAXMANN.COM 304(KOL-TRIB.). ITA 5802/MUM/2013 7 THE LEARNED CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD TO MAKE INVESTMENT OF THE WHOLE OR ANY PART OF THE CAPITAL GAINS WITHIN A PERIOD OF 6 MONTHS IN LONG TERM SPEC IFIED ASSETS FROM THE DATE OF TRANSFER FOR CLAIMING EXEMPTION U/S 54EC OF 1961 ACT. THE LEARNED CIT(A) OBSERVED THAT IN THE PRESENT CASE THE DATE OF TRANS FER OF TDR IS THE DATE ON WHICH THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FO R SALE OF THE TDRS WHICH WAS ON 06-08-2008. THE LD. CIT(A) OBSERVED THAT SEC TION 54EC OF 1961 ACT HAS NEVER USED THE WORD CONSIDERATION AS IT USES THE WORD TRANSFER ONLY, WHICH IN THE INSTANT CASE WAS ON 06-08-2008 AND THE INVESTMENT IN NHAI/REC BONDS SHOULD HAVE BEEN MADE ON OR BEFORE 0 6-02-2009, WHILE THE ASSESSEE INVESTED IN REC/NHAI BONDS ON 26-03-2009 W HICH IS BEYOND A PERIOD OF 6 MONTHS. HENCE, THE LD. CIT(A) HELD THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION CANNOT BE ALLOWED U/S 54 EC OF THE AC T AS THE INVESTMENT WAS MADE BEYOND 6 MONTHS FROM THE DATE OF TRANSFER. THE ASSESSEE RELIED ON THE CBDT CIRCULAR NO. 791 DATED 2 ND JUNE, 2000 WHEREBY THE LD. CIT(A) HELD THAT THE CBDT CIRCULAR COVERS THE SITUATION OF CONVERSIO N OF CAPITAL ASSET INTO STOCK-IN-TRADE AND THE TIME IS ALLOWED TILL WHEN TH E STOCK-IN-TRADE IS ACTUALLY SOLD OR OTHERWISE TRANSFERRED BY THE ASSESSEE WHICH IS NOT THE ISSUE IN THE PRESENT CASE AND, HENCE, THIS CIRCULAR IS NOT APPLI CABLE TO THE FACTS OF THE ASSESSEES CASE, VIDE APPELLATE ORDER DATED 15-07-2 013 PASSED BY LEARNED CIT(A). 6. AGGRIEVED BY THE APPELLATE ORDER DATED 15-07-201 3 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED SECOND APPEAL BEFORE THE TRIBUNA L. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SOLD TDR AGAINST WHICH CAPITAL GAIN WAS EARNED OF RS. 47 ,35,420/-. IT WAS SUBMITTED THAT THE ASSESSEE HAD INVESTED IN RESIDEN TIAL FLAT TO THE TUNE OF RS.22,50,000/- AGAINST WHICH REVENUE HAS ALLOWED EX EMPTION U/S 54F OF 1961 ACT. THE DISPUTE HAS ARISEN W.R.T. INVESTMENT IN REC/NHAI BONDS TO THE ITA 5802/MUM/2013 8 TUNE OF RS. 43,51,000/- WHICH WAS MADE ON 26-03-200 9 WHICH WAS BEYOND SIX MONTH FROM THE DATE OF AGREEMENT FOR TRANSFER O F TDR ON 06-08-2008. IT WAS SUBMITTED THAT THE ASSESSEE HAD REALIZED THE SA LE PROCEEDS OF TDR ON VARIOUS DATES FROM 07-08-2008 TO 15-11-2008 AND INV ESTMENT IN REC/NHAI BONDS WERE MADE WITHIN SIX MONTHS IF CALCULATED FRO M THE LAST DATE OF RECEIEPT OF CONSIDERATION ON 15-11-2008. THE LD. C IT(A) HAS DISTINGUISHED THE CBDT CIRCULAR NO. 791 DATED 2 ND JUNE, 2000 WHEREBY HE HELD THAT THE CBDT CIRCULAR COVERS ONLY WHERE THE CAPITAL ASSET IS CON VERTED INTO STOCK-IN-TRADE AND THEN THE PERIOD WAS TO BE RECKONED FROM THE DAT E OF ACTUAL SALE OR TRANSFER OF STOCK-IN-TRADE BY THE ASSESSEE. THE LE ARNED COUNSEL FOR ASSESSEE RELIED ON DECISION OF ITAT, PUNE IN THE CASE OF MAH ESH NEMICHANDRA GANESHWADE & ORS. V. ITO (2012) 73 DTR (PUNE-TRIB.) 1 AND DECISION OF ITAT- KOLKATTA IN THE CASE OF CHANCHAL KUMAR SIRCAR V. IT O IN ITA NO. 1146/KOL/2011 VIDE ORDERS DATED 21.02.2012 (2012) 1 8 TAXMANN.COM 304(KOL.TRIB) . IN ALTERNATIVE, IT WAS CONTENDED BY LEARNED COUNSEL FOR THE ASSESSEE THAT GAINS ARISING FROM SALE OF TDR ARE NO T TAXABLE AND RELIED UPON DECISION OF HONBLE APEX COURT IN THE CASE OF CIT V . B.C.SRINIVASA SETTY (1981) 128 ITR 294(SC) . 8. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) WAS Q UITE RIGHT IN DISTINGUISHING THE CBDT CIRCULAR. IT IS SUBMITTED THAT THE ASSESSEE CANNOT BE ALLOWED DEDUCTION U/S 54EC OF THE ACT AS THE INVEST MENT HAVE NOT BEEN MADE WITHIN SIX MONTHS FROM THE DATE OF TRANSFER. 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON . THE ASSESSEE HAD SOLD TDR FOR RS.1,45,92,750/- VIDE AGREEMENT FOR SALE DA TED 06-08-2008 AGAINST WHICH PAYMENTS WERE RECEIVED BY THE ASSESSEE OVER A PERIOD OF TIME FROM 07- 08-2008 TO 15-11-2008 AND LONG TERM CAPITAL GAIN OF RS. 47,35,420/- WERE COMPUTED. THE ASSESSEE AND HIS BROTHER HAD SURRENDE RED THEIR RIGHT IN THE ITA 5802/MUM/2013 9 PLOT OF LAND BEARING CTS NO. 138B AND 138/2B TO MUN ICIPAL CORPORATION OF GREATER MUMBAI(MCGM) AND IN LIEU OF THIS MCGM HAD I SSUED DEVELOPMENT RIGHTS CERTIFICATE DATED 29-07-2008 FOR 1355.70 SQU ARE METERS AREA OF FSI . THE SAID TDR EQUIVALENT OF 14592.75 SQUARE FEET WAS TRANSFERRED FOR CONSIDERATION OF RS. 1,45,92,750/- AT THE RATE OF R S. 100/- PER SQUARE FEET BY ASSESSEE, VIDE AGREEMENT FOR SALE DATED 06-08-2008. THE ASSESSEE UNDISPUTEDLY RECEIVED PAYMENTS OF RS. 1,45,92,750/- AGAINST SALE OF TDR , VIDE AGREEMENT FOR SALE DATED 06-08-2008 AS UNDER : DATE AMOUNT 07.08.2008 19,92,750 26.09.2008 35,00,000 03.10.2008 35,00,000 25.10.2008 21,00,000 08.11.2008 15,00,000 15.11.2008 20,00,000 TOTAL 1,45,92,750 THE ASSESSEE HAD MADE INVESTMENT IN RESIDENTIAL FLA T TO THE TUNE OF RS. 22,50,000/- AGAINST WHICH EXEMPTION U/S 54F OF 1961 ACT WAS ALLOWED BY REVENUE , WHICH IS NOT IN DISPUTE BEFORE THE TRIBUN AL . THE DISPUTE HAS ARISEN W.R.T. INVESTMENTS MADE BY THE ASSESSEE IN NHAI/RE C BONDS TOTALING RS. 43,51,000/- WHICH WAS ADMITTEDLY MADE BY ASSESSEE O N 26-03-2009 AND THE ASSESSEE HAD CLAIMED EXEMPTION U/S 54EC OF THE ACT, WHICH WAS DENIED BY AUTHORITIES BELOW AS THE SAID INVESTMENT IN NHAI/RE C BONDS WERE MADE BEYOND PERIOD OF SIX MONTHS FROM THE DATE OF TRANSF ER OF TDR ON 06-08-2008 WHICH INFRINGES PROVISIONS OF SECTION 54EC OF 1961 ACT AND HENCE AS PER AUTHORITIES BELOW , THE ASSESSEE IS NOT ENTITLED FO R EXEMPTION U/S 54EC OF 1961 ACT. HOWEVER , WE FIND THAT THE SAID INVESTME NTS HAVE BEEN MADE ITA 5802/MUM/2013 10 WITHIN SIX MONTHS FROM THE DATE OF RECEIPT OF LAST INSTALLMENT OF SALE CONSIDERATION OF TDR WHICH WAS RECEIVED ON 15-11-20 08 , THE TOTAL CONSIDERATION HAVING BEEN RECEIVED OVER A PERIOD OF TIME SPREAD FROM 07-08- 2008 TO 15-11-2008, AS DETAILED ABOVE. THE ASSESSE E RECEIVED FIRST PAYMENT OF RS. 19,92,750/- ON 07-08-2008 WHICH WAS PAID BY THE ASSESSEE FOR ARCHITECT FEES AND ALSO SHARE OF HIS BROTHER IN TDR . THE SECOND INSTALLMENT OF RS. 35,00,000/- WAS RECEIVED ON 26-09-2008 AND IF T HE PERIOD OF SIX MONTH IS RECKONED FROM THIS DATE OF SECOND INSTALLMENT, THE ASSESSEE HAS MADE THE INVESTMENT WITHIN TIME STIPULATED U/S 54EC OF 1961 ACT OF SIX MONTHS AS INVESTMENT IN REC/NHAI BONDS OF RS. 43,51,000/- WAS MADE ON 26-03-2009. SECTION 54EC OF 1961 AS WAS PREVALENT DURING RELEVA NT PERIOD IS REPRODUCED HEREUNDER: [ CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN CER TAIN BONDS. 