ITO 12(2)(4), MUMBAI V. CHANDA ASHOK GUPTA, MUMBAI

ITA 7111/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9262 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 54F; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . !'# , $ %& BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO. 7111/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR : 2007-08 THE ITO 12(2)(4), AYAKAR BHAVAN, MUMBAI-400 020 / VS. SMT. CHANDA ASHOK GUPTA, 231, MAKER TOWER B, CUFFE PARADE, COLABA, MUMBAI-400 005 &( $ ./ )* ./PAN/GIR NO.AAAPG 9570H ( (+ /APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: SHRI RAKESH RANJAN ,-(+ / . / RESPONDENT BY SHRI S.L. JAIN / 01$ / DATE OF HEARING : 20.12.2012 23' / 01$ /DATE OF PRONOUNCEMENT :20.12.2012 %4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-23, MUMBAI DT.26.7.2010 PERTAINING TO A.Y. 2 007-08. 2. THE SHORT GRIEVANCE OF THE REVENUE IS THAT THE L D. CIT(A) OUGHT NOT HAVE ALLOWED EXEMPTION CLAIMED U/S. 54F / 54EC OF THE ACT ON INVESTMENTS MADE OUT OF BORROWED FUNDS. ITA NO. 7111/MUM/2010 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT ASSESSEE HAS MADE LONG TERM CAPITAL GAINS AND FOUND THAT IN THE REVISED COMPUTATION, THE ASSESSEE HAS CLAIMED RS. 47,39,202/- AS EXEMPTI ON U/S. 54EC OF THE ACT. ON FURTHER VERIFICATION, THE AO FOUND THAT TH E ASSESSEE HAS INVESTED IN THE BONDS OF RURAL ELECTRIFICATION CORPN. ON F URTHER SCRUTINY, THE AO FOUND THAT THE INVESTMENT IN THESE BONDS WERE MADE OUT OF LOAN OF RS. 50 LAKHS TAKEN FROM SHRI ASHOK M. GUPTA AND SHRI ATUL GUPTA. SINCE THE INVESTMENT MADE IN REC BOND WERE NOT OUT OF CAPITAL GAINS ARISING FROM TRANSFER OF LOAN FROM CAPITAL ASSET, THE AO SOUGHT EXPLANATION FROM THE ASSESSEE TO SUBSTANTIATE HER CLAIM OF EXEMPTION U/S . 54EC OF THE ACT. 5. IN THE WRITTEN REPLY, THE ASSESSEE EXPLAINED THA T THE EXEMPTION CLAIMED IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASES OF SMT. PRERANA P. SHAH VS ITO TTJ (BOM) 849, SURENDRA P. S ANGNERIA VS ITO IN ITA NO. 2973/M/045 (BOM). THE AO REJECTED THE S UBMISSIONS OF THE ASSESSEE AND DISALLOWED THE EXEMPTION U/S. 54EC OF THE ACT. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED HER SUBMISSION AS MADE BEFORE THE AO. THE LD. CIT(A) RELIED UPON THE DECISIONS OF THE TRIBUNAL IN THE CASE OF S MT. PRERANA P. SHAH(SUPRA) AND SURENDRA P. SANGNERIA(SUPRA) AND HE LD THAT THE AO CANNOT DENY EXEMPTION U/S. 54F OR 54EC OF THE ACT I F THE INVESTMENT IS MADE OUT OF BORROWED FUNDS. 7. AGGRIEVED BY THIS FINDING OF LD. CIT(A), REVENU E IS BEFORE US. 8. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE RELIED UP ON THE DECISION OF THE LD. CIT(A). ITA NO. 7111/MUM/2010 3 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE FACTS O F THE CASE ARE SQUARELY COVERED BY THE DECISIONS OF THE TRIBUNAL IN THE CAS E OF SMT. PRERANA P. SHAH(SUPRA) AND SURENDRA P. SANGNERIA(SUPRA). IN T HE CASE OF SURENDRA P. SANGNERIA, THE TRIBUNAL HELD THAT THE SAME AMOUNT O F SALE CONSIDERATION NEED NOT BE UTILIZED FOR ACQUIRING A NEW ASSET, EVE N IF AN ASSESSEE BORROWS REQUIRED FUNDS AND SATISFIES THE CONDITION RELATING TO INVESTMENT IN SPECIFIED ASSETS, THE ASSESSEE IS ENTITLED TO EXEMP TION U/S. 54 OF THE ACT. IN THE PRESENT CASE ALSO IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS INVESTED IN REC BONDS FOR CLAIMING EXEMPTION US. 54EC OF THE AC T. THE ONLY DISPUTE RELATES TO THE FACT THAT THE INVESTMENT HAV E BEEN MADE OUT OF BORROWED FUNDS. AS HAS BEEN HELD BY THE TRIBUNAL IN THE CASES CITED HEREINABOVE, WE HAVE NO HESITATION IN FOLLOWING THE DECISION OF THE TRIBUNAL AND ACCORDINGLY WE DIRECT THE AO TO ALLOW EXEMPTION U/S. 54EC OF THE ACT TOWARDS PURCHASE OF REC BONDS. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5 06 )& / 7 $5) / )0 8' ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 20.12.2012 %4 / 3' $ 7 9%6 20.12.2012 3 / : SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT $ %& / ACCOUNTANT MEMBER MUMBAI; 9% DATED . . ./ RJ , SR. PS ITA NO. 7111/MUM/2010 4 %4 / ,0 ; '0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. < ( ) / THE CIT(A)- 4. < / CIT 5. =: ,0 , , / DR, ITAT, MUMBAI 6. :> ? / GUARD FILE. %4 / BY ORDER, - 0 ,0 //TRUE COPY// @ / 8 ) DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI