ACIT, Khanna V. Sh. Tapvir Singh, Doraha

ITA 688/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60918 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: T S SETHI
• Keywords: Capital asset; Gift
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R. SOOD, AM AND MS. SUSHMA CHOWLA, JM ITA NO. 688/CHD/2011 ASSESSMENT YEAR: 2008-09 A.C.I.T. CIRCLE, KHANNA V TAPVIR SINGH W NO. 13, H NO. 87 TEHSIL PAYAL VPO DORAHA PAN: AQWPS 2804 E ITA NO. 689/CHD/2011 ASSESSMENT YEAR: 2008-09 A.C.I.T. CIRCLE, KHANNA V JAPVIR SINGH W NO. 13, H NO. 87 TEHSIL PAYAL VPO DORAHA PAN: AJKPS 1930 N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MANJIT SINGH ASSESSEE BY: SHRI T.S. SETHI DATE OF HEARING: 25.06.2012 DATE OF PRONOUNCEMENT: 27 .06.2012 ORDER PER T.R. SOOD, A.M ITA NO. 688/CHD/2011 TAPVIR SINGH IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1 (A) THAT THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS. 22,96,121/- MADE BY THE AS SESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S 54EC O F THE INCOME- TAX ACT, 1961. (B) THAT THE LD. CIT(A)-II HAS FAILED TO APPRECIATE THAT THE ACT ENVISAGES INVESTMENT INTO SPECIFIED ASSETS OUT OF T HE LONG TERM CAPITAL GAINS ONLY. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SOLD TWO PROPERTIES ON 5.4.2007 AND 30.11.2007 ON WHICH LONG TERM CAPITAL GAINS WAS AMOUNTING TO RS. 22,11,079/- AND RS. 85,042/-. IT WAS FURTHER NOTED THAT THE ASSESSEE HAS DEPOSITED THE AMOUNT OF SALE CONSIDER ATION IN HDFC BANK. OUT OF THIS SUM WITH HDFC BANK, A SUM OF RS. 15.00 LAKH S WAS FOR PURCHASE OF 2 FDR AND SOME MONEY WAS GIVEN LOAN TO CERTAIN PERSO NS. LATER ON 21.9.2007 REC BONDS AMOUNTING TO RS. 15.00 LAKHS WERE PURCHAS ED. THIS SUM ACCORDING TO THE ASSESSING OFFICER HAD BEEN RECEIVED BY WAY O F TRANSFER FROM ANOTHER BANK ACCOUNT OF THE ASSESSEE WITH PUNJAB & SIND BAN K, DORAHA BRANCH AND ANOTHER TRANSFER FROM JASPREET SINGH AND LOAN FROM SUKHPAL SINGH (FATHER). THE ASSESSEE HAD ALSO PURCHASED REC BONDS OF RS. 7, 20,000/- ON 3.10.2007 AND FOR THIS FUNDS AMOUNTING TO RS. 7,50,000/- WERE TRANSFERRED FROM ASSESSEES ACCOUNT WITH PUNJAB SIND BANK. FURTHER REC BONDS WERE PURCHASED FOR RS. 90,000/- ON 18.12.2007 AND FUNDS FOR THE SAME WERE ARRANGED OUT OF GIFT OF RS. 8.00 LAKHS. THE ASSESSI NG OFFICER WAS OF THE OPINION THAT SINCE THE FUNDS INVESTED IN PURCHASE OF REC BO NDS WERE NOT OUT OF CAPITAL GAIN, THEREFORE, HE ISSUED A SHOW CAUSE NOTICE THA T WHY EXEMPTION U/S 54EC SHOULD NOT BE DENIED. IN RESPONSE THE ASSESSEE PL ACED RELIANCE ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE O F CIT V. 305 ITR 371, CIT V. LATE N. KASI VISWANATHAN. IN THIS CASE THE ASSE SSEE HAS MADE INVESTMENT PRIOR TO RECEIVING THE COMPENSATION FOR SALE OF LAN D AND IT WAS HELD THAT SECTION 54EC DOES NOT PREVENT THE ASSESSEE FOR MAKING INVES TMENT OUT OF AVAILABLE FUNDS EVEN BEFORE THE ENHANCED COMPENSATION IS RECE IVED. HOWEVER, THE ASSESSING OFFICER DID NOT FIND MERIT IN THESE SUBMI SSIONS, THEREFORE, ACCORDING TO THE ASSESSING OFFICER THE FUNDS WERE NOT INVESTE D OUT OF CAPITAL GAIN AND ACCORDINGLY THE ASSESSEE WAS HELD TO BE NOT ELIGIB LE FOR DEDUCTION U/S 54EC. 3. BEFORE THE LD. CIT(A) THE SUBMISSIONS MADE BEFOR E THE ASSESSING OFFICER WERE REITERATED. 4. THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIONS O BSERVED THAT THE INVESTMENT WAS MADE WITHIN STIPULATED PERIOD OF SIX MONTHS AND THEREFORE, THE CONDITIONS LAID DOWN IN SECTION 54EC WERE COMPLIED. ACCORDING TO HIM THERE WAS NO REQUIREMENT THAT THE FUNDS SHOULD BE GIVEN O UT OF CAPITAL GAINS AND 3 ACCORDINGLY HE HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 54EC OF THE ACT. 5. BEFORE US, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER AND ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE SUPPORTED THE IMPUGNED ORDER PASSED BY THE FIRST APPELLATE AUTHOR ITY. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND NO MERIT IN THIS APPEAL. WE HAVE CAREFULLY PERUSED SECTION 54EC AND THE ONLY REQUIREMENT IS THAT INVESTMENT IN SPECIFIED ASSETS SHOULD HAVE BEEN MAD E WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF SUCH CAPITAL AS SET. THIS CONDITION HAS BEEN COMPLIED BY THE ASSESSEE AND THERE IS NO FURTHER CO NDITION THAT THE FUNDS SHOULD BE GIVEN OUT OF CAPITAL GAIN. OTHERWISE ALS O ONCE MONEY IS DEPOSITED IN THE BANK ACCOUNT IT GETS MERGED WITH OTHER FUNDS OF THE ASSESSEE AND IT IS IMPOSSIBLE TO LOCATE WHICH FUNDS HAVE BEEN USED FOR PURCHASE OF SPECIFIED ASSETS BECAUSE THE NORMAL BUSINESSMAN WOULD KEEP ON DOING VARIOUS TRANSACTIONS IN THE BANK ACCOUNT. THEREFORE, WE F IND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. 8. ITA NO. 689/CHD/2011 JAPVIR SINGH 9. GROUND NO. 1 THE FACTS IN THIS CASE ARE IDENTI CAL. THE ASSESSING OFFICER HAS DISALLOWED DEDUCTION U/S 54 EC BECAUSE THE AMOUNT INVESTED IN REC BONDS IS NOT OUT OF THE SALE CONSIDERATION. TH IS ISSUE HAS ALREADY BEEN ADJUDICATED BY US IN ITA NO. 688/CHD/2011 IN ABOVE NOTED PARAS AND FOLLOWING THE DECISION WE DECIDE THIS ISSUE AGAINST THE REVEN UE. 10. GROUND NO. 2 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ONE OF THE CHEQUE FOR SALE OF PROPERTY SHOULD HAVE BEEN FOR RS. 4,37, 500/- WHEREAS IN THE BANK SAME WAS CREDITED AT RS. 6,25,000/-. WHEN A QUERY WAS RAISED IN THIS RESPECT IT WAS SUBMITTED THAT EXACT AMOUNT SHOULD HAVE BEEN RS. 4,37,500/- BUT THE PURCHASER HAD BY MISTAKE GIVEN THE CHEQUE FOR RS. 6 ,25,000/- AND THE BALANCE 4 OF RS. 1,87,500/- WAS RETURNED TO THE PURCHASER. H OWEVER, THE ASSESSING OFFICER NOTED THAT SINCE AN CHEQUE WAS RECEIVED AGA INST SALE OF LAND, A SUM OF RS. 1,87,500/- WAS ADDED TO THE INCOME OF THE ASSES SEE. 11. ON APPEAL, THE LD. CIT(A) ADJUDICATED THIS ISSU E VIDE PARA 6.3 WHICH IS AS UNDER: AS FAR AS, THE ADDITION OF RS. 1,87,500/- IS CONCE RNED BOTH THE ASSESSING OFFICERS ORDER AND APPELLANT COUNSELS SUBMISSIONS IS AMBIGUOUS ON THIS ISSUE. IT IS ALSO NOTICED THAT THE APPELLANT HAS ALLEGEDLY RETURNED THE SME AMOUNT BACK AFTER THE PERIOD OF 9 MONTHS. THE ASSESSING OFFICE R IS DIRECTED TO ASCERTAIN THE CORRECT CAPITAL GAIN ON LONG TERM CAPITAL ASSET AS HAS ARISEN TO THE APPELLANT AND TAX IT IN THE LIGHT OF AVAILABLE RECORDS. THER EFORE, THIS GROUND OF THE APPELLANT IS DISPOSED OF ACCORDINGLY. 12 BEFORE US, THE LD. DR FOR THE REVENUE RELIED ON THE ORDER OF ASSESSING OFFICER AND ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE ORDERS OF LD. CIT(A). 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE LD. CIT(A) HAS CORRECTLY OBSERVED THAT THE ADDITION HAS BEEN MADE BY AMBIGUOUS OBSERVATIONS BY THE ASSESSING OFFICER, THEREFORE, HE HAS RIGHTL Y DIRECTED THE ASSESSING OFFICER TO VERIFY THE RECORD AND DISPOSE OF THE MAT TER ACCORDINGLY . THEREFORE, WE DECLINE TO INTERFERE THE ORDER OF LD. CIT(A). 14. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED ON 27 .06. 2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 .06.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 5