54EC. (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRED BEI NG HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE O F SUCH TRANSFER, INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCO RDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SA Y, (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET I S 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 I S 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 THE CA PITAL GAIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE L ONG-TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN, SHALL NOT BE CHARGED UNDER SECTION 45 : [ 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 RUPEE S.] (2) WHERE THE LONG-TERM SPECIFIED ASSET IS TRANSFER RED OR CONVERTED (OTHERWISE THAN BY TRANSFER) INTO MONEY AT ANY TIME WITHIN A PERIOD OF ITA 5802/MUM/2013 11 THREE YEARS FROM THE DATE OF ITS ACQUISITION, THE A MOUNT OF CAPITAL GAINS ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH LONG-TERM SPECIFI ED ASSET AS PROVIDED IN CLAUSE (A) OR, AS THE CASE MAY BE, CLAUSE (B) OF SUB-SECTION (1) SHALL BE DEEMED TO BE THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS RELATING TO LONG-TERM CAPITAL ASSET OF THE PREVIOUS YEAR IN WHICH THE LONG- TERM SPECIFIED ASSET IS TRANSFERRED OR CONVERTED (O THERWISE THAN BY TRANSFER) INTO MONEY. EXPLANATION.IN A CASE WHERE THE ORIGINAL ASSET IS TRANSFERRED AND THE ASSESSEE INVESTS THE WHOLE OR ANY PART OF THE CAPIT AL GAIN RECEIVED OR ACCRUED AS A RESULT OF TRANSFER OF THE ORIGINAL ASS ET IN ANY LONG-TERM SPECIFIED ASSET AND SUCH ASSESSEE TAKES ANY LOAN OR ADVANCE ON THE SECURITY OF SUCH SPECIFIED ASSET, HE SHALL BE DEEME D TO HAVE CONVERTED (OTHERWISE THAN BY TRANSFER) SUCH SPECIFIED ASSET I NTO MONEY ON THE DATE ON WHICH SUCH LOAN OR ADVANCE IS TAKEN. [(3) WHERE THE COST OF THE LONG-TERM SPECIFIED ASSE T HAS BEEN TAKEN INTO ACCOUNT FOR THE PURPOSES OF CLAUSE (A) OR CLAUSE (B ) OF SUB-SECTION (1), (A) A DEDUCTION FROM THE AMOUNT OF INCOME-TAX WITH REFERENCE TO SUCH COST SHALL NOT BE ALLOWED UNDER SECTION 88 FOR ANY ASSESSMENT YEAR ENDING BEFORE THE 1ST DAY OF APRIL, 2006; (B) A DEDUCTION FROM THE INCOME WITH REFERENCE TO SUCH COST SHALL NOT BE ALLOWED UNDER SECTION 80C FOR ANY ASSESSMENT YEAR BEGINNING ON OR AFTER THE 1ST DAY OF APRIL, 2006.] EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) COST, IN RELATION TO ANY LONG-TERM SPECIFIED ASSET, MEANS THE AMOUNT INVESTED IN SUCH SPECIFIED ASSET OUT OF CAPITAL GAI NS RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE ORIGINAL ASSET; [(B) LONG-TERM SPECIFIED ASSET FOR MAKING ANY IN VESTMENT UNDER THIS SECTION DURING THE PERIOD COMMENCING FROM THE 1ST D AY OF APRIL, 2006 AND ENDING WITH THE 31ST DAY OF MARCH, 