ASST CIT 4(3), MUMBAI V. JNR SECURITIES BROKING P.LTD, MUMBAI

ITA 6987/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93145 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 29-11-2013
• Court: TRIBUNAL
• Department Lawyers: VANDANA SAGAR
• Keywords: Capital asset
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI . , . . , BEFORE SHRI D. MANMOHAN, VP & SHRI R.C.SHARMA , A M ./ ITA NO. 69 87 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 10 - 1 1 ) ACIT - 4(3) MUMBAI VS. M/S JNR SECURITIES BROKING LTD., C - 72, MITTAL TOWER, 210 NARIMAN POINT, MUMBAI - 21 ./ ./ PAN/GIR NO. : A A BCJ 3720 E ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : MS. VANDANA SAGAR /ASSESSEE BY : SHRI BHUPENDRA SHAH / DATE OF HEARING : 2 8 TH A PRIL , 201 5 / DATE OF PRONOUNCEMENT 08 - 07 - 2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 8 , MUMBAI , DATED 12 - 9 - 2013 FOR THE ASSESSMENT YEAR 20 10 - 11 . 2. THE ONLY GRIEVANCE OF THE REVENUE RELATES TO DELE T ING DISALLOWANCE OF EXEMPTION U/S . 54EC OF THE ACT IN RESPECT OF FURTHER INVESTMENT IN REC BONDS OF RS. 50 LAKHS MADE IN THE NEXT FINANCIAL YEAR. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS OF TH E CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSER VED THAT THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN OF R S .1,99,12,143 / - ON WHICH IT HAS CLAIMED DEDUCTION U/S. 54EC OF RS.1,00,00,000 / - SINCE THE ASSESSEE HAS MADE INVESTMENTS IN REC BONDS . T HE A O , ASKED THE ASSESSEE TO FURNISH COMPLETE DETAILS AND ITA NO. 6987 / 1 3 2 EVI DENCE FOR REC BOND AND DEDUCTION CLAIMED. IN RESPONSE TO THE SAME, THE ASSESSEE FILED PROOF OF R E C BONDS AMOUNTING TO RS.50,00,000 / - . IN RESPECT OF CLAIM OF DEDUCTION OF RS.1 ,00,00,000/ - , IT HAS FILED COPIES OF JUDGMENT IN SUPPORT OF THEIR CLAIM U/S. 54EC FOR INVESTMENT UPTO RS.1,00,00,000 / - IN DIFFERENT FINANCIAL YEAR. ON PERUSAL OF THE DETAILS, THE AO NOTICED THAT THE ASSESSEE HAS PU R CHASED ONE INVES TMENT REC BOND ON 29/3/2010 AND THE OTHER ON 7/9/2010. THE AO FURTHER FOUND THAT THE CLAIM OF THE APPELLANT WAS NOT TENABLE AS THE ASSESSEE IS ELIGIBLE FOR CLAIM OF RS.50,00,000/ - ONLY BEING INVESTMENT IN ONE FINANCIAL YEAR. REGARDING APPLICABILITY, OF DEDUCTION' U/S.54EC, THE AO PRODUCED SECTION 54EC IN THE, ASSESSMENT ORDER ON PA G E 2 & '3 WHERE IT HAS BEEN ST ATED THAT 'PROVIDED THAT THE INVESTMENT MADE ON OR AFTER 1ST DAY OF APRIL 2007 IN THE LONG TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED RS.50 LACS. THE AO FURTHER STATED THAT THE CASE OF THE ASSESSEE IS NOT THE SAME AS THAT OF THE APPELLANT HAS RELIED UPON AND FURTHER CONFIRMED IN THE, FORM OF THE FOLLOWING TABULAR : - CAPITAL GAIN AROSE IN F.Y.2009 - 10 DATE OF SALE OF INVESTMENT 22/3/2010 DATE OF INVESTMENT IN REC BOND 29/3/2010 F.Y.OVER BY 31/3/2010 CAPITAL GAIN PUT TO T AX IN AY 2010 - 11 SECOND PART OF REC BOND PURCHASED FY 2010 - 11 RELEVANT TO AY 2011 - 12 THE AO FURTHER STATED THAT AS THE CAPITAL ASSET ITSELF IS SOLD IN THE FINANCIAL YEAR RELEVANT TO A.Y. UNDER CONSIDERATION, THERE IS NO INCOME LEFT OUT FOR CLAIM OF DE DUCTION U/S. 54EC. THUS, THE CLAIM OF THE ASSESSEE OF RS.50 ITA NO. 6987 / 1 3 3 LAKHS FURTHER CANNOT BE ALLOWED FOR DEDUCTION WHEN THERE IS NIL INCOME IN THE HANDS OF THE ASSESSEE FOR AY 2011 - 12 AS THE INVESTMENT HAS BEEN MADE BY HIM' IN SUBSEQUENT FINANCIAL YEAR. IN VIEW OF THE ABOVE, THE DEDUCTION ELIGIBLE U/S. 54EC WAS RESTRICTED TO. RS.50 LAKHS ONLY. 4. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION/DISALLOWANCE AFTER OBSERVING AS UNDER : - 2.3 I HAVE CAREFULLY, CONSIDERED THE FACTS OF THE CASE, CONTENTION OF THE AS SESSING OFFICER AND M ATERIAL ON RECORD AND THE, ARGUMENTS OF THE APPELLANT. I FIND THAT THE ONLY DISPUTE IN THIS CASE IS REGARDING THE DISALLOWANCE OF EXEMPTION CLAIMED BY THE APPELLANT U/S. 54EC OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT IF TH E CAPITAL ASSET ITSELF IS SOLD IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATIO N AND THERE IS NO, INCOME LEFT OUT FOR CLAIM OF DEDUCTION U/S. 54EC THEN THE CLAIM OF THE APPELLANT IS THUS RESTRICTED ,TO RS. 50 LAKHS AND NO FURTHER CLAIM CAN BE ALLOWED FOR DEDUCTION WHEN THERE IS NIL INCOME IN HANDS OF THE APPELLANT IN THE SUBSEQUENT FINANCIAL YEAR. 2.3.1 I FIND THAT SIMILAR ISSUE ARO SE FOR CONSIDERATION OF THE HON BLE AHMADABAD BENCH IN THE CASE OF ASPI GINWALA, SHREE RAM ENGG. & MFG. I NDUSTRIES VS. ACIT REPORTED IN 52 SOT 16,(2012) WHEREIN THE FACTS WE R E THAT THE APPELLANT SOLD A HOUSE PROPERTY ON 22/10/2007' FOR RS. 6.21 CRORES. THE APPELLANT HAD 50% SHARE IN THAT PROPERTY. THE APPELLANT MADE AN INVESTMENT OF RS. 50 LAKHS ON 31/12/2008 IN REC BONDS AND RS. 50 LAKHS ON 26/512008 IN NHAI BONDS AND CLAIMED EXEMPTION OF RS.1 CRORE U/S. 50EC. THE INVESTMENT IN REC BOND WAS WITHIN TIME LIMIT OF SIX MONTHS PRESCRIBED IN SECTION 54EC OF THE ACT AND CLAIMED LONG TERM CAPITAL GAIN OF RS.100 LAKH S. THE ASSESSING OFFICER DISALLOWED THE CAPITAL G AIN OF RS. 50 LAKHS. THE HON'BLE AHMEDABAD BENCH HELD AS THAT: 'THE 'DISPUTE, WHICH IS TO BE DECIDED IN THIS CASE IS WHETHER AS PER THE PROVISIONS OF SECTION54EC 'THE ASSESSEE IS ENTITLED FOR EXEMPTION, OF RS.1 CRORE AS SIX MONTHS PERIOD FOR INVESTMENT IN ELIGIBLE INVESTMENT INVOLVES TWO FINANCIAL YEARS. IF THE ANSWER TO THIS QUESTION IS 'YES' WHETHER INVESTMENT MADE BY THE ASSESSEE IN NHAI BONDS ON 26112008 BEYOND SIX MONTHS PERIOD IS' ELIGIBLE FOR EXEMPTI ON IN VIEW OF THE FACT THAT NO 'SUBSCRIPTION FOR ELIGIBLE INVESTMENT WAS AVAILABLE TO THE ASSESSEE FROM 1/4/2008 TO 26/5/2008. (PARA 7). IT IS CLEAR FROM PROVISO TO SECTION 54EC THAT WHERE ASSESSEE TRANSFERS HIS CAPITAL ASST AFTER 30 TH SEPTEMBER OF THE FI NANCIAL YEAR HE GETS AN OPPORTUNITY TO MAKE AN ITA NO. 6987 / 1 3 4 INVESTMENT OF R. 50 LAKHS EACH IN TWO DIFFERENT FINANCIAL YEAR AND IS ABLE TO CLAIM EXEMPTION UPTO RS.1 CRORE U/S 54EC. SINCE THE WORDING OF THE PROVISO TO SECTION 54EC IS CLEAR, THE BENEFITS WHICH ARE AVAILAB LE TO' THE ASSESSEE CANNOT BE DENIED. IN VIEW OF ABOVE, ASSESSEE IN INSTANT CASE WAS ENTITLED FOR EXEMPTION OF RS. 1 CRORE AS SIX MONTHS PERIOD FOR INVESTMENT IN ELIGIBLE INVESTMENTS INVOLVED WAS TWO FINANCIAL YEARS. IN VIEW OF THE FORE GOING, SINCE THE AP PELLANT HAD MADE, INVESTMENT IN THE REC BOND WITHIN A PERIOD OF SIX MONTHS THE SAME NEED TO BE ALLOWED. IN VIEW OF THE ABOVE, THE ASSESSING, OFFLCER IS DI RECTED TO ALLOW EXEMPTION OF RS. 100 LAKHS U/S. 54EC OF THE ACT. THIS GROUND OF APPEAL IS, THUS ALLOWE D. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF JAICHANDER, 370 ITR 0579 , WHEREIN THE HON BLE HIGH COURT HELD AS UNDER : - ON A PLAIN READING OF THE ABOVE SAID PROVISION, WE ARE OF THE VIEW THAT SECTION 54EC(L) OF THE ACT RESTRICTS THE TIME LIMIT FOR THE PERIOD OF INVESTMENT AFTER THE PROPERTY HAS BEEN SOLD TO SIX MONTHS. THERE IS NO CAP ON THE INVESTMENT TO BE MADE IN BONDS. THE FIRST PROVISO TO SECTION 54 EC(L) OF THE ACT SPECIFIES THE QUANTUM OF INVESTMENT AND IT STATES THAT THE INVESTMENT SO MADE ON OR AFTER 1.4.2007 IN THE LONG - TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. IN OTHER WORDS, AS PER THE MAND ATE OF SECTION 54EC(1) OF THE ACT,THE TIME LIMIT FOR INVESTMENT IS SIX MONTHS AND THE BENEFIT THAT FLOWS FROM THE FIRST PROVISO IS THAT IF THE ASSESSEE MAKES THE INVESTMENT OF RS.50,00,000/ - IN ANY FINANCIAL YEAR, IT WOULD HAVE THE BENEFIT OF SECTION 54EC( 1) OF THE ACT. (PARA 7) TH E LEGISLATURE NOTICING THE AMBIGUITY IN THE ABOVE S A ID PROVISION, BY FINANCE (NO.2) ACT, 2014, WITH EFFECT FROM 1.4.2015, INSERTED AFTER THE EXISTING PROVISO TO SUB- SECTION (1) OF SECTION 54EC OF THE ACT, A SECOND PROVISO , WHICH READS AS UNDER: 'PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN ASSESSEE IN THE LONG - TERM SPECIFIED ASSET, FROM CAPITAL GAINS ARISING'. FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS A RE TRANSFERRED AND IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES.' (PARA 8) IN ANY EVENT, FROM A READING OF SECTION 54EC(1) AND THE FIRST PROVISO, IT IS CLEAR THAT THE TIME LIMIT FOR INVESTMENT IS SIX MONTHS FROM THE DATE OF TRAN SFER AND EVEN IF SUCH INVESTMENT FALLS UNDER TWO FINANCIAL YEARS, THE BENEFIT CLAIMED BY THE' ASSESSEE CANNOT BE ITA NO. 6987 / 1 3 5 DENIED. IT WOULD HAVE MADE A DIFFERENCE, IF THE RESTRICTION ON THE INVESTMENT IN BONDS TO RS.50,00,000 / - IS INCORPORATED IN SECTION 54EC(1) OF THE ACT ITSELF. HOWEVER, THE AMBIGUITY HAS BEEN REMOVED BY THE LEGISLATURE WITH EFFECT FROM 1.4.2015 IN RELATION TO THE ASSESSMENT YEAR 2015 - 16 AND THE SUBSEQUENT YEARS 6. SIMILAR ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE CASE OF DR. KUMAR M. DHAWALE, ITA NO. 7585/MUM/2012, ORDER DATED 9 - 1 - 2015 FOR THE A.Y. 2009 - 2010 . 7. IN VIEW OF THE ABOVE DISCUSSION, RESPECTFULLY FOLLOWING THE DECISION OF HON BLE MADRAS HIGH COURT IN THE CASE OF JAICHANDER (SUPRA), AS WELL AS DECISION OF COORDINATE BENCH IN THE CASE OF DR. KUMAR M. DHAWALE (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING FURTHER CLAIM OF EXEMPTION IN RESPECT OF INVESTMENT MADE IN SUBSEQUENT FINANCIAL YEAR AMOUNTING TO RS. 50 L AKHS U/S.54EC OF THE I.T.ACT. 8 . I N THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08/07 / 201 5 . SD/ - SD/ - ( . ) ( D.MANMOHAN ) ( . . ) ( R.C.SHARMA ) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED 08/07 / 201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//