TaxTMI 
TaxTMI 
2011 (2) TMI 26
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....capital asset was 9-8-2005. The assessee made investment of Rs. 20.00 lakhs in NABARD Bonds and claimed exemption from tax on capital gain. The dispute in this appeal is with regard to the eligibility of the assessee for the claim of exemption as aforesaid. The assessee had originally made a claim under section 54EA of the Income-tax Act, 1961 (the Act). Those provisions were admittedly not applicable. The correct provision under which the assessee could claim exemption was section 54EC of the Act. For claiming exemption under section 54EC the assessee had to make investment of the capital gain in long term specified asset within a period of 6 months after the date of transfer of the long term capital asset. The dispute in this appeal is two fold, (i) whether the assessee made the investment in long term specified asset within a period of 6 months from the date of transfer (ii) whether the assessee made investment in long term specified assets. 4. On the dispute with regard to the period of 6 months within which investment in long term specified asset has to be made, the facts were as follows. According to the revenue authorities the Assessee invested the resultant capital gains o....
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....datory time limit. It is not understood as to why the assessee delayed the reinvestment by a few days specially when the money was available with the assessee well before the due date. In view of the above, it is clear that the benefits of section 54EC would not be applicable to the assessee because the time limit for the purpose of exemption has not been complied with as was mandatory to have been done." 5. On the question whether NABARD were long term specified securities, the revenue authorities held that section 54EC of the Act was introduced by Finance Act, 2000 w.e.f. 1-4-2001 and has undergone various amendments by the Finance Act, 2001, 2002, 2005, 2006 & 2009. By these amendments the long term specified assets are described. Upto A.Y 2005-06 the long term specified assets were defined to mean as under : - i. Bonds by NABARD or by NHAI redeemable after 3 years issued on or after 1-4-2000. ii. Bonds by R.E. Corporation Ltd. redeemable after 3 years issued on or after 1-4-2000. iii. Bonds by N H Bank or SIDBI redeemable after 3 years issued on or after 1-4-2002. However, wi....
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....ity of India Act, 1988 (68 of 1988). 8. By Finance Act, 2001 w.e.f. 1-4-2002, clause (b) was substituted as follows: '(b) "long-term specified asset" means any bond redeemable after three years, issued,- (i) on or after the 1st day of April, 2000, by the National Bank for Agriculture and Rural Development established under section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981) or by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988); (ii) on or after the 1st day of April, 2001, by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956). 9. The following sub-clause (iii) shall be inserted after sub-clause (ii) in the Explanation to section 54EC by the Finance Act, 2002, w.e.f. 1-4-2003: (iii) on or after the 1st day of April, 2002, by the National Housing Bank established under sub-section (1) of section 3 of the National Housing Bank Act, 1987 (53 of 1987) or by the Small Industries Development Bank of India established under sub-section....
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....essee in the above case had opted for Samvat Year as his accounting period ending on Diwali every year. The controversy relates to asst. yr. 1975-76, the previous year relevant to which ended on Diwali of 1974, i.e., the accounting period commencing on next day of Diwali 1973 and ending on Diwali 1974 is the previous year relevant to the assessment year in question for which income-tax payable by the assessee was to be assessed. He sold certain plots of land between 26