2007, MEANS ANY BOND, REDEEMABLE AFTER THREE YEARS AND ISSUED ON OR AFTER THE 1ST DA Y OF APRIL, 2006, BUT ON OR BEFORE THE 31ST DAY OF MARCH, 2007, (I) BY THE NATIONAL HIGHWAYS AUTHORITY OF INDIA CONSTITUTED UNDER SECTION 3 OF THE NATIONAL HIGHWAYS AUTHORITY OF IND IA ACT, 1988 (68 OF 1988); OR (II) BY THE RURAL ELECTRIFICATION CORPORATI ON LIMITED, A COMPANY FORMED AND REGISTERED UNDER THE COMPANIES ACT, 1956 (1 OF 1956), AND NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OFFI CIAL GAZETTE FOR THE PURPOSES OF THIS SECTION WITH SUCH CONDITIONS (INCL UDING THE CONDITION FOR PROVIDING A LIMIT ON THE AMOUNT OF INVESTMENT BY AN ASSESSEE IN SUCH BOND) AS IT THINKS FIT:] ITA 5802/MUM/2013 12 [ PROVIDED THAT WHERE ANY BOND HAS BEEN NOTIFIED BEFORE THE 1S T DAY OF APRIL, 2007, SUBJECT TO THE CONDITIONS SPECIFIED IN THE NOTIFICATION, BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTE UNDER TH E PROVISIONS OF CLAUSE (B) AS THEY STOOD IMMEDIATELY BEFORE THEIR AMENDMEN T BY THE FINANCE ACT, 2007, SUCH BOND SHALL BE DEEMED TO BE A BOND N OTIFIED UNDER THIS CLAUSE;] [(BA) LONG-TERM SPECIFIED ASSET FOR MAKING ANY I NVESTMENT UNDER THIS SECTION ON OR AFTER THE 1ST DAY OF APRIL, 2007 MEAN S ANY BOND, REDEEMABLE AFTER THREE YEARS AND ISSUED ON OR AFTER THE 1ST DAY OF APRIL, 2007 BY THE NATIONAL HIGHWAYS AUTHORITY OF INDIA CO NSTITUTED UNDER SECTION 3 OF THE NATIONAL HIGHWAYS AUTHORITY OF IND IA ACT, 1988 (68 OF 1988) OR BY THE RURAL ELECTRIFICATION CORPORATION L IMITED, A COMPANY FORMED AND REGISTERED UNDER THE COMPANIES ACT, 1956 (1 OF 1956).] SECTION 54EC OF 1961 ACT IS A BENEFICIAL SECTION WH ICH ALLOWS EXEMPTION AGAINST LONG TERM CAPITAL GAINS EARNED BY TAX-PAYER ON TRANSFER OF ORIGINAL ASSET, IF THE INVESTMENTS ARE MADE IN LONG TERM SPE CIFIED ASSETS WITHIN SIX MONTHS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET. THE SECTION ENCOURAGES MAKING INVESTMENTS IN REC/NHAI BONDS OUT OF LONG TE RM CAPITAL GAINS ON TRANSFER OF ORIGINAL ASSET EARNED BY TAX-PAYER AND IS TO BE CONSTRUED REASONABLY TO GIVE FULL EFFECT TO THE BENEFICIAL PR OVISIONS AND IT CANNOT BE INTERPRETED IN A MANNER TO FRUSTRATE THE INTENT OF LEGISLATURE. THE TAX-PAYER CANNOT BE ASKED TO DO IMPOSSIBLE , AS IN CASES IF T HE CONSIDERATION IS NOT RECEIVED BY THE TAX-PAYER ON SALE / TRANSFER OF LON G TERM CAPITAL ASSETS BUT IS RECEIVED SUBSEQUENTLY AS PROVIDED IN AN AGREEMENT T O SALE, THE TAX-PAYER CANNOT BE EXPECTED TO INVEST IN REC/NHAI BONDS OUT OF HIS OWN OTHER SOURCES OR TO MAKE BORROWINGS TO INVEST IN NHAI/REC BONDS TO CLAIM EXEMPTION U/S 54EC OF 1961 ACT, THE OBJECTIVE OF TH E BENEFICIAL PROVISION OF SECTION 54EC OF 1961 ACT IS TO ENCOURAGE INVESTMENT S OUT OF SALE PROCEEDS RECEIVED OR ACCRUING TO THE TAX-PAYER FROM SALE OF LONG TERM CAPITAL ASSETS AND THE TAX-PAYER CANNOT BE ASKED TO DO IMPOSSIBLE IN C ASES WHERE GENUINELY THE SALE CONSIDERATIONS ARE NOT RECEIVED AT THE TIME OF TRANSFER OF LONG TERM CAPITAL ASSET IN TERMS OF AGREEMENT FOR SALE/TRANSFER OF LO NG TERM CAPITAL ASSET. THE ASSESSSEE HAS RIGHTLY RELIED UPON THE DECISION OF T HE KOLKATA BENCH OF THIS ITA 5802/MUM/2013 13 TRIBUNAL IN THE CASE OF CHANCHAL KUMAR SIRCAR V. IT O IN ITA NO. 1146/KOL/2011 & ITA NO. 1147/KOL/2011 (2012) 18 TAX MANN.COM 304(KOL.TRIB.) FOR ASSESSMENT YEAR 2005-06 VIDE CO MMON ORDER DATED 21 ST FEBRUARY, 2012, WHEREIN ON SIMILAR FACTS, THE DEDUC TION U/S 54EC OF 1961 WAS ALLOWED BY THE KOLKATA-TRIBUNAL. THE RELEVANT E XTRACT OF THE DECISION OF KOLKATA TRIBUNAL IS REPRODUCED HEREUNDER : 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH F ACTS AND CIRCUMSTANCES OF THE CASE. FROM THE DATE OF RECEIPT OF SALE CONSIDERATION AND DATE OF DEPOSITS WITH NABARD (DATES MENTIONED I N PARA 3 PAGE 3 OF THIS ORDER) CLEARLY REVEALS THAT DEPOSIT IS MADE WI THIN ONE MONTH OF THE RECEIPT OF SALE CONSIDERATION. IT IS A FACT THAT TH ESE TWO BROTHERS SOLD PART OF HIS IMMOVABLE PROPERTY AND RECEIVED FIRST PAYMEN T FROM CPI(M) ON 01.07.2004 AND FROM REMAINING THREE PURCHASERS ON 0 2.07.2004 AS PART PAYMENT ALTHOUGH THE POSSESSION WAS ALSO HANDED OVE R TO THESE PURCHASERS. IT IS ALSO A FACT THAT THE SALE DEED WA S REGISTERED, IN THE CASE OF CPI(M) ON 27.06.2005 AND IN THE CASE OF OTHER TH REE PURCHASERS ON 28.09.2005. THE ASSESSEE HAS DEPOSITED THE SALE CON SIDERATION WITHIN ONE MONTH OF RECEIPT WITH NABARD FOR AVAILING EXEMP TION U/S. 54EC OF THE ACT. IN SUCH CIRCUMSTANCES WHETHER THE ASSESSEE IS ELIGIBLE FOR CLAIM OF EXEMPTION OR NOT ? IN OUR VIEW, IN THIS TYPE OF CASE, THE PERIOD OF SIX MONTHS FOR MAKING DEPOSIT U/S. 54EC OF THE ACT SHOU LD BE RECKONED FROM THE DATES OF ACTUAL RECEIPT OF THE CONSIDERATION, B ECAUSE IN THE PRESENT CASE THE ASSESSEE HAS RECEIVED PART PAYMENT AS ON T HE DATE OF EXECUTION OF AGREEMENT AND HANDING OVER OF POSSESSION OF THE PROPERTY AND RECEIVED PART PAYMENT AFTER SIX MONTHS AT THE TIME OF REGISTRATION OF SALE DEED OR EVEN AFTER THAT IN FEW OF INSTANCES, AS IS EVIDENTLY CLEAR FROM THE ABOVE CHART AT PARA 3 PAGE 3 OF THIS ORDER. WE ARE OF THE VIEW THAT IF THE PERIOD IS RECKONED FROM THE DATE OF AGREEMENT AND R ECEIPT OF PART PAYMENT AT THE FIRST INSTANCE, THEN IT WOULD LEAD T O AN IMPOSSIBLE SITUATION BY ASKING ASSESSEE TO INVEST MONEY IN SPE CIFIED ASSET BEFORE ACTUAL RECEIPT OF THE SAME. THIS VIEW OF OURS IS SU PPORTED BY THE DECISION OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF S. GOPAL REDDY V. CIT [1990] 181 ITR 378 , WHEREIN SIMILAR SITUATION OF DELAYED RECEIPT OF COMPENSATION AMOUNT ON ACQUISITION OF PR OPERTY, HON'BLE HIGH COURT OBSERVED THAT IF THE INVESTMENT IN SPECIFIED ASSET WAS MADE WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF RECEIPT OF COMPENSATION, AS AGAINST THE DATE OF ACQUISITION OF THE PROPERTY DEN OTING TRANSFER THEREOF, THE SAME SHOULD BE CONSIDERED TO BE SUFFICIENT COMP LIANCE FOR THE PURPOSE OF CLAIMING EXEMPTION U/S. 54E OF THE ACT. HON'BLE HIGH COURT OBSERVED THAT A TAXING STATUTE OR ANY OTHER STATUTE HAS TO BE CONSTRUED ITA 5802/MUM/2013 14 REASONABLY AND EVERY EFFORT SHOULD ALWAYS BE MADE T O ASCERTAIN THE INTENTION OF PARLIAMENT FROM THE WORDS EMPLOYED AND , AS FAR AS POSSIBLE, AN INTERPRETATION WHICH LEADS TO ABSURDITY SHOULD B E AVOIDED. THOUGH EQUITY AND TAXATION ARE OFTEN STRANGERS, ATTEMPTS S HOULD BE MADE THAT THESE DO NOT REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE, THEN SUCH CONSTRUCTION WO ULD BE PREFERRED TO THE LITERAL CONSTRUCTION. THE HON'BLE COURT ALSO OBSERV ED THAT UNDER THE PROVISIONS OF SECTION 54E OF THE ACT, WHAT IS TO BE INVESTED IN SPECIFIED ASSETS IS 'THE CONSIDERATION OR ANY PART THEREOF' A ND UNLESS THE CONSIDERATION IS RECEIVED, OR ACCRUES, THERE IS NO QUESTION OF INVESTING IT. THE SECOND PROVISO TO SUB-SECTION (1) OF SECTION 54 E INSERTED WITH EFFECT FROM APRIL 1, 1984, STATES THAT IN THE CASE OF COMP ULSORY ACQUISITION OF PROPERTY UNDER A STATUTE, IF THE FULL AMOUNT OF COM PENSATION AWARDED FOR SUCH ACQUISITION IS NOT RECEIVED BY THE ASSESSEE ON THE DATE OF SUCH TRANSFER, THE PERIOD OF SIX MONTHS REFERRED TO IN S UB-SECTION (1) SHALL, IN RELATION TO SO MUCH OF SUCH COMPENSATION AS IS NOT RECEIVED ON THE DATE OF THE TRANSFER, BE RECKONED FROM THE DATE ON WHICH SU CH COMPENSATION IS RECEIVED BY THE ASSESSEE. IT WOULD BE CONSISTENT WI TH REASON TO CONSTRUE THIS PROVISO AS BEING MERELY CLARIFICATORY. IN OTHE R WORDS, THE PROVISION MADE BY THE SECOND PROVISO TO SUB-SECTION (1) OF SE CTION 54E SHOULD BE DEEMED TO HAVE PREVAILED EVEN PRIOR TO APRIL 1, 198 4, I.E., WITH EFFECT FROM THE DATE OF THE ENACTMENT OF SECTION 54E OF THE ACT . 7. SIMILAR SITUATION WAS ANALYSED BY HON'BLE ALLAHABA D HIGH COURT IN THE CASE OF CIT V. JANARDHAN DASS [2008] 299 ITR 210 / 170 TAXMAN 113 WHEREIN HON'BLE HIGH COURT OBSERVED THAT SECTION 5 4B(2) OF THE ACT, PROVIDES THAT WHERE THE TRANSFER OF THE ASSET IS BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW AND THE COMPENSATION AMOU NT AWARDED FOR SUCH ACQUISITION IS ENHANCED BY ANY COURT, TRIBUNAL OR OTHER AUTHORITY, THE CAPITAL GAINS ATTRIBUTABLE TO THE ENHANCED VALU E OF THE COMPENSATION SHALL BE DEALT WITH AS PROVIDED FOR IN SECTION 54B( 2), ACCORDING TO WHICH IF THE ENHANCED COMPENSATION AS RECEIVED HAS BEEN INVE STED IN AGRICULTURAL LAND WITHIN TWO YEARS OF ITS RECEIPT, TO THAT EXTEN T NO CAPITAL GAINS TAX WILL BE CHARGED. THIS PROVISION GIVES AN INSIGHT THAT SE CTION 54B OF THE ACT HAS TAKEN INTO CONSIDERATION THE POSSIBILITY OF ENH ANCEMENT OF COMPENSATION AMOUNT BY THE COURT, TRIBUNAL, ETC., A T THE SUBSEQUENT STAGES. IF THE AGRICULTURAL LAND IS PURCHASED WITHI N A PERIOD OF TWO YEARS FROM SUCH ENHANCEMENT, THE CAPITAL GAIN OR NO CAPIT AL GAIN, AS THE CASE MAY BE, WILL BE CHARGED UNDER SECTION 54B(2) OF THE ACT. IN OTHER WORDS, THE PERIOD OF TWO YEARS IN SUCH CASES WILL COMMENCE FROM THE DATE OF ENHANCEMENT OF THE COMPENSATION AMOUNT BY THE COURT , ETC. THIS IS INDICATIVE OF THE LEGISLATIVE INTENT TO THE EFFECT THAT FOR THE PURPOSES OF SECTION 54B, THE DATE OF RECEIPT OF ENHANCEMENT OF THE COMPENSATION AMOUNT IS THE RELEVANT CONSIDERATION AND NOT THE DA TE OF TRANSFER. IT ITA 5802/MUM/2013 15 FOLLOWS, THEREFORE, THAT FOR A DELAY ON THE PART OF THE ACQUIRING BODY IN MAKING PAYMENT OF THE COMPENSATION AMOUNT, THE