Harish Kumar, Sec'bad, Secunderabad V. DCIT, Circle-10(1), Hyd, Hyderabad

ITA 890/HYD/2015

• Counselvise Citation: 89022514 RSA 2015
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Reopening of assessment; Capital asset; Transfer pricing; International transaction; Period of limitation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 890/HYD/2015 ASSESSMENT YEAR: 2009-10 SHRI HARISH KUMAR , HYDERABAD [PAN: AIRPK5883C] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI M . V . ANIL KUMAR , AR FOR REVENUE : S HRI B. KURMI NAIDU , DR DATE OF HEARING : 2 0 - 1 0 - 201 5 DATE OF PRONOUNCEMENT : 23 - 1 2 - 2 015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, HYDERABAD, DATED 07-05-2015. ASSESSEE HAS RAISED AS MANY AS 8 GROUN DS. GROUND NOS. 1 & 3 PERTAINS TO ISSUE OF REOPENING OF ASSESS MENT ON WHICH NO ARGUMENTS HAVE BEEN ADVANCED. HENCE, THESE GROU NDS ARE TREATED AS WITHDRAWN. GROUND NOS. 7 & 8 PERTAINS T O AN AMOUNT OF RS. 6,49,344/- ADDED BY THE ASSESSING OFFICER (AO) AS A I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 2 -: DISCREPANCY IN GROSS RECEIPTS. LD. CIT(A) VIDE HIS PARA 6.2 ACCEPTED ASSESSEES EXPLANATION AND DELETED THE ADDITION. I N SPITE OF THAT, ASSESSEE RAISED THE GROUND ABOUT THE SAME ISSUE. S INCE ASSESSEE GOT RELIEF ON THIS ISSUE, THERE IS NO NEED TO ADJUD ICATE THE GROUND AS THERE IS NO PREJUDICE CAUSED. ACCORDINGLY, THE SAM E IS DISMISSED. 2. THE MAIN ISSUE IN THIS APPEAL IS WITH REFERENCE TO THE INVESTMENT MADE IN THE BONDS AS PER SECTION 54EC OF THE ACT. ASSESSEE CONTENDS THAT THE INVESTMENT WAS MADE WITH IN THE PERIOD AS PRESCRIBED, WHEREAS, AO DID NOT AGREE. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT HE INVESTMENT IN BONDS AS PER SECTION 54EC HAVE BEEN M ADE WITHIN SIX MONTHS FROM THE MONTH IN WHICH THE TRANSFER HAS TAK EN PLACE. 5. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT TH AT THE APPLICATION WAS SUBMITTED ONLINE WELL WITHIN THE TI ME OF SIX MONTHS AS PER SECTION 54EC OF THE INCOME TAX ACT, 1961. 6. THE CIT(A) OUGHT TO HAVE FOLLOWED THE DECISION O F THE ITAT SPECIAL BENCH IN THE CASE OF ALKABEN B PATEL VS. IT O 43 TAXMANN.COM 333 (AHMEDABAD TRIB) (SB) AND THE ITA T MUMBAI IN THE CASE OF YAHYA E DHARIWALA VS. DCIT 49 SOT 458, YOUR APPELLANT SUBMITS THAT THE FACTS ARE SIMILAR AND TH E DECISION HAS TO BE APPLIED TO THE FACTS OF THIS CASE. 3. WE HAVE HEARD LD. COUNSEL AND LD. DR IN DETAIL. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL DERIVING INCOME F ROM CONSULTATION SERVICES. ASSESSEE HAS CAPITAL GAINS ON SALE OF SH ARES AND ON THE BASIS OF REVISED COMPUTATION, THE ASSESSMENT COMPLE TED ON 13-12-2011 ACCEPTING THE CAPITAL GAINS AT RS. 3,34, 31,823/- ALLOWING DEDUCTION OF RS. 50 LAKHS AS INVESTMENT IN THE BONDS U/S. 54EC. LATER AO NOTICED THAT SHARES WERE SOLD ON 25 -01-2009 AND ASSESSEE SHOULD HAVE INVESTED IN THE LONG TERM SPEC IFIED ASSETS I.E., I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 3 -: REC BONDS ON OR BEFORE 25-01-2009. SINCE ASSESSEE I NVESTED AFTER THAT DATE ASSESSMENT WAS REOPENED. ASSESSEE SUBMIT TED THE EVIDENCE THAT APPLICATION WAS MADE WITH NO. 8703049 DT. 28-07-2009 AND THE CHEQUE WAS CLEARED SUBSEQUEN TLY AND THE BONDS WERE ALLOTTED WITH THE DATE 31-07-2009. IT W AS SUBMITTED THAT BONDS HAVE BEEN INVESTED AS PER THE PROVISIONS . AO HOWEVER, CONSIDERED THAT ASSESSEE HAS CLEARLY OVER SHOT THE STIPULATED PERIOD OF SIX MONTHS. THEREFORE, HE DENIED THE DEDUCTION IN THE PROCEEDINGS U/S. 147. 4. BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT ASS ESSEE HAS INVESTED WITHIN THE TIME ALLOWED AND RELIED ON THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF YAHYA E DHARIWALA VS. DCIT [17 TAXMANN.COM 159] AND ALSO ON THE SPECIAL BENCH OF AHMEDABAD IN THE CASE OF ALKABEN B PATEL VS. ITO 43 TAXMANN.COM 333 (AHMEDABAD TRIB) (SB). LD. CIT(A ) HOWEVER, DISTINGUISHED THE ABOVE CO-ORDINATE BENCH DECISION AND DID NOT DISCUSS THE SPECIAL BENCH DECISION. HOWEVER, HE RE LIED ON THE HON'BLE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF H INDUSTAN UNILEVER LTD., VS. DCIT [191 TAXMANN 119] AND CONFI RMED THE AOS STAND THAT ASSESSEE HAS NOT INVESTED WITHIN THE PER IOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF ASSETS. 5. LD. COUNSEL DISTINGUISHED THE HON'BLE BOMBAY HI GH COURT JUDGMENT TO SUBMIT THAT THE ISSUE BEFORE THE HON'BLE BOMBAY HIGH COURT WAS ABOUT REOPENING OF THE ASSESS MENT AND THE OBSERVATIONS THAT THE PERIOD OF SIX MONTHS WAS DUE TO EXPIRE ON 28-03-2014 IN THAT CASE CANNOT BE CONSIDERED AS A B INDING PRECEDENT AS THEY ARE MADE ON THE BASIS OF THE SUBM ISSIONS WHILE EXAMINING THE ISSUE OF REOPENING AND THE ISSUE OF S IX MONTH PERIOD I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 4 -: WAS NOT IN APPEAL. IT WAS SUBMITTED THAT THE SPECI AL BENCH DECISION IS DIRECTLY ON THE ISSUE AND THE PERIOD OF SIX MONTHS SHOULD BE CONSIDERED FROM THE END OF THE MONTH IN W HICH TRANSFER OF ASSET HAD TAKEN PLACE AND THEREFORE, IT IS TO BE CONSIDERED THAT ASSESSEE HAS MADE INVESTMENTS WELL WITHIN THE TIME LIMITS PRESCRIBED. 6. LD. DR HOWEVER, RELIED ON THE DECISION OF HINDU STAN UNILEVER LTD., VS. DCIT [325 ITR 102] IN SUPPORT OF THE ORDER OF THE LD. CIT(A). 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE INFORMATION AVAILABLE ON THE RECORD. THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT ASSESSEE HAS TRANSFERRED THE SHARES ON 25-01-2009. THERE IS ALSO NO DISPUTE WITH REFERENC E TO THE PROVISIONS OF SECTION 54EC WHICH PRESCRIBES THAT WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF THE LONG TERM CAPI TAL ASSET (CAPITAL ASSET SO TRANSFERRED BEING HEREAFTER IN THE SECTION REFERRED TO AS THE ORIGINAL ASSET) AND ASSESSEE HAS AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER , INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG TERM SPECIFIE D ASSET, THE CAPITAL GAIN SHALL BE DEALT WITH . AS CAN BE SEEN FROM THE ABOVE PROVISION, THE ACT PRESCRIBES TIME LIMIT OF S IX MONTHS AFTER THE DATE OF SUCH TRANSFER. 