ARDESHIR SHAPUR NARIELWALA, MUMBAI V. ACIT CIRCLE- 47, MUMBAI

ITA 6518/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0961 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: S A MUKADAM
• Keywords: Surrender of tenancy right

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA , ACCOUNTANT MEMBER ITA NO.6518/MUM/2013(A.Y. 2010-11) ARDESHIR SHAPUR NARIELWALA, 7, KALPATARU, PEDDAR ROAD, MUMBAI 400 026. PAN: AAAPN 6442R (APPELLANT ) VS. THE ACIT, CEN. CIR.17, MUMBAI. (RESPONDENT) APPELLANT BY : SHRI S. A.MUKADAM RESPONDENT BY : SHRI ASGH AR ZAIN DATE OF HEARING 30/03/2015 DATE OF PRONOUNCEMENT 08/04/2015 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-38, MUMBAI DATED 26/08/2013 FOR ASSE SSMENT YEAR 2010-11. GROUNDS OF APPEAL READ AS UNDER: 1) ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DENYING THE EXEMPTION O F RS.1 CRORE U/S 54EC OF THE ACT, TAKING A VIEW THAT THE EXEMPTION IS LI MITED TO RS.50 LACS ONLY. THE INVESTMENT IN SPECIFIED BONDS OF RS.50 LACS EACH WA S MADE IN TWO DIFFERENT FINANCIAL YEARS AND WITHIN TIME LIMIT OF SIX MONTHS FROM THE DATE OF TRANSFER AND THERE WAS NO NEED TO DENY THE EXEMPTION CLAIMED . THE EXEMPTION OUGHT TO BE GRANTED AS THE CEILING ON INVESTMENT OF RS.50 LACS IS PER FINANCIAL YEAR AND NOT PER TRANSACTION. ITA NO.6518/MUM/2013(A.Y. 2010-11) 2 2. THE ASSESSEE IN THE PRESENT APPEAL IS ASSAILING THE ORDER PASSED BY LD. CIT(A), VIDE WHICH IT HAS BEEN HELD THAT IN RESPE CT OF ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE CANNOT SEEK EXEMPTION OF M ORE THAN RS.50.00 LACS, AS AGAINST CLAIM OF THE ASSESSEE THAT ASSESSEE IS ENTI TLED TO GET EXEMPTION UNDER SECTION 54EC OF THE INCOME TAX ACT, 1961(THE ACT) ON THE TWO SEPARATE AMOUNT OF RS.50.00 LACS, PAYMENTS OF WHICH WERE MADE IN TW O DIFFERENT FINANCIAL YEARS, BUT WITHIN THE LIMIT OF SIX MONTHS FROM THE DATE O F TRANSFER. 3. AT THE TIME OF HEARING, IT WAS PLEADED BY LD. A R THAT SUCH DECISION OF LD.CIT(A) AGAINST THE ASSESSEE IS CONTRARY TO THE V IEW TAKEN BY THE TRIBUNAL IN THE CASE OF OM ELECTRONICS VS. DCIT, ORDER DATED 31/7 /2013 PASSED IN ITA NO.7680/MUM/2011, COPY OF THE SAID ORDER WAS PLACE D ON OUR RECORD AND WAS ALSO GIVEN TO LD. DR. IN THE SAID CASE, ASSESSEE HAD R ECEIVED A SUM OF RS.1.50 CRORES ON SURRENDER OF TENANCY RIGHT AGAINST ASSESSEE INVE STED IN REC BONDS IN TWO INSTALLMENT OF RS.50.00 LACS EACH. HOWEVER, THE DE POSIT WAS WITHIN A PERIOD OF SIX MONTHS AND FOLLOWING THE DECISION AHAMEDABAD TRIBUN AL IN THE CASE SHRI ASPI GINWALA, SHREE RAM ENGG.& MFG. INDUSTRIES VS. ACIT, 52 SOT 15 IT WAS HELD THAT ASSESSEE WAS ENTITLED TO SUCH DEDUCTION. 3.1 IT WAS FURTHER SUBMITTED THAT RECENTLY AMENDMEN T HAS BEEN BROUGHT IN SECTION 54EC BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 1/4/2015 APPLICABLE TO ASSESSMENT YEAR 2015-16 ONWARDS AND IT IS PROVIDED THAT INVESTMENT IN TOTAL SHOULD NOT EXCEED RS.50.00 LACS. THUS, IT WAS SUBMITTED THAT THE AMENDMENT IN THE STATUTE IS PROSPECTIVE AND CANNOT BE APPLIED TO IM PUGNED ASSESSMENT YEAR 2010-11. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY AO AND LD. CIT(A). ITA NO.6518/MUM/2013(A.Y. 2010-11) 3 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE AMENDMENT HAS BEEN BROUGHT IN STAT UTE IN SECTION 54EC, WHEREBY SECOND PROVISO IS ADDED TO SECTION 54EC BY THE FINA NCE (NO.2) ACT, 2014 W.E.F. 1/4/2015, WHICH READ AS UNDER: PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN AS SESSEE IN THE LONG-TERM SPECIFIC ASSET, FROM CAPITAL GAIN ARISING FROM TRAN SFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AND IN THE SUBSEQUENT FINANC IAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. IT CAN BE SEEN FROM THE ABOVE PROVISO THAT FROM ASS ESSMENT YEAR 2015-16 ONWARDS ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION/EXEMPTI ON UNDER SECTION 54EC OF THE ACT ON MORE THAN RS.50.00 LACS AND EARLIER TO THE S AID AMENDMENT SUCH INTERPRETATION COULD BE POSSIBLE THAT ASSESSEE IS E NTITLED TO GET DEDUCTION/EXEMPTION UNDER SECTION 54EC , IF IT IS MADE IN TWO DIFFERENT FINANCIAL YEARS, PROVIDED THAT THE PERIOD FALL WITHIN SIX MONTHS AFTER THE DATE OF TRA NSFER. FIRST PROVISO TO SECTION 54EC SUPPORT SUCH CONTENTION WHERE A LIMIT OF RS.50 .00 LACS HAS BEEN PUT FOR INVESTMENT IN A FINANCIAL YEAR. THE FIRST PROVISO, AS IT EXISTED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND BEFORE AMENDMENT READ AS UNDER: PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1 ST DAY OF APRIL, 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. 5.1 IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE OPIN ION THAT LD. CIT(A) HAS COMMITTED AN ERROR IN NOT GRANTING THE IMPUGNED REL IEF TO THE ASSESSEE. ACCORDING TO FACTS OF THE CASE, ASSESSEE HAD EARNED CAPITAL GAIN OF RS.18.33 CRORES ON WHICH APART FROM CLAIMING OTHER DEDUCTION A SUM OF RS. 1.00 CORE WAS CLAIMED TO BE ITA NO.6518/MUM/2013(A.Y. 2010-11) 4 EXEMPTION UNDER SECTION 54EC AND DATES OF PURCHASES HAVE BEEN MENTIONED IN PARA-5 OF ORDER OF LD. CIT9A0 AND THE SAME IS REPR ODUCED BELOW: 5.0 THE FIRST GROUND OF APPEAL PERTSINS TO THE RES TRICTION OF EXEMPTION CLAIMED U/S.54EC OF THE ACT TO RS.50,00,000/- AS AG AINST THE CLAIM OF RS.1,00,00,000/-. IT IS STATED IN THE ASSESSMENT O RDER THAT THE ASSESSEE EARNED CAPITAL GAIN OF RS.18,33,89,470/- AND CLAIME D DEDUCTION OF RS.8,22,53,779/- U/S.54 OF THE ACT AND RS.1,00,00,0 00/- U/S.54EC OF THE ACT. IT IS FURTHER STATED THAT THE ASSESSEE PURCHASED 50 0 BONDS OF RURAL ELECTRIFICATION CORPORATION LTD. (REC) VALUED AT RS .10,000/- EACH AGGREGATING TO RS.50.00 LAKHS ON 31.03.2010 AND 500 BOND OF REC AT SAME VALUE AGGREGATING TO RS.50 LAKHS ON 30.04.2010. TH E ASSESSING OFFICER, RELYING ON THE PROVISO TO SECTION 54EC(1) OF THE AC T DISALLOWED THE EXCESS DEDUCTION OF RS.50,00,000/- CLAIMED BY THE ASSESSEE FOR THE ELABORATE REASONS DISCUSSED IN PARA NOS. 4.1 TO 4.5 OF THE AS SESSMENT ORDER. 5.2 IT IS NOT THE CASE OF AO THAT ASSESSEE DID NOT MAKE AFOREMENTIONED INVESTMENT WITHIN THE PERIOD OF SIX MONTHS FROM TH E DATE OF TRANSFER. THEREFORE, WE ARE OF THE OPINION THAT PRIOR TO AFOREMENTIONED AMENDMENT BROUGHT ON THE STATUTE BY INSERTION OF 2 ND PROVISO TO SECTION 54EC W.E.F. 1/4/2015, ASSESSEE WAS ENTITLED TO CLAIM IMPUGNED DEDUCTION. ACCORDINGLY WE ALLOW THE APPEAL AND THE ADDITION IS DELETED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/04/2015 08/04/2015 SD/- SD/- ( , /RAJENDRA ) ( . . / I.P. BANSAL ) /ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; $% DATED 08/04/2015 ITA NO.6518/MUM/2013(A.Y. 2010-11) 5 / COPY OF THE ORDER FORWARDED TO : 1. & '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. +, ( & ) / THE CIT(A)- 4. +, / CIT 5. -. ),%/0 , &1 &/0 , / DR, ITAT, MUMBAI 6. 2 / GUARD FILE. / BY ORDER, * -, ), //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . ./ VM , SR. PS