Appeal Allowed Due to Supervening Impossibility Excusing Delay in REC Bonds Investment

The Tribunal allowed the appeal, applying the Doctrine of supervening impossibility to excuse the delay in investing in REC bonds beyond the statutory limit under sec.54EC. Despite the technical non-compliance, the Tribunal considered the senior citizen assessee's health issues post-sale, deeming the 59-day delay reasonable. It directed the assessing authority to grant the exemption under sec.54EC, ordering a refund if applicable within 45 days. The decision highlights the significance of assessing cases on a case-by-case basis and applying legal principles sensibly, even in instances of statutory timeframe breaches.

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Issues:
1. Interpretation of sec.54EC for exemption from capital gains taxation.
2. Delay in investing sale proceeds in REC bonds.
3. Application of the Doctrine of supervening impossibility in tax law.

Analysis:
1. The appeal involved the interpretation of sec.54EC of the Income-tax Act, 1961, regarding exemption from capital gains taxation. The assessee, a retired army officer aged 94, sold a property in Delhi with the intention of moving to Chennai to be closer to family. However, due to the inability to find a suitable property in Chennai within the prescribed time, the assessee deposited the sale proceeds in REC bonds after a delay of 59 days. The Assessing Officer and the Commissioner of Income-tax(Appeals) rejected the claim under sec.54EC due to this delay.

2. The Tribunal acknowledged that technically, the delay in investing in REC bonds exceeded the six-month limit prescribed by sec.54EC. However, the Tribunal considered the unique circumstances of the case. The assessee, being a senior citizen, fell ill after the property sale, which hindered timely investment. The delay of 59 days was deemed reasonable considering the age and health condition of the assessee. The Tribunal applied the Doctrine of supervening impossibility to excuse the delay and held that the assessee should be entitled to the exemption under sec.54EC.

3. The Tribunal emphasized that the decision to excuse the delay was based on the specific facts and circumstances of the case. It was noted that the assessee acted diligently once recovered from illness and promptly invested in the bonds. The Tribunal directed the assessing authority to extend the benefit of sec.54EC to the assessee and revise the assessment accordingly. If eligible, the Tribunal ordered a refund to be issued within 45 days. The appeal filed by the assessee was allowed based on the application of the Doctrine of supervening impossibility in the context of tax law.

This judgment illustrates the importance of considering individual circumstances and applying legal principles judiciously, even in cases involving technical non-compliance with statutory timelines.

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