The ITO, Ward-10(4), Ahmedabad V. Shri Popatlal N. Vora Inheritance Trust, Ahmedabad

MA 60/AHD/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3355 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY SHINDE
• Keywords: Capital asset
• Section: 54B; 54F; 54

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER MA NO.60/AHD/2014 IN ./ ITA NO.2365/AHD/2010 /BLOCK ASSTT. YEAR: 2007-2008 ITO, WARD - 10(4) AHMEDABAD. VS POPATLAL N. VORA INHERITANCE TRUST 15, SUDAMA SOCIETY NAVRANGPURA, AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : SHRI VIJAY SHINDE, SR.DR ASSESSEE BY : SHRI TUSHAR HEMANI / DATE OF HEARING : 21/08/2015 / DATE OF PRONOUNCEMENT: 26/08/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT MA IS DIRECTED AT THE INSTANCE OF REVE NUE POINTING OUT APPARENT ERROR IN THE ORDER OF THE TRIBUNAL DAT ED 22.11.2013 PASSED IN ITA NO.2365/AHD/2010 FOR THE ASTT.YEAR 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S CHALLENGED DISALLOWANCE OF DEDUCTION OF RS.87,29,080/- UNDER S ECTION 54EC OF THE INCOME TAX ACT IN THE HANDS OF THE ASSESSEE-TRUST. THE TRIBUNAL HAS RECORDED THE FOLLOWING FINDING: 5. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED TH E MATERIAL PLACED BEFORE US. AT THE OUTSET, WE HAVE BEEN INFOR MED THAT THE TRUSTEES ARE THE SONS AND THE BENEFICIARIES ARE THE DAUGHTER-IN- MA NO.60 /AHD/2014 2 LAWS OR THE GRANDSONS OF THE SETTLERS. THE DETAILS OF THE TRUSTEES AND BENEFICIARIES IS AS UNDER: TRUSTESS BENEFICIARIES 1. SHRI JAYANTILAL P. VORA A. SAVITABEN J. VORA B. KRUNAL J. VORA 2. SHRI SHANTILAL P. VORA C. SHARDABEN S. VORA D. UDAY S. VORA 3. SHRI PRAFULCHANDAR P. VORA E. INDUMATIBEN P. VO RA 4. SHRI PRAVINCHANDRA P. VORA F. RANJANBEN P. VORA 5.1 WE HAVE BEEN INFORMED THAT LATE P.N. VORA HAD E XECUTED A WILL ON 15.3.1980. THAT WILL WAS FOR THE BENEFIT OF THE DAUGHTER- IN-LAWS AND GRANDSONS. IN EXECUTION OF POWERS; THE EXECUTOR HAS EXECUTED A DISCRETIONARY TRUST. AS PER ONE OF THE C LAUSE OF THE TRUST DEED, THE PERIOD OF DISTRIBUTION OF THE CORPU S OF THE TRUST WAS 18 YEARS FROM THE DATE OF THE DEATH OF LATE P.N. VO RA, WHO DIED ON 21.7.1990. THEREFORE, THE CORPUS OF THE TRUST WA S REQUIRED TO BE DISTRIBUTED ON THE EXPIRY OF 18 YEARS WHICH WAS UP TO 20TH OF JULY, 2008. THE ASSESSEE HAS FURNISHED THE REQUISIT E TRUST DEED, ETC. BEFORE THE LOWER AUTHORITIES AS WELL AS IN THE COMPILATION BEFORE US. THE ASSESSEE TRUST HAD SOLD THE PROPERTY ON 29TH OF SEPTEMBER, 2006 AND THE INVESTMENT IN REC BOND WAS REQUIRED TO BE MADE WITHIN SIX MONTHS OF THE EXPIRY OF THE FINA NCIAL YEAR IN WHICH THE CAPITAL ASSET WAS SOLD, WHICH WAS UP TO 3 0TH OF SEPTEMBER, 2007. THE MINIMUM PERIOD FOR INVESTMENT AS PRESCRIBED U/S.54 EC WAS THREE YEARS. SINCE, THE LO CKIN PERIOD OF THREE YEARS WAS BEYOND THE PERIOD OF 18 YEARS AND T HE DATE OF VESTING OF THE CORPUS OF THE TRUST WAS 20TH OF JULY , 2008, THEREFORE, IT WAS DECIDED THAT THE INVESTMENT WAS T O BE MADE IN THE NAME OF THE BENEFICIARIES OR THE TRUSTEES. 6. WITH THIS FACTUAL BACKGROUND, WE HAVE CONSIDERED FEW CASE LAWS, NAMELY, JCIT VS. SMT. ARMEDA K. BHAYA, 95 ITD 313 (MUM.), ITO VS. SMT. SARASWATI RAMANATHAN, 116 ITD 234 (DEL.), 3 RD ITO VS. VARDARJAN, 33 TTJ 466 (MAD.) AND CIT V S. KAMAL WAHAL, 351 ITR PAGE 4 (DEL.). IN ONE OF THE CASE, N AMELY, SMT. SARASWATI RAMANTHAN (SUPRA), IT WAS HELD AS UNDER: THE CIT(A) HAS FURTHER NOTED THAT THE ASSESSEE WAS 69 YEARS OLD AT THE RELEVANT TIME AND IT WAS ONLY A MA TTER OF CONVENIENCE AND TO AVOID ANY PROBLEM IN FUTURE THAT THE SONS NAME WAS INCLUDED. WHILE AVAILING OF THE EXEM PTIONS UNDER THE ACT OF THE NATURE OF SECTION 54EC, IT IS BETTER TO REMEMBER THAT THE ASSESSEE IS REQUIRED TO MAKE AN INVESTMENT. IN DOING SO, THE ASSESSEE MUST BE ACCOR DED THE MA NO.60 /AHD/2014 3 FREEDOM TO BE PRACTICAL AND WISE. NORMALLY, WHEN AN INVESTMENT IS MADE, PARTICULARLY IF IT IS MADE BY A PERSON OF ADVANCED AGE, PRECAUTIONS ARE TAKEN TO INCLUDE ANOT HER NAME THE NAME OF A MUCH YOUNGER PERSON, PREFERABLY A HEIR (MAY BE SPOUSE OR CHILDREN) IS INCLUDED SO THAT NO PROBLEMS ARISE IN FUTURE IN CASE THE PERSON INVESTING DIES. IT IS QUITE COMMON TO FIND A PERSON INVESTING IN A HOUSE TO INC LUDE THE NAME OF THE SPOUSE AS A JOINT NAME. EVEN IN CASE OF FINANCIAL ASSETS SUCH AS BANK DEPOSITS IT IS QUITE COMMON TO FIND PEOPLE INVESTING IN JOINT NAMES, MORE OFTEN IN CLUDING THE NAME OF THE SPOUSE OR CHILDREN. THE OBJECT IN D OING SO IS MERELY TO AVOID ANY PROBLEM IN FUTURE IN CASE AN YTHING UNTOWARD SHOULD HAPPEN TO THE INVESTOR. I FIND IT D IFFICULT TO IMAGINE THAT IT WOULD HAVE BEEN THE INTENTION OF TH E ACT TO PLACE RESTRICTIONS ON SUCH FREEDOMS GIVEN TO THE CI TIZENS OF THE COUNTRY OR ON THEIR RIGHT TO TAKE SUCH PRECAUTI ONS IN THE INTERESTS OF A SECURE FUTURE. INCOME-TAX IS ONLY ON E ASPECT OF LIFE, AND THAT TOO FOR A MINUSCULE PART OF THE C ITIZENS OF THIS COUNTRY; WHILE EVERYONE IS GIVEN THE FREEDOM T O MAKE INVESTMENTS IN ANY NAME HE LIKES, THERE IS NO REASO N WHY SUCH FREEDOM SHOULD BE TAKEN AWAY IN THE CASE OF IN COME- TAX ASSESSEES, WHEN THE SUBSTANTIAL INGREDIENTS OF THE SECTION ARE COMPLIED WITH AND THE SALE PROCEEDS OF THE CAPITAL ASSET ARE CHANNELED INTO THE ASSETS IN THE NATIONAL INTEREST WHICH IS THE MAIN AND VITAL REQUIREMENT OF THE SECTION. IN ANY CASE, THE PROVISIONS OF THE ACT CAN NOT BE INTERPRETED IN AN UNREASONABLE MANNER, FOR, TAX LAW S LIKE ALL OTHER LAWS, HAVE TO INTERPRETED REASONABLY AND IN CONSONANCE WITH JUSTICE AS HELD BY HIS LORDSHIP JU STICE K.S. HEGDE, SPEAKING FOR THE SUPREME COURT IN R. B. JODH A MAL KUTHIALA V. CIT [1971] 82 ITR 570; AGAIN HIS LORDSH IP OBSERVED IN CGT V. N.S. GETTI CHETTAIR [1971] 82 IT R 599 (SC) THAT: WORDS IN A STATUTE ARE NOT TO BE INTERP RETED BY HAVING THOSE WORDS IN ONE HAND AND THE DICTIONARY I N THE OTHER. IN SPELLING OUT THE MEANING OF THE WORDS IN A SECTION, ONE MUST TAKE INTO CONSIDERATION THE SETTING IN WHI CH THOSE TERMS ARE USED AND THE PURPOSE THEY ARE INTENDED TO SERVE. FURTHER IT IS A WELL-SETTLED RULE OF INTERPRETATION IN INCOME- TAX LAW THAT A BENEFICIAL SECTION HAS TO BE CONSTRU ED LIBERALLY, HAVING DUE REGARD TO THE OBJECT WHICH IT INTENDS TO SERVE. THE ASSESSING OFFICER HAS INTERPRETED THE WO RD INVESTED IN SECTION 54EC TO MEAN INVESTED IN THE ASSESSEES NAME, AN APPROACH WHICH HAS NO JUSTIFIC ATION AS IT ADDS WORDS INTO THE SECTION AND ALSO IGNORES THE PURPOSE WHICH THE SECTION IS INTENDED TO SERVE. 5. FOR THE ABOVE REASONS, I AGREE WITH THE VIEW TAKEN BY THE CIT(A) THAT THE ASSESSEE IS ELIGIBLE FOR THE EXEMPTION UNDER SECTIO N 54EC. I MA NO.60 /AHD/2014 4 FURTHER FIND THAT THE MUMBAI BENCH, ITAT HAS HELD I N THE CASE OF JT. CIT V. SMT. ARMEDA K. BHAYA [2005] 95 I TD 313 THAT FOR THE PURPOSE OF SECTION 54 OF THE ACT, IT I S SUFFICIENT COMPLIANCE WITH THE SECTION THAT THE ASSESSEE PURCH ASED THE NEW FLAT IN THE NAMES OF HIMSELF, HIS FATHER AN D MOTHER AND THAT IT WAS NOT THE REQUIREMENT OF THE SECTION THAT THE NEW FLAT SHOULD BE IN THE ASSESSEES EXCLUSIVE NAME . IT WAS HELD THAT THE MAIN CONDITION OF THE SECTION WAS THA T THE SALE CONSIDERATION SHOULD BE INVESTED IN THE NEW HOUSE. I RESPECTFULLY FOLLOW THE RATION OF THE ABOVE DECISIO N. I ACCORDINGLY CONFIRM HIS ORDER AND DISMISS THE APPEA L FILED BY THE REVENUE WITH NO ORDER AS TO COSTS. 6.1 RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THE HO NBLE COURT, WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELO W AND THEREBY DIRECT TO ALLOW THE CLAIM TO THE ASSESSEE. THE GROU NDS ARE ALLOWED. 3. IN THE MA, THE REVENUE HAS PLEADED THAT THE TRIB UNAL FAILED TO TAKE NOTE OF THE FOLLOWING DECISIONS WHICH HAS BEEN REFERRED BEFORE IT ON BEHALF OF THE REVENUE: I) KALYA VS. CIT (2012) 2541 CTR 174 (RAJ) II) VIPIN MALIK (HUF) VS. CIT, (2011) 330 ITR 309 (DELH I) III) PRAKASH VS. ITO, (2009) 312 ITR 40 (BOM) IV) JAI NARAYAN VS. ITO, (2008) 306 ITR 335 (P&H) 4. THE LD.DR CONTENDED THAT IN THESE DECISIONS, IT HAS BEEN PROPOUNDED THAT IF AN ASSESSEE HAD EARNED CAPITAL G AIN AND SUCH CAPITAL GAIN WAS NOT INVESTED IN THE PRESCRIBED FORM IN ITS OWN NAME, THEN THE EXEMPTION UNDER SECTION 54B AND 54F ETC. WOULD NOT BE ADMISSIBLE TO SUCH ASSESSEE. HAD THE TRIBUNAL DELIBERATED UPON T HESE DECISIONS, THEN PROBABLY THE APPEAL OF THE ASSESSEE WOULD HAVE BEEN DISMISSED. BY NOT CONSIDERING THESE DECISIONS, THE TRIBUNAL HAS COMMI TTED APPARENT ERROR. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE CONTENDED THAT THERE IS NO DECISION AVAILABLE ON TH IS POINT FROM THE HONBLE JURISDICTIONAL HIGH COURT, NOR THERE IS A D ECISION OF THE HONBLE MA NO.60 /AHD/2014 5 SUPREME COURT CITED BY THE REVENUE. AS FAR AS NON- JURISDICTIONAL HIGH COURTS ARE CONCERNED, THEY ARE CONFLICTING ONE. FE W DECISIONS ARE IN FAVOUR OF THE ASSESSEE AS REFERRED BY THE ITAT IN T HE IMPUGNED ORDER. THE REVENUE HAS ALREADY CHALLENGED THE ORDER OF THE TRIBUNAL ON THIS LEGAL ISSUE, AND APPEAL OF THE REVENUE STANDS ADMIT TED. HE PRODUCED INTERIM ORDER OF THE HONBLE HIGH COURT DATED 16.6. 2014 IN TAX APPEAL NO.483 OF 2014. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE POWERS OF RECTIFICATION UNDE R SECTION 254(2) OF THE I.T.ACT CAN BE EXERCISED WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE, WHICH I S APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTA BLISHED BY ARGUMENTS AND LONG DRAWN PROCESS OF REASONING, ON P OINT ON WHICH, THERE MAY CONCEIVABLY BE TWO OPINIONS. IN THE PRE SENT CASE, THE ITAT HAS CONSIDERED ALL THESE ASPECTS, AND THEREAFTER TO OK A DECISION ON THE BASIS OF HONBLE DELHI HIGH COURTS DECISION IN THE CASE OF CIT VS. KAMAL WAHAL, 351 ITR 4 (DEL) IN WHICH THE INVESTMENT WAS MADE IN THE NAME OF WIFE. IN THE CASE OF CIT VS V. NATARAJAN, 287 I TR 271 AGAIN THE INVESTMENT WAS MADE IN THE NAME OF WIFE. TAKING IN TO CONSIDERATION THESE FACTS, THE TRIBUNAL TOOK A CONSCIOUS VIEW IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THERE IS NO APP ARENT ERROR AS SUCH IN THE ORDER OF THE TRIBUNAL, THEREFORE, THE MA IS REJECTED. 7. IN THE RESULT, THE MISC. APPLICATION OF THE REVE NUE IS REJECTED. ORDER PRONOUNCED IN THE COURT ON 26 TH AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 26/08/2015