7.1. HOWEVER, THIS SIX MONTHS TIME LIMIT IS SUBJ ECT MATTER OF DISPUTE, IN THE CASE OF YAHYA E DHARIWALA VS. DCIT [49 SOT 458] WHEREIN THE CO-ORDINATE BENCH HAS CONSIDERED THE US E OF THE PERIOD AS SIX MONTHS IN CONTRAST TO USE OF WORDS 1 82 DAYS OR SIMILAR PRESCRIPTION OF SPECIFIC NUMBER OF DAYS IN VARIOUS PROVISIONS I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 5 -: OF THE ACT AND CAME TO THE CONCLUSION THAT SIX MON THS PERIOD SHOULD BE RECKONED FROM THE END OF THE MONTH IN WHI CH TRANSFER TOOK PLACE. THE DECISION OF THE CO-ORDINATE BENCH IN DETAIL IS AS UNDER: 8. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATI ON OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A P ERUSAL OF THE PAPERS ON RECORD, AS WELL AS THE CASE LAWS CIT ED BEFORE US, WE HOLD AS FOLLOWS:- 9. THE SHARES THAT WERE TRANSFERRED WERE OF A PRIVATE LIMITED COMPANY. UNDER THE COMPANIES ACT, 1956, ACCORDING TO THE PROVISIONS AS CONTAINED IN SECTION 3(1)( III), A PRIVATE LIMITED COMPANY IS A COMPANY WHICH RESTRICTS THE RIGHT T O TRANSFER ITS SHARES. ONCE THE BOARD OF DIRECTORS APPROVE THE TRANSFER, THEN ONLY THE PROCESS OF TRANSFER OF SHARES CAN BE SAI D TO BE COMPLETED IN CASE OF A PRIVATE LIMITED COMPANY. TH E ASSESSEE'S ANNUAL RETURN FILED BEFORE THE REGISTRAR OF COMP ANIES DISCLOSED THAT THE DATE OF REGISTRATION OF TRAN SFER WAS 28TH FEBRUARY 2005. THE PURCHASER CONFIRMS THAT THE DATE OF TRANSFER IS 28TH FEBRUARY 2005. BOARD RESOLUTION APPROVING T RANSFER OF SHARES WAS PASSED ON 25TH FEBRUARY 2005. JUST BECAU SE STAMPING WAS DONE ON 24TH FEBRUARY 2005 OF BL ANK FORMS, IT CANNOT BE CONCLUDED THAT THERE IS TRANSFER ON 24TH FEBRUARY 2005. THUS, WE CONCLUDE THAT THE DATE OF TRANSFER I S 28TH FEBRUARY 2005. HENCE, THE INVESTMENT MADE ON 30TH A UGUST 2005, WAS WITHIN A PERIOD OF SIX MONTHS AS CONTEMPL ATED UNDER THE ACT. 10. EVEN IF THE DATE, OF TRANSFER IS TO BE TAKEN AS 24TH FEBRUARY 2005, THE WORDING USED IN THE SECTION IS 'AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTER THE DA TE OF SUCH TRANSFER'. UNDER THE GENERAL CLAUSES ACT, 1897, MON TH IS DEFINED AS FOLLOWS:- 'MONTH' SHALL MEAN THE MONTH RECKONED ACCORDING TO THE BRITISH CALENDAR. 11. THE HON'BLE MADRAS HIGH COURT IN KADRI MILLS (COIMBATORE) LTD. (SUPRA) HELD THAT THE DEFMI TION UNDER THE GENERAL CLAUSES ACT, 1897, WILL APPLY TO THE T ERM 'MONTH' OCCURRING IN THE INCOME TAX ACT, 1961, AS TH ERE IS NOTHING IN THE CONTEXT TO EXCLUDE THE INVOCATION OF THIS DEFMITION. THE HON'BLE CALCUTTA HIGH COURT IN BRIJLAL LOHI A & MAHABIR I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 6 -: PROSAD KHEMKA (SUPRA), HELD THAT AS MONTH IS NOT DEFINED UNDER THE INCOME TAX ACT, 1961, THE EXPRESSION U SED UNDER THE GENERAL CLAUSES ACT, 1897, SHOULD BE APPLIED. 12. IN THE INCOME TAX ACT, 1961, THE TERM 'MONTH' HAS BEEN USED IN CERTAIN SECTIONS AND WHEREVER THE LEGISLAT URE WANTED TO SPECIFY THE NUMBER OF DAYS, IT WAS STATED AS SUC H IN THOSE SECTIONS. FOR E.G., IN SECTION 143(2)(II) OF THE A CT, THE PROVISO TO THIS SECTION READS AS FOLLOWS:- ' PROVIDED THAT NO NOTICE UNDER CLAUSE (II) SHALL BE SERV ED ON THE ASSESSEE AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FMANCIAL YEAR IN WHICH THE RETURN IS FURNISHED.' 13. IN THIS PROVISO, THE EXPRESSION 'SIX MONTHS' I S USED AS IN CASE OF SECTION 54EC. THIS CAN BE COMPARED WITH MANY OTHER SECTIONS IN THE ACT, WHEREIN THE PERIOD HAS BEEN DESCRIBED IN A NUMBER OF DAYS. FOR E.G., '1. SECTION 6: RESIDENCE' IN INDIA SECTION 6(1) WHILE PROVIDING THE TIME LIMIT TO DET ERMINE RESIDATION STATUS WAS THE LANGUAGE - (1)(A) IS IN INDIA IN THAT YEAR FOR A PERIOD O R PERIODS AMOUNTING IN ALL TO ONE HUNDRED AND EIGHTY-TWO DAYS OR MORE; OR (C) HAVING WITHIN THE FOUR YEARS PRECEDING T HAT YEAR BEEN IN INDIA FOR A PERIOD OR PERIODS AMOUNTING IN ALL TO THREE HUNDRED AND SIXTY-FIVE DAYS OR MORE, IS IN INDIA FOR A PERIOD OR PERIODS AMOUNTING IN ALL TO SIXTY DAYS OR MORE IN THAT YEA R. EXPLANATION.-IN THE CASE OF AN INDIVIDUAL,- (A) BEING A CITIZEN OF INDIA, WHO LEAVES INDIA IN ANY PREVIOUS YEAR [AS A MEMBER OF THE CREW OF AN INDIAN SHIP AS DEFINED IN CLAUSE (18) OF SECTION 3 OF THE MERCHANT SHIPPING ACT, 1958 (44 OF 1958), OR] FOR THE PURPOSES OF EMPLOYMENT OUTSIDE INDIA, THE PROVISIONS OF SUB-CLAUSE (B) BEING A CITIZEN OFLNDIA, OR A PERSON OF LND IAN ORIGIN WITHIN THE MEANING OF EXPLANATION TO CLAUSE (E) OF, WHO, BEING OUTSIDE INDIA, COMES ON A VISIT TO INDIA IN ANY PREVIOUS YEAR, THE PROVISIONS OF SUB-CLAUSE (C) SHALL APPLY IN RELAT ION TO THAT YEAR I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 7 -: AS IF FOR THE WORDS 'SIXTY DAYS', OCCURRING THEREI N, THE WORDS 'ONE HUNDRED AND [EIGHTY-TWO} DAYS' HAD BEEN SUB STITUTED. 2. SECTION 10: INCOMES NOT INCLUDED IN TOTAL INCOME SECTION 1O(6)( VI)WAS THE WORDS '--- PERIOD OF NINETY DAYS IN SUCH PROVISIONS YEAR' WHILE LAYING THE CONDITION S (VI)(B) HIS STAY IN INDIA DOES NOT EXCEED IN TH E AGGREGATE A PERIOD OF NINETY DAYS IN; SUCH PREVIOUS YEAR (VIII) ANY INCOME CHARGEABLE UNDER THE HEA D 'SALARIES' RECEIVED BY OR DUE TO ANY SUCH INDIVIDUAL BE ING A NON- RESIDENT AS REMUNERATION FOR SERVICES RENDERED IN CONNECTION WITH HIS EMPLOYMENT ON A FOREIGN SHIP WHERE HIS T OTAL STAY IN INDIA DOES NOT EXCEED IN THE AGGREGATE A PERIOD O F NINETY DAYS IN THE PREVIOUS YEAR 3. SECTION 54(E) : CAPITAL GAIN ON TRANSFER OF CA PITAL ASSETS NOT TO BE CHARGED IN CERTAIN CASES. (1B) WHERE ON THE FULFILLMENT OF THE CONDITIONS SPECIFIED IN SUB-SECTION (1A), THE CO ST OF THE NEW ASSET REFERRED TO IN THAT SUBSECTION IS TAKEN I NTO ACCOUNT FOR THE PURPOSES OF SUB-SECTION (1), THE ASSESSEE SH ALL, WITHIN A PERIOD OF NINETY DAYS FROM THE EXPIRY OF THE PE RIOD OF THREE YEARS RECKONED FROM THE' DATE OF SUCH DEPOSIT, FURNISH TO THE [ASSESSING] OFFICER A CERTIFICATE FROM THE OFFICER REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1A) TO THE EFFECT THAT THE ASSESSEE HAS NOT TAKEN ANY LOAN OR ADVANCE ON THE SECURITY OF SUCH DEPOSIT DURING THE SAID PERIOD OF THREE YEARS. 4. SECTION 92(D) : MAINTENANCE AND KEEPING OF INFORMATION AND DOCUMENT BY PERSONS ENTERING INTO AN INTER NATIONAL TRANSACTION. (3) THE ASSESSING OFFICER OR THE COMMISSIONER (AP PEALS) MAY, IN THE COURSE OF ANY PROCEEDING UNDER THIS ACT, REQUIR E ANY PERSON WHO HAS ENTERED INTO AN INTERNATIONAL TRANSACTION TO FURNISH ANY INFORMATION OR DOCUMENT IN RESPECT THEREOF, AS MAY BE PRESCRIBED UNDER SUB-SECTION (1), WITHIN A PERIOD OF THIRTY DAYS FROM THE DATE OF RECEIPT OF A NOTICE ISSUED IN THIS REGARD PROVIDED THAT THE ASSESSING OFFICER OR THE COM MISSIONER (APPEALS) MAY, ON AN APPLICATION MADE BY SUCH PE RSON, EXTEND THE PERIOD OF THIRTY DAYS BY A FURTHER PERIOD NOT EXCEEDING THIRTY DAYS. 5. SECTION 142 : INQUIRY BEFORE ASSESSMENT. I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 8 -: (2C) EVERY REPORT UNDER SUB-SECTION (2A) SHALL BE F URNISHED BY THE ASSESSEE TO THE [ASSESSING] OFFICER WITHIN SUCH PER IOD AS MAY BE SPECIFIED BY [ASSESSING] OFFICER: PROVIDED THAT THE [ASSESSING] OFFICER MAY, [ SUO MOTU, OR] ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESS EE AND FOR ANY GOOD AND SUFFICIENT REASON, EXTEND THE SAID P ERIOD BY SUCH FURTHER PERIOD OR PERIODS AS HE THINKS FIT ; SO, HOWEVER, THAT THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND THE PERIOD OR PERIODS SO EXTENDED SHALL NOT, IN ANY CASE, EXCEED ONE HUNDRED AND EIGHTY DAYS FROM THE DATE ON WHI CH THE DIRECTION UNDER SUB-SECTION (2A) IS RECEIVED BY THE ASSESSEE. SECTION 153 : TIME-LIMIT FOR COMPLETION OF ASSES SMENT UNDER (B)(VIII) THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENCE FOR EXCHANGE OF INFORMATION IS MADE BY AN AUTHORITY COMPETENT UNDER AN AGREEMENT REFERRED TO IN OR AND ENDING WITH THE DATE ON WHICH THE INFORMATION SO REQUESTED IS R ECEIVED BY THE COMMISSIONER OR A PERIOD OF SIX MONTHS, WHICHEVER IS LESS,] SHALL BE EXCLUDED: PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFE RRED TO IN CLAUSE (A) OR CLAUSE (B) OF THIS [SUB-SECTION] AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT OR RE ASSESSMENT, AS THE CASE MAY BE, IS LESS THAN SIXTY DAYS, SUCH REM AINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID P ERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDING LY.' [EMPHASIS SUPPLIED] 14. IN VIEW OF THE ABOVE DISCUSSION AND FROM THE LANGUAGE IN SECTION 54EC, WE ARE OF THE OPINION THAT SIX MONTHS PERIOD SHOULD BE RECKONED FROM THE END OF THE MONTH IN WHI CH THE TRANSFER TAKES PLACE. AS THE INVESTMENT HAS BEEN MADE ON 30TH AUGUST 2005, WE HOLD THAT THE ASSESSEE HAS INVESTED A PART OF THE CAPITAL GAIN 'WITHIN A PERIOD OF SIX M ONTHS AFTER THE DATE OF TRANSFER OF THE LONG TERM ASSET IN QUESTION IN SPECIFIED ASSETS. WE ORDER ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7.2. SPECIAL BENCH OF THE ITAT IN THE CASE OF ALKA BEN B. PATEL VS. ITO [148 ITD 31] HAS CONSIDERED THE ISSUE AND HELD THAT : TO RESOLVE THE CONTROVERSY EXACTLY, IT IS REQ UIRED TO KNOW I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 9 -: THAT FOR THE PURPOSE OF SECTION 54EC, THE PERI OD OF INVESTMENT SHOULD BE CALCULATED AS SIX MONTHS AFTER THE DAT E OF TRANSFER OR TO BE RECKONED 180 DAYS FROM THE DATE OF TRANSFER . THIS IS THE CRUX OF THE ISSUE. THE TERM 'MONTH' IS NOT DEFINED IN THE ACT, TH EREFORE SEEKING THE HELP OF AN ANOTHER STATUTE; THE TERM 'MONTH' AS PE R GENERAL CLAUSES ACT, 1897 SHALL MEAN A MONTH RECKONED AC CORDING TO THE BRITISH CALENDAR. IT MAY NOT BE OUT OF PLACE TO MENTION THAT IN SE CTIONS 54E, 54EA AND 54EB, THE PHRASE IS IDENTICAL, I.E., 'WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER'. THIS PHRASE OTHERWISE IS NOT USED BY THE LEGISLATOR IN ANY OTHER PROVISIONS OF IT ACT, 1961 OR IT RULES, 1962. WHICH MEANS A SPECIFIC PERIOD IS PRESCRIBED FOR THE PURPOSE OF INVESTMENT IN C ERTAIN SPECIFIED ASSETS IN RESPECT OF COMPUTATION OF CAPITAL GA IN. MEANING THEREBY, AN INCENTIVE IS PRESCRIBED BY THE STAT UTE TO A TAXPAYER, WHO HAS EARNED LONG TERM CAPITAL GAIN, TO GET REL IEF IF INVEST THE GAIN IN ANY OF THE SPECIFIED ASSET. BUT THE INVEST MENT HAS TO BE MADE AT ANY TIME WITHIN A PERIOD OF SIX MONTHS AFTE R THE DATE OF SUCH TRANSFER. WHILE DEALING WITH THIS TYPE OF INCENTIVE PROVIS IONS ONE MAY LIKE TO MENTION THAT IT IS NEITHER A QUESTION OF 'LIBER AL INTERPRETATION OF STATUTE' OR A 'LITERAL INTERPRETATION OF STATUTE ', BUT IT IS A MATTER OF 'PURPOSIVE CONSTRUCTION OF STATUTE' OR 'CONSTRUCT IVE INTERPRETATION OF STATUTE'. A TRUE INTENTION OF THE ENACTMENT IS R EQUIRED TO BE CONSIDERED BY A COURT OF LAW. IN THE PRESENT CASE , THE INTENTION IS TO ATTRACT INVESTMENT TO BE USED FOR THE DEVELOPMEN T OF INFRASTRUCTURE ETC. THE QUESTION AS TO WHETHER A STATUTE IS MANDATORY OR DIRECTORY, DEPENDS UPON THE INTENT OF THE LEGISLATOR AND NOT UPON THE LANGUAGE IN WHICH IT IS CLOTHED. THE MEANING AND INTENTION OF THE LEGISLATOR IS TO JUDGED BY THE LANGUAGE, BUT THESE ARE TO BE CONSIDERED NOT ONLY FR OM PHRASEOLOGY OF THE PROVISION, BUT ALSO BY CONSIDERING ITS NATURE, ITS DESIGN, AND THE CONSEQUENCES WHICH WOULD FOLLOW FROM CONSTR UING IT THE ONE WAY OR THE OTHER. IN THE GENERAL CLAUSES ACT, 1897 WHERE THE 'MON TH' SHALL MEAN 'A MONTH RECKONED ACCORDING TO BRITISH CALENDAR'. THIS CONTROVERSY HAS EARLIER BEEN ADDRESSED BY CERTAIN HIGHER FORUM AND THEN IT WAS DECIDED THAT THE QUESTION WHETHER 'MONTH' MEANS A 'LUNAR I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 10 -: MONTH' OR A 'CALENDAR MONTH' WOULD DEPEND ON IN TENTION FOR THE USAGE OF THE TERM 'MONTH'. IN BRITISH CALENDAR A MONTH IS A UNIT OF PERIOD USED IN A CALENDAR. IT MAY NOT BE OUT OF CONTEXT TO MENTION THAT TILLS SYSTEM WAS INVENTED BY MESOPOTA MIA, AN AVERAGE LENGTH OF A MONTH IS 29.53 DAYS; BUT IN A CALENDAR YEAR THERE ARE 7 MONTHS WITH 31 DAYS, 4 MONTHS HAVING 30 DAYS AND ONE MONTH HAS 28/29 DAYS. IT CAN BE POSSIBLE THAT UNDER COMMON PARLANCE PROBABLY IT MEANT A LUNAR MONTH B UT IN CALCULATING THE SPECIFIED NUMBER OF MONTHS THA T HAD ELAPSED AFTER OCCURRENCE OF A SPECIFIED EVENT THEN A GENERAL RULE IS THAT THE PERIOD OF A MONTH ENDS ON THE LAS T DAY. THEREFORE, A MONTH ENDS BY THE LAST DATE OF THAT MONTH. THE SUBTLE QUESTION IS THAT WHETHER THE WOR D 'MONTH' REFERS IN THIS SECTION A PERIOD OF 30 DAYS OR IT REFERS T O THE MONTHS ONLY. SECTION 54EC, PRESCRIBES THAT AN INVESTMENT IS R EQUIRED TO BE MADE WITHIN A PERIOD OF SLX MONTHS. WHETHER THE INTENTION OF THE LEGISLATOR WAS TO COMPUTE SIX CALENDAR MON THS OR TO COMPUTE 180 DAYS. TO RESOLVE THIS CONTROVERSY, ONE AS GUIDED BY A DECISION OF ALLAHABAD HIGH COURT PRONOUNCED IN THE CASE OF CIT V. MUNNALAL SHRIKISHAN [19871 167 1TR 415 WHERE ANSWERING THE DISPUTE IN RESPECT OF LAW OF LIMITA TION THE COURT HAS CLEARLY HELD THAT THERE IS NOTHING IN THE CONT EXT OF SECTION 256(2) TO WARRANT THE CONCLUSION THAT THE WORD 'MONTH' IN IT REFERS TO A PERIOD OF 30 DAYS, THEREFORE, REFER S TO SIX MONTHS IN SECTION 256(2) IS TO SIX CALENDAR MONTHS AND NOT 180 DAYS. SO THE LOGICAL CONCLUSION IS THAT IN THE ABSENC E OF ANY DEFINITION OF THE WORD 'MONTH' IN THE ACT, THE DEFINITION OF GENERAL CLAUSES ACT, 1897 SHALL BE APPLICABLE AND BY DOING SO THE RE IS NO ATTEMPT TO INTERPRET THE LANGUAGE OF SECT ION 54EC, WHAT TO SAY A LIBERAL OR LITERAL INTERPRETATION. THE L EGISLATURE HAS IN ITS WISDOM HAS CHOSEN TO USE THE WORD 'MONTH'. THIS WAS DONE BY KEEPING IN MIND THE DEFINITION AS PRESCRIBED IN GENERAL CLAUSES ACT, 1857. THEREFORE ONE HAS TO READ THE WORD 'MON TH' WITHIN THE RECOGNIZED WAYS OF INTERPRETATION. IN THE PRESENT CASE THERE IS NO DISPUTE ABOUT THE INVESTMENT WHICH HAD ACTUALLY BEEN MADE BY THE ASSESSEE. THE SAID INVESTMENT HAD BEEN MADE IN THE MONTH OF DECEMBER, 2008.HOWEV ER, ALLEGED TO BE FEW DAYS LATE FROM THE DATE OF TRANSFER IN THE MONTH OF JUNE, 2008. IT IS NOT THE CASE OF THE REVENUE THAT THE APPELLAN T HAD ALTOGETHER FUDGED THE DATES. ONCE THE PURPOSE O F THE I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 11 -: INTRODUCTION OF THE SECTION WAS SERVED BY MAKING THE INVESTMENT IN THE SPECIFIED ASSETS THEN THAT PURPOSE HAS TO BE KEPT IN MIND WHILE GRANTING INCENTIVE. IT IS THUS HELD THAT THE INVESTMENT IN QUESTION QUALIF IES FOR THE DEDUCTION UNDER SECTION 54EC. RESULTANTLY ASSESSE E'S GROUNDS ARE HEREBY ALLOWED. IN VIEW OF THE DECISION OF THE SPECIAL BENCH WHICH IS BINDING ON US, WE ARE OF THE OPINION THAT THE PERIOD OF SIX MONTHS SHOULD BE COUNTED FROM THE END OF THE MONTH IN WHICH TRANSFER OF ORIGINAL ASSET HAS TAKEN PLACE AND IF WE CONSIDER THE SAME, THE PERIOD OF INVESTMENT IS WITHIN THE PERIOD AS PRESCRIBED BY TH E STATUTE. 8. THE DECISION OF THE HON'BLE BOMBAY HIGH COURT I N THE CASE OF HINDUSTAN UNILEVER LTD., VS. DCIT [325 ITR 102] RELIED ON BY LD.CIT(A) IS MAINLY CONCERNED WITH THE REOPENING OF ASSESSMENT U/S. 147. THE ENTIRE DISCUSSION IN THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IS WHETHER THE RE-ASSESSMENT UNDE RTAKEN BY THE AO WAS VALID OR NOT? IN THAT CONTEXT, THE FACT S OF THE INVESTMENT MADE BY ASSESSEE U/S. 54EC WERE DISCUSSE D AND THE PERIOD WAS COUNTED DAY TO DAY, AS SUBMITTED BEFORE THE HON'BLE HIGH COURT. SINCE THE ISSUE BEFORE THE HON'BLE HIG H COURT IS NOT ABOUT THE PROVISIONS OF SECTION 54EC, BUT ABOUT THE CONSIDERATION OF PROVISIONS OF SECTION 147, WE ARE OF THE OPINION THAT THERE IS NO BINDING PRECEDENT ESTABLISHED IN THE SAID JUDGMENT SO AS TO UPHOLD THE CIT(A)S ORDER. IN VIEW OF THE DETAILED DISCUS SIONS ON THE ISSUE BY THE CO-ORDINATE BENCH IN THE CASE OF YAHYA E DHA RIWALA VS. DCIT [49 SOT 458] (SUPRA) AND THE DECISION OF THE S PECIAL BENCH IN THE CASE OF ALKABEN B. PATEL VS. ITO [148 ITD 31] (SUPRA), WE ARE OF THE OPINION THAT THE PERIOD OF SIX MONTHS SHOULD BE RECKONED FROM THE END OF THE MONTH IN WHICH TRANSFER TOOK PLACE. CONSEQUENTLY, I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 12 -: WE ARE OF THE OPINION THAT INVESTMENT MADE BY ASSES SEE IN THE REC BONDS IS WITHIN THE TIME AS PRESCRIBED AND ASSESSEE IS ENTITLED FOR THE DEDUCTION OF THE SAME. MOREOVER, WE ALSO NOTIC E THAT AO IN THE ORIGINAL ASSESSMENT ORDER HAS CONSIDERED THE CLAIM AND ALLOWED THE SAME. IN THAT CONTEXT ALSO, WE ARE OF THE OPINION THAT ASSESSEE IS ENTITLED FOR DEDUCTION ON THE INVESTMENT MADE IN LO NG TERM ASSETS AS PRESCRIBED UNDER THE SECTION 54EC. ACCORDINGLY GROUNDS ARE ALLOWED. 9. IN THE RESULT, APPEAL IS TREATED AS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2015 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 23 RD DECEMBER, 2015 TNMM I.T.A. NO. 890/HYD/2015 SHRI HARISH KUMAR :- 13 -: COPY TO : 1. SRI HARISH KUMAR, C/O. M. ANANDAM & CO., CHARTER ED ACCOUNTANTS, 7A, SURYA TOWERS , S.P.ROAD, SECUND ERABAD. 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10(1), HYDERABAD. 3 . CIT (APPEALS) - VI , HYDERABAD. 4. CIT - VI , HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.