LILAVATI M SAYANI, MUMBAI V. ITO 14(1)(2), MUMBAI

ITA 6619/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6639 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 12-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: JIGNESH R SHAH
• Keywords: Capital asset; Retrospective amendment; Validity of assessment; Reason to believe
• Section: 143(3); 234B; 148; 54

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI .. , ; BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ./ I.T.A. NO.6619 /MUM/2013 ( / ASSESSMENT YEAR : 2008-2009 MRS. LILAVATI M. SAYANI, 94, VITHALWADI, KALBADEVI ROAD, MUMBAI 400 002. / VS. INCOME TAX OFFICER 14(1)(2), EARNESH HOUSE, 2 ND FLOOR, R. NO. 204, NARIMAN POINT, MUMBAI - 400021. ./ PAN : AACPS 4953L ( # / APPELLANT ) .. ( $%# / RESPONDENT ) A PPELLANT BY SHRI JIGNESH R. SHAH R E SPONDENT BY : SHRI M.L. PERUMAL ) * / DATE OF HEARING : 27-03-2014 ) * / DATE OF PRONOUNCEMENT : 23-04-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF LD. CIT(A) -25, MUMBAI DATED 9-10-2013 AND THE MAIN ISS UE INVOLVED THEREIN AS RAISED IN GROUND 2 RELATERS TO THE DISALLOWANCE MAD E BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF ASSESSEE S CLAIM FOR EXEMPTION OF RS. 34,59,538/- U/S 54EC OF THE INCOME TAX ACT, 196 1 ON INVESTMENT MADE IN NHAI BONDS. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28-8-200 8 DECLARING TOTAL INCOME ITA 6619/M/13 2 OF RS. 51,560/-. THE SAID RETURN WAS ORIGINALLY ACC EPTED BY THE A.O. U/S 143(1) OF THE ACT. SUBSEQUENTLY, IT CAME TO THE NOT ICE OF THE A.O. THAT THE ASSESSEE HAD DERIVED LONG TERM CAPITAL GAIN OF RS. 84,59,538/- FROM SALE OF HER NEW OFFICE PREMISES ON 14-2-2008 AND THE SAME W AS CLAIMED TO BE EXEMPT U/S 54EC OF THE ACT ON THE GROUND THAT INVESTMENT O F RS. 85 LACS WAS MADE IN THE BONDS ISSUED BY RURAL ELECTRIFICATION CORPOR ATION LTD. AMOUNTING TO RS. 50 LACS ON 25-3-2008 AND IN THE BONDS ISSUED BY NATIONAL HIGHWAYS AUTHORITY AMOUNTING TO RS. 35 LACS ON 30-6-2008. A CCORDING TO THE A.O., THE ASSESSEE WAS ENTITLED TO CLAIM U/S 54EC OF THE ACT MAXIMUM EXEMPTION TO THE EXTENT OF RS. 50 LACS FOR INVESTMENT MADE IN SP ECIFIED BONDS. HE THEREFORE ENTERTAINED THE REASON TO BELIEVE THAT THERE WAS ES CAPEMENT OF INCOME BY THE ASSESSEE BY WAY OF EXCESS EXEMPTION ALLOWED U/S 54E C OF THE ACT TO THE EXTENT OF RS. 34,59,538/- AND ACCORDINGLY REOPENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION BY ISSUE OF NOTICE U/S 148 ON 20-10-2011. IN THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE A CT BY AN ORDER DTD. 23- 11-2012, HE DENIED THE CLAIM OF THE ASSESSEE FOR EX EMPTION U/S 54 EC OF THE ACT TO THE EXTENT OF RS. 34,59,538/- REJECTING THE CONTENTION OF THE ASSESSE THAT THE LIMIT OF RS. 50 LACS WAS NOT AN OVERALL AB SOLUTE LIMIT AND IT WAS ONLY AN INVESTMENT APPLICABLE FOR THE FINANCIAL YEAR. 3. THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF CLAIM FOR EXEMPTION OF RS. 34,59,538/- U/S 54EC OF THE ACT WAS DISPUTED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. CIT(A) AND AFTER CONSID ERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE O N RECORD, THE LD. CIT(A) CONFIRMED THE SAID DISALLOWANCE MADE BY THE A.O. FO R THE FOLLOWING REASONS GIVEN IN PARA 5.5 OF HIS IMPUGNED ORDER:- 5.5 I HAVE PERUSED THE ASSESSMENT ORDER, REMAND RE PORT, SUBMISSIONS OF THE APPELLANT, RELEVANT PROVISIONS OF THE ACT AN D ALSO THE VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE. I FIND THAT I T IS A DEBATABLE ISSUE AND INCIDENTALLY NO DIRECT DECISION OF JURISDICTION HONBLE BOMBAY HIGH COURT, OR EVEN ANY BENCH OF HONBLE ITAT, MUMBAI IS AVAILABLE ON THE ISSUE. AS REGARDS TO THE APPELLANTS CONTENTION THA T THE DECISIONS OF ITA 6619/M/13 3 ITAT ARE BINDING ON LOWER AUTHORITIES; WITH DUE RES PECT TO THE JUDGMENTS, I RESPECTFULLY STATE THAT THE ONLY DECIS ION OF ANY HIGH COURT ON THE ISSUE IS FROM HONBLE HIGH COURT OF MADRAS I N THE CASE OF AREVA T&D INDIA LTD. VS. ACIT (2009) 177 TAXMAN 192 (MAD. ) RELIED UPON BY AO IN PARA 5(E)(III) OF THE ASSESSMENT ORDER, WHICH IS IN FAVOUR OF REVENUE AND WHICH SHOULD PREVAIL AT PRESENT. THE HO NBLE MADRAS HIGH COURT HAS OBSERVED THAT THE INTENTION OF THE LEGISL ATURE IS TO LIMIT THE INVESTMENT IN THE LONG TERM SPECIFIED ASSET TO RS 50 LAKHS, WHICH GOES IN FAVOUR OF THE REVENUE AND AGAINST THE APPELLANT. MOREOVER, IN MY PERSONAL OPINION, THE STATUTE CANNOT BE INTERPRETED SO AS TO DEFEAT ITS VERY INTENTION, ESPECIALLY WHEN SUCH INTERPRETATION WOULD GIVE UNDUE ADVANTAGE ONLY TO A CLASS OF ASSESSEES (I.E. WHO EA RN CAPITAL GAIN IN SECOND HALF OF A FINANCIAL YEAR). AFTER ALL, THE PU RPOSE OF PUTTING THE RESTRICTION OVER ALLOWABLE INVESTMENT IS TO GIVE EQ UAL CHANCE TO ALL ASSESSEES OUT OF LIMITED AMOUNT OF RFC/ NHAI BONDS NOTIFIED AT A PARTICULAR POINT OF TIME, AND ALSO TO DISTRIBUTE TH E SAME TO MAXIMUM NUMBER OF ASSESSEE, RATHER THAN PUTTING SOME OF THE ASSESSEES TO UNDUE ADVANTAGE AT THE COST OF OTHER ASSESSES. AGGRIEVED BY THE ORDER OF THE LD. CIT(A, THE ASSESS EE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUE INVOLVED IN THE APPEAL OF THE A SSESSEE IS SQUARELY COVERED BY VARIOUS DECISIONS OF THE TRIBUNAL. IN ONE OF SUC H DECISIONS RENDERED IN THE CASE OF SHRI ASPI GINWALA, SHREE RAM ENGG. & MFG IN DUSTRIES VS. ACIT (ITA NO. 3226/AHD/2011 DTD. 30-3-2012), THE AHMEDABAD BE NCH OF ITAT HELD THAT PROVISION OF SECTION 54EC MAKES IT CLEAR THAT WHERE THE ASSESSEE TRANSFERS IT CAPITAL ASSET AFTER 30 TH SEPTEMBER OF THE FINANCIAL YEAR, HE GETS AN OPPORTUNITY TO MAKE AN INVESTMENT OF RS. 50 LACS EA CH IN TWO DIFFERENT FINANCIAL YEARS AND IS ABLE TO CLAIM EXEMPTION UPTO RS. 1 CRORE U/S 54EC OF THE ACT. THE TRIBUNAL OBSERVED THAT THE LANGUAGE O F THE PROVISO IS CLEAR AND UNAMBIGUOUS AND RELIED ON THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF IPCA LABORATORIES, 266 ITR 521(SC) TO HOLD THAT SINCE THE WORDING OF THE PROVISO TO SECTION 54 EC IS CLEAR, THE BENEFITS WHICH ARE AVAILABLE TO THE ASSESSEE CANNOT BE DENIED. IN HIS IMPUGNED ORDER, T HE LD. CIT(A) HAS RELIED ON ITA 6619/M/13 4 THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CA SE OF AREVA T&D INDIA LTD. VS. ACIT (2009) 177 TAXMAN 192 (MAD). IN THE CASE OF COROMANDEL INDUSTRIES PVT. LTD. VS. ACIT (ITA NO. 411/MDS/2013 ORDER DATED 25-06- 2013), THE CHENNAI BENCH OF THE TRIBUNAL, HOWEVER, HELD THAT THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF AREVA T&D INDIA LTD. (SUPRA) WAS RENDERED IN THE CONTEXT OF WRIT PETITION FILED BY T HE ASSESSEE CHALLENGING THE AMENDMENT TO SECTION 54EC OF THE ACT BY FINANCE ACT , 2007 WITH RETROSPECTIVE EFFECT W.E.F. 1-4-2006 AND THE SAME T HEREFORE WAS NOT APPLICABLE IN THE CONTEXT OF INTERPRETATION OF PROVISO TO SECT ION 54EC OF THE ACT WHICH ALLOWED THE DEDUCTION TO THE ASSESSEE IN RESPECT OF INVESTMENT OF RS. 50 LACS MADE IN THE ELIGIBLE BONDS IN TWO DIFFERENT FINANCI AL YEARS. AT THE TIME OF HEARING, THE LD. D.R. HAS SUBMITTED THAT THE DECISI ON OF JAIPUR BENCH OF ITAT IN THE CASE OF ACIT VS. SHRI RAJ KUMAR JAIN & SONS (HUF) (ITA NO. 648/JP/2011 ORDER DTD. 31-1-2012) IS IN FAVOUR OF THE REVENUE ON THIS ISSUE. HOWEVER, AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FO R THE ASSESSEE, THE SAID DECISION OF JAIPUR BENCH OF ITAT HAS ALREADY BEEN C ONSIDERED BY THE BANGALORE BENCH OF ITAT IN ITS DECISION RENDERED IN THE CASE OF SHRI VIVEK JAIRAZBHOY VS. DCIT (ITA NO.236/BANG/2012 DTD. 12 TH DECEMBER, 2012) WHEREIN THE TRIBUNAL FOLLOWED THE DECISION OF AHMED ABAD BENCH OF ITAT IN THE CASE OF SHRI ASPI GINWALA & OTHERS (SUPRA) KEEP ING IN VIEW THE CBDT CIRCULAR NO. 3/208 DATED 12-3-2008 AND THE PRINCIPL ES LAID DOWN BY THE HONBLE SUPREME COURT. IN OUR OPINION, THIS ISSUE THUS IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS OF THE TRIBUNAL AS DISCUSSED ABOVE AND RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54EC OF THE ACT. GR OUND NO. 2 IS ACCORDINGLY ALLOWED. 5. AS REGARDS GROUND NO. 1, IT IS OBSERVED THAT THE ISSUE RAISED THEREIN RELATING TO VALIDITY OF ASSESSMENT MADE U/S 143(3) R.W.S. 147 OF THE ACT HAS BECOME INFRUCTUOUS OR ACADEMIC IN VIEW OF DECISION RENDERED BY US ON GROUND ITA 6619/M/13 5 NO. 2. WE THEREFORE DO NOT CONSIDER IT NECESSARY O R EXPEDIENT TO ADJUDICATE UPON THE SAME. 6. THE ISSUES RAISED IN GROUND NO. 3 RELATING TO CH ARGING OF INTEREST U/S 234A AND 234B OF THE ACT ARE CONSEQUENTIAL AND THE A.O. IS ACCORDINGLY DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE ASSES SEE ON THESE ISSUES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23- 04-2014 . ) 0 1 23-04-2014 ) SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 23-04-2014 [ .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. 4 () / THE CIT(A)25 MUMBAI. 4. 4 / CIT 14 MUMBAI 5. $8 , * 8 , / DR, ITAT, MUMBAI A BENCH 6. / GUARD FILE. / BY ORDER, % $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI