Ajit Govindrao Jillewar (HUF), Nanded V. Commissioner of Income-tax,

ITA 973/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1838 (ITAT-PUNE)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Keywords: Capital asset; Period of limitation
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , !'!! # , $ % BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 973/PN/2014 $& ' !(' / ASSESSMENT YEAR : 2009-10 SHRI AJIT GOVINDRAO JILLEWAR (HUF), SARASWATI BUILDING, TELEPHONE OFFICE ROAD, VISWANAGAR, NANDED PAN : AACHJ0071L ....... / APPELLANT )& / V/S. COMMISSIONER OF INCOME TAX, AURANGABAD / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI S.K. RASTOGI / DATE OF HEARING : 30-03-2016 / DATE OF PRONOUNCEMENT : 09-05-2016 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX, AURANGABAD DATED 18-03-2014 PASSED U/S. 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2009-10. 2 ITA NO. 973/PN/2014, A.Y. 2009-10 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS AN HUF. IN THE RETURN OF INCOME THE ASSES SEE HAS DECLARED TOTAL INCOME OF ` 2,39,180/- FROM HOUSE PROPERTY AND CAPITAL GAIN ON SALE OF PLOT AND AGRICULTURAL LAND. THE ASSESSMENT WAS MAD E IN THE CASE OF ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR U/S. 143(2) OF THE ACT. THE ASSESSING OFFICER MADE ADDITION OF ` 31,424/- IN THE INCOME RETURNED BY THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF NON- AGRICULTURE TAX VIDE ASSESSMENT ORDER DATED 14-10-20 11. THE COMMISSIONER OF INCOME TAX (APPEALS) THEREAFTER INVOKED THE PROVISIONS OF SECTION 263 AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON 06-02-2014. THE RELEVANT EXTRACT OF THE NOTICE ISSUE D BY THE COMMISSIONER OF INCOME TAX IS REPRODUCED HERE-IN-BELOW: (I) ON VERIFICATION OF THE CASE RECORD, IT IS OBSE RVED THAT DURING THE YEAR UNDER CONSIDERATION, YOU HAVE SOLD A PIECE OF LAND ADMEASURING 1 HECTARE 43 R AT PUYANI, NANDED FOR A CONSIDERATION OF RS.12,50,000/-, WHICH HAS RESULTED IN CAPITAL GAINS OF RS.11,40,995 /-. AGAINST THE SAID CAPITAL GAINS, YOU HAVE CLAIMED DEDUCTION OF RS.11, 40,995/-U/S. 54EC OF THE ACT. IT IS SEEN FROM THE COMPUTATION OF CAPI TAL GAINS THAT YOU HAVE SHOWN THE SAID TRANSACTION HAVING BEEN EXECUTED ON 15.10.2008, WHEREAS AS PER THE SALE DEED AVAILABLE ON RECORD, T HE ACTUAL DATE OF SALE TRANSACTION IS 24.07.2008. IT IS SEEN THAT FOR THE PURPOSE OF PURCHASE OF REC BOND FOR CLAIMING DEDUCTION U/S. 54EC, YOU HAVE ISSUED CHEQUE ON 26.02.2009 AND THE BOND WAS ALLOTTED TO YOU ON 31.0 3.2009. AS PER THE PROVISIONS OF SEC. 54EC(1), IT IS MANDATORY ON YOUR PART TO INVEST CAPITAL GAINS IN THE LONG TERM CAPITAL ASSETS AT ANY TIME W ITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER. SINCE, YOU HAVE NOT ACQUIRED REC BOND WITHIN A PERIOD OF SIX MONTHS AFTER THE DA TE OF ACTUAL TRANSFER OF PROPERTY I.E. 24.07.2008, THE DEDUCTION U/S. 54E C CLAIMED BY YOU AMOUNTING TO RS.11,40,995/- IS NOT ALLOWABLE AND DE SERVES TO BE WITHDRAWN. THE COMMISSIONER OF INCOME TAX HELD THAT THE ASSESSEE I S NOT ELIGIBLE TO CLAIM EXEMPTION U/S. 54EC OF THE ACT AS THE INVES TMENT 3 ITA NO. 973/PN/2014, A.Y. 2009-10 MADE BY THE ASSESSEE IN REC BONDS IS BEYOND 6 MONTHS FROM THE DATE OF EXECUTION OF THE SALE DEED. THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSING OFFICER TO WITHDRAW THE BENEFIT OF DEDUCTION U/S. 54EC AMOUNTING TO ` 11,40,955/-. AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT THE ASSESSEE HAD SOLD AGRICULTURAL LAND MEASURING 1 HECTARE 43 R TO SHRI BHARAT S/O VISHWANTHRAO RAMINWAR VIDE REGISTER ED SALE DEED DATED 24-07-2008 FOR A TOTAL CONSIDERATION OF ` 12,50,000/-. THE CONSIDERATION WAS PAID VIDE POST DATED CHEQUE DATED 23- 09-2008. IT WAS CATEGORICALLY MENTIONED IN THE SALE DEED THAT AFTER R ECEIVING THE CONSIDERATION, POSSESSION OF THE LAND WOULD BE TRANSFERRED TO THE PURCHASER. THE LD. AR REFERRED TO TRANSLATED COPY OF THE SALE DEED AT PAGES 9 TO 10 OF THE PAPER BOOK. THE ASSESSEE ON THE INSTRUCTION OF THE PURCHASE OF LAND DEPOSITED THE CHEQUE ON 15-10-2008AND AFTER THE REALIZATION OF THE CHEQUE AMOUNT THE ASSESSEE INVESTED T HE SALE PROCEEDS IN REC BONDS ON 26-02-2009. THE ASSESSEE IN ITS RETURN OF INCOME CLAIMED DEDUCTION U/S. 54EC IN RESPECT OF THE AMOUN T INVESTED IN REC BONDS. THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX HAS ERRED IN COMING TO THE CONCLUSION THAT THE ASS ESSEE HAS MADE INVESTMENT IN REC BONDS AFTER THE EXPIRY OF THE 6 MONTHS FROM THE DATE OF SALE OF LAND. THE ASSESSEE HAD IN FACT RECEIVED THE SALE CONSIDERATION ON 15-10-2008 AND WITHIN 6 MONTHS THEREAFTER I.E. ON 26-0 2-2009 THE ASSESSEE INVESTED THE AMOUNT IN REC BONDS TO CLAIM DEDU CTION U/S. 54EC OF THE ACT. THE LD. AR CONTENDED THAT THE PROVISION S OF SECTION 4 ITA NO. 973/PN/2014, A.Y. 2009-10 54EC ARE BENEFICIAL IN NATURE AND HAVE TO BE CONSTRUED LIB ERALLY. THE LD. AR FURTHER PLACED RELIANCE ON THE DECISION OF HON'BLE BOM BAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. CELLO P LAST REPORTED AS 209 TAXMAN 617. IN SUPPORT OF HIS SUBMISSIO N, THE LD. AR SUBMITTED THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL IN T HE CASE OF MAHESH NEMICHANDRA GANESHWADE & ORS. VS. INCOME TAX OFFIC ER REPORTED AS 147 TTJ 488, UNDER SIMILAR CIRCUMSTANCES HAD GRANTED THE BENEFIT OF SECTION 54EC WHERE THE AMOUNT WAS DEPOSITED IN REC BONDS FROM THE 6 MONTHS FROM THE DATE OF RECEIPT OF THE PAYM ENTS BUT BEYOND THE 6 MONTHS FROM THE DATE OF TRANSFER OF CAPITAL ASSETS. 4. PER CONTRA SHRI S.K. RASTOGI REPRESENTING THE DEPARTM ENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOM E TAX AND PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. THE LD. D R SUBMITTED THAT THE ASSESSEE HAD SOLD AGRICULTURAL LAND VIDE SALE DEED DATED 24- 07- 2008. THE ASSESSEE SHOULD HAVE MADE INVESTMENT IN REC BONDS WIT HIN 6 MONTHS FROM THE DATE OF TRANSFER I.E. BEFORE 24-01-2009, TO AVAIL THE BENEFIT OF SECTION 54EC OF THE ACT. HOWEVER, THE ASSESSE E MADE INVESTMENT IN REC BONDS ON 26-02-2009. THUS, IT IS CLEAR LY EVIDENT THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE CONDITION S FOR AVAILING THE BENEFIT OF SECTION 54EC. THE LD. DR FURTHER CONTENDED THAT EVEN IF IT IS PRESUMED THAT THE ASSESSEE HAD RECEIVED THE SALE CONSIDERATION ON 15-10-2008, THE ASSESSEE HAD SUFFICIENT TIME TO MAKE INVES TMENT IN REC BONDS UPTO 24-10-2009. AFTER THE RECEIPT OF SALE CO NSIDERATION THE ASSESSEE ADVANCED ` 5,00,000/- TO SHRI K.R. GUPTA ON 25-10-2008 AND DEPOSITED A SUM OF ` 7,50,000/- IN FDR ON 01-11-2008. THE ASSESSEE INSTEAD OF DEPOSITING THE AMOUNT IN REC BONDS INVESTED TH E MONEY FOR 5 ITA NO. 973/PN/2014, A.Y. 2009-10 EARNING INTEREST INCOME. THE ASSESSEE BY HIS OWN ACT AN D CONDUCT HAS MADE HIMSELF INELIGIBLE FOR CLAIMING DEDUCTION U/S. 54EC OF THE ACT. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. BEFORE WE PROCEED TO DECIDE THIS ISSUE IT WOULD BE RELEVANT TO G LANCE THROUGH RELEVANT DATES WHICH ARE AS UNDER: DATES EVENTS 24 - 07 - 2008 SALE DEED EXECUTED BY THE ASSESSEE FOR A CONSIDERATION OF ` 12,50,000/-. CHEQUE FOR ` 12,50,000/- DATED 23-09-2008 RECEIVED AS CONSIDERATION AT THE TIME OF EXECUTION OF SALE DEED. 15 - 10 - 2008 THE ASSESSEE DEPOSITED THE CHEQUE IN HIS SAVING BANK ACCOUNT. AMOUNT CREDITED ON THE SAME DATE. 26 - 02 - 2009 THE ASSESSEE MADE INVESTMENT IN REC BONDS U/S. 54EC OF THE ACT. 6. THE ONLY ISSUE BEFORE US IN THE PRESENT APPEAL IS, WHE THER THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S. 54EC OF THE ACT, IN VIEW OF THE FACT THAT THE ASSESSEE HAS MADE INVESTMENT IN REC BONDS AFTER THE EXPIRY OF 6 MONTHS FROM THE DATE OF EXECUTION OF THE SALE DEED? 7. AS PER THE PROVISIONS OF SECTION 54EC, THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION ON THE LONG TERM CAPITAL GAIN ARISING FROM TR ANSFER OF CAPITAL ASSET, IF THE ASSESSEE AT ANY TIME WITHIN THE PERIOD OF 6 MONTHS AFTER THE DATE OF TRANSFER OF ASSET INVEST THE WHOLE OR A NY PART OF THE CAPITAL GAINS IN THE LONG TERM SPECIFIED ASSET I.E. THE BONDS ISSUED BY NATIONAL HIGHWAY AUTHORITY OF INDIA OR RURAL ELECTRIFICATION CORPORAT ION LIMITED NOTIFIED BY THE CENTRAL GOVERNMENT OF INDIA. 6 ITA NO. 973/PN/2014, A.Y. 2009-10 IN THE PRESENT CASE THE ASSESSEE HAD SOLD THE AGRICULT URAL LAND VIDE SALE DEED DATED 24-07-2008 AND HAS RECEIVED THE C ONSIDERATION ON 15-10-2008. THE ASSESSEE IN SUPPORT OF HIS CLAIM HAS FILED BANK STATEMENT OF SHRI BHARAT VISHWANATHRAO RAMINWAR (PURCHAS ER OF LAND) AT PAGES 24 AND 25 OF THE PAPER BOOK TO SHOW THAT A SUM OF ` 12,50,000/- WAS DEBITED IN THE ACCOUNT ON 15-10-2008 IN FAVOUR OF SHRI A G JIHEWAR VIDE CHEUQE NO. 712019. THE SAME CHEQUE NUMBER IS ALSO MENTIONED IN THE SALE DEED DATED 24-07-2008. THUS, THE PERIOD OF LIMITATION FOR MAKING INVESTMENT IN SPECIFIED BONDS STARTS FROM THE DATE OF CREDIT OF CONSIDERATION AMOUNT IN FAVOUR OF THE ASSESSEE . ALTHOUGH, THE CHEQUE WAS DATED 23-09-2008 THE SAME WAS DEPOSIT ED BY THE ASSESSEE IN HIS ACCOUNT ON 15-10-2008. A PERUSAL OF T HE TERMS AND CONDITIONS OF THE REGISTERED SALE DEED DATED 24-07-2008 PLACED ON RECORD SHOWS THAT THE POSSESSION OF LAND WOULD BE HANDE D OVER TO THE PURCHASER ON RECEIPT OF CONSIDERATION. THUS, THE SALE T RANSACTION WOULD BE COMPLETE ONLY ON THE RECEIPT OF CONSIDERATION AN D HANDING OVER OF THE POSSESSION OF LAND. EVEN IF THE LIMITATION IS CO UNTED FROM THE DATE OF CHEUQE, THE ASSESSEE SHOULD HAVE MADE INVES TMENT IN THE SPECIFIED BONDS ON OR BEFORE 22-03-2009. UNDISPUTEDLY, T HE ASSESSEE MADE INVESTMENT IN REC BONDS ON 26-02-2009 I.E. WITHIN SIX MONTHS FROM THE DATE OF RECEIPT OF CONSIDERATION. IT IS A WELL SETTLED LAW THAT BENEFICIAL PROVISIONS/LEGISLATIONS H AVE TO BE INTERPRETED LIBERALLY. THE PROVISIONS OF SECTION 54EC BEING A BENEFICIAL PROVISION HAS TO BE CONSTRUED LIBERALLY. THE CLAIM OF THE ASSESSEE SHOULD NOT BE THWARTED ON MERE TECHNICALITIES O R BY GIVING NARROW INTERPRETATION TO BENEFICIAL PROVISIONS. IN THE INSTA NT CASE, INVESTMENT IN REC BONDS MADE BY THE ASSESSEE WITHIN SIX MONTHS FROM 7 ITA NO. 973/PN/2014, A.Y. 2009-10 THE DATE OF RECEIPT OF SALE CONSIDERATION WOULD AMOUNT TO CONSTRUCTIVE COMPLIANCE OF THE PROVISIONS OF SECTION 54EC AND HENCE, THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S. 54EC OF THE ACT. 8. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M AHESH NEMICHANDRA GANESHWADE & ORS. VS. INCOME TAX OFFICER (SUPR A) WHILE DEALING WITH THE SIMILAR SITUATION GRANTED RELIEF TO THE ASSE SSEE WHERE THE AMOUNT WAS DEPOSITED WITHIN 6 MONTHS FROM THE DATE OF PAYMENT BUT BEYOND 6 MONTHS FROM THE DATE OF TRANSFER. THE RELE VANT EXTRACT OF THE FINDINGS OF THE TRIBUNAL IN THE SAID CASE ARE REPRODUCE D HERE-IN- BELOW: 18. IN OUR CONSIDERED OPINION, THE INTERPRETATION PLACED BY THE CBDT IN CONSULTATION WITH THE MINISTRY OF LAW TO THE CONDIT ION OF MAKING INVESTMENT WITHIN SIX MONTHS FROM THE DATE OF TRANS FER IN SECTION 54EC WOULD SUPPORT THE CLAIM OF THE ASSESSEE IN THIS CAS E ALSO FOR EXEMPTION FROM CAPITAL GAIN WITH RESPECT TO THE IMPUGNED SUM OF RS 50 LAKHS INVESTED IN SPECIFIED ASSETS ON 3.8.2007 AND 27.10. 2007. IN THE PRESENT CASE, ADMITTEDLY THE IMPUGNED AMOUNT OF SALE PROCEE DS HAVE BEEN RECEIVED BY THE ASSESSEE MUCH AFTER THE DATE OF TRA NSFER I.E. 12.7.2005, SO HOWEVER, IT IS ALSO EMERGING FROM THE RECORD THA T THE INVESTMENTS OF RS 12,50,000/- AND RS 37,50,000/- MADE ON 3.8.2007 AND 27.10.2007 RESPECTIVELY HAVE BEEN MADE WITHIN SIX MONTHS OF RE CEIPT OF SUCH CONSIDERATION. THEREFORE, HAVING REGARD TO THE INTE RPRETATION PLACED BY THE CBDT TO UNDERSTAND THE REQUIREMENT OF MAKING IN VESTMENT WITHIN SIX MONTHS FROM THE DATE OF TRANSFER IN SECTION 54EC OF THE ACT WE ARE INCLINED TO UPHOLD THE PLEA OF THE ASSESSEE FOR EXE MPTION FROM TAX ON CAPITAL GAINS QUA IMPUGNED AMOUNT OF RS 50 LAKHS . THEREFORE ON THIS ASPECT, ASSESSEE HAS TO SUCCEED. THUS, THIS GROUND OF APPEAL IS ALLOWED. 9. IN SO FAR AS THE OBJECTION OF THE LD. DR THAT BEFORE M AKING INVESTMENT THE ASSESSEE UTILIZED THE SALE CONSIDERATION FOR EARNING INTEREST BY INVESTING IN FDR AND ADVANCING TO THE THIRD P ARTY IS 8 ITA NO. 973/PN/2014, A.Y. 2009-10 CONCERNED, WE FIND THAT THERE IS NO RESTRICTION IN THE PRO VISION OF SECTION 54EC THAT THE CAPITAL GAIN ARISING FROM THE SALE OF ASSET CANNOT BE UTILIZED IN ANY OTHER MANNER BEFORE INVESTING IN LONG TER M SPECIFIED ASSET (I.E. THE BONDS) WITHIN THE TIME FRAME GIVEN IN THE SECTION. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE PROVISIONS OF SECTION 54EC OF THE ACT, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 09 TH DAY OF MAY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 09 TH MAY, 2016 RK *+,$-.'/'(- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' / THE CIT, AURANGABAD 4. !() %%*+ , *+ , , -./ , / DR, ITAT, A BENCH, PUNE. 5. ) 0 12 / GUARD FILE. // ! % // TRUE COPY// #3 / BY ORDER, %4 */ / PRIVATE SECRETARY, *+ , / ITAT, PUNE