ASSE SSEE SHOULD NOT BE DEPRIVED OF THE BENEFIT OF SECTION 54B OF THE AC T PROVIDED HE FULFILLS THE OTHER CONDITIONS OF THE SECTION WITHIN THE STIPULAT ED PERIOD FROM THE DATE OF RECEIPT OF THE PAYMENT. THE EMPHASIS IS ON THE D ATE OF ACTUAL RECEIPT OF THE PAYMENT AND NOT ON THE DATE OF TRANSFER OF THE ASSET, IN THE CASE OF AGRICULTURAL LAND. THE STATUTE SHOULD BE INTERPRETE D AS IT STANDS WITHOUT MAKING ANY ADDITION OR SUBTRACTION THEREIN. SECTION 54B OF THE ACT IS A BENEFICIAL PROVISION FOR AN ASSESSEE WHO IS OTHERWI SE LIABLE TO PAY INCOME-TAX UNDER THE HEAD 'CAPITAL GAINS'. ON A CON JOINT READING OF SECTION 45 WITH SECTION 54B OF THE ACT, THE WORD 'T RANSFER' SHOULD BE READ FOR THE PURPOSES OF INCOME-TAX AS THE DATE ON WHICH THE COMPENSATION AMOUNT IS PAID TO SUCH ASSESSEE. THE PERIOD OF TWO YEARS FOR THE PURPOSES OF EXAMINATION UNDER SECTION 54B OF THE AC T WILL COMMENCE FROM THE DATE OF RECEIPT OF COMPENSATION AND NOT FROM TH E DATE OF ACQUISITION OF THE AGRICULTURAL LAND. 8. IN ANOTHER SIMILAR SITUATION HON'BLE ANDHRA PRADES H HIGH COURT IN THE CASE OF DARAPANENI CHENNA KRISHNAYYA (HUF) V. CIT [ 2007] 291 ITR 98 WHEREIN HON'BLE HIGH COURT OBSERVED THAT LAND BELO NGING TO THE ASSESSEE WAS ACQUIRED BY THE GOVERNMENT OF ANDHRA P RADESH IN TERMS OF THE PROVISIONS OF THE LAND ACQUISITION ACT DURING 1 981-82. THE LAND ACQUISITION OFFICER AWARDED COMPENSATION AT THE RAT E OF RS. 20,000 PER ACRE. NOT SATISFIED WITH THE AWARD, THE ASSESSEE SO UGHT A REFERENCE AND THE CIVIL COURT ENHANCED THE COMPENSATION TO RS. 71 ,380 PER ACRE. ON APPEAL, THE HIGH COURT ENHANCED THE COMPENSATION TO RS. 2,83,000 PER ACRE. BY VIRTUE OF THE ORDERS OF THE HIGH COURT, TH E ASSESSEE RECEIVED ADDITIONAL COMPENSATION AMOUNTING TO RS. 15,26,135 AND INTEREST ON THE ADDITIONAL COMPENSATION AMOUNTING TO RS. 28,58,622 ON APRIL 9, 1991, AND ON RECEIVING THE AMOUNTS, HE INVESTED THE ENTIR E ADDITIONAL COMPENSATION IN THE UTI CAPITAL GAINS SCHEME OF 198 3, ON OCTOBER 1, 1991, I.E., WITHIN SIX MONTHS FROM THE DATE OF RECE IPT OF THE ADDITIONAL COMPENSATION AND SOUGHT EXEMPTION UNDER SECTION 54E OF THE ACT. THE ASSESSING OFFICER DENIED THIS EXEMPTION ON THE GROU ND THAT THE CAPITAL GAIN AROSE IN RESPECT OF TRANSFER OF THE ORIGINAL A SSET PRIOR TO MARCH 31, 1983, WHEN THE UTI CAPITAL GAINS SCHEME, 1983, WAS NOT IN FORCE. ON APPEAL, THE COMMISSIONER (APPEALS) UPHELD THE DISAL LOWANCE MADE BY THE ASSESSING OFFICER. ON FURTHER APPEAL, THE TRIBU NAL HELD THAT THE ASSESSEE WAS ENTITLED FOR THE EXEMPTION UNDER SECTI ON 54E. ON A REFERENCE, THE HON'BLE COURT HELD THAT THE ASSESSEE RECEIVED THE AMOUNTS IN 1991-92. ADMITTEDLY, THE AMOUNTS WERE DEPOSITED BY THE ASSESSEE WITHIN SIX MONTHS FROM THE DATE OF ITS RECEIPT, IN THE UTI CAPITAL GAINS SCHEME, WHICH IS ONE OF THE UNITS AS SPECIFIED ASSE T MENTIONED IN ITA 5802/MUM/2013 16 EXPLANATION 1(C)(II) TO SECTION 54E OF THE ACT. THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 54E OF THE ACT. 9. IN VIEW OF THE ABOVE CONSISTENT PRINCIPLE ADOPTED BY HON'BLE HIGH COURTS IN RESPECT TO INTERPRETATION OF A BENEFICIAL PROVISION I.E. EXEMPTION PROVISION UNDER CAPITAL GAINS TAX, WE HAVE TO TAKE SIMILAR APPROACH IN DECIDING THE ISSUE IN HAND I.E. THE CLAIM OF ASSESS EE FOR EXEMPTION U/S. 54EC OF THE ACT BECAUSE THIS IS EXACTLY SIMILAR TO SECTION 54E, 54B OR 54EAOR EB OF THE ACT. IN THE PRESENT CASE BEFORE US , ADMITTEDLY ASSESSEE RECEIVED PART PAYMENTS AFTER EXECUTION OF AGREEMENT TO SALE AND HANDING OVER OF POSSESSION THEREBY COMPLETING THE TRANSACTI ON IN TERMS OF SECTION 53A OF TRANSFER OF PROPERTY ACT BUT INVESTED IN SPE CIFIED BONDS I.E. NABARD BONDS WITHIN ONE MONTH OF THE RECEIPT OF SAL E CONSIDERATION BEING PART PAYMENT. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S. 54EC OF THE ACT ON PART PAYMENT RECEIVED AFTER COMPLETION OF TRANSACTION ON 02.07.2 004 AND AS DETAILED OUT IN PARA 3 PAGE 3 OF THIS ORDER. AO IS DIRECTED ACCORDINGLY. THIS ISSUE OF ASSESSEE'S APPEAL IS ALLOWED. SIMILAR ARE THE FA CTS IN ITA NO. 1146/KOL/2011 IN THE CASE OF SHRI CHANCHAL KR. SIRC AR, HENCE AO WILL ALLOW EXEMPTION IN THIS CASE ALSO. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE AL LOWED. THE ASSESSEE HAS ALSO RIGHTLY RELIED UPON DECISION OF ITAT-PUNE IN THE CASE OF MAHESH NEMICHAND GANESHWADE V. ITO(SUPRA) . SECTION 54 EC OF 1961 ACT IS A BENEFICIAL PROVISION AND IS TO BE REASONABLY INT ERPRETED TO GIVE EFFECT TO THE INTENTION OF PARLIAMENT WHILE LEGISLATING THE SAID PROVISION AND IT CANNOT BE CONSTRUED IN MANNER TO FRUSTRATE THE INTENTION OF L EGISLATURE . IN THIS CASE, THE ASSESSEE ADMITTEDLY RECEIVED PAYMENTS AFTER EXE CUTION OF THE AGREEMENT ON 06-08-2008, WHICH WERE RECEIVED OVER A PERIOD OF TIME FROM 07-08-2008 TO 15-11-2008 AND INVESTMENTS OF RS. 43,51,000/- WERE MADE IN NHAI/REC BONDS ON 26-03-2009 WHICH IS WITHIN SIX MONTHS IF R ECKONED FROM THE DATE OF RECEIPT OF LAST INSTALLMENT OF SALE CONSIDERATION B Y THE ASSESSEE ON 15-11- 2008 AND ALSO IS WITHIN SIX MONTHS FROM THE RECEIPT OF SECOND INSTALLMENT OF RS. 35,00,000/- ON 26-09-2008. IT IS ALSO ADMITTED AND UNDISPUTED THAT FIRST INSTALLMENT OF RS. 19,92,750/- RECEIVED BY THE ASSE SSEE ON 07-08-2008 WAS ITA 5802/MUM/2013 17 UTILIZED BY ASSESSEE FOR PAYING ARCHITECT FEE AND P AYMENT OF SHARE OF HIS BROTHER IN TDR. CONSIDERING THE FACTUAL MATRIX OF T HE CASE AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSES SEE IS ELIGIBLE FOR EXEMPTION U/S 54EC OF THE ACT AND ADDITION OF RS. 2 4,85,420/- MADE BY THE AO AND AS CONFIRMED BY LEARNED CIT(A) IS NOT SUSTAI NABLE IN EYES OF LAW AND IS HEREBY ORDERED TO BE DELETED. IN VIEW OF OUR ABOVE DECISION, THE ALTERNATE GROUND RAISED BY THE ASSESSEE THAT CAPITAL GAIN ON SALE OF TDR IS NOT TAXABLE HAS BECOME ACADEMIC AND INFRUCTUOUS AND THE SAID Q UESTION OF LAW IS KEPT OPEN. WE ORDER ACCORDINGLY. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO. 5802/MUM/2013 FOR THE ASSESSMENT YEAR 2009-10 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2017. # $% &' 10-04-2017 ( ) SD/- SD/- (D.T. GARASIA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 10-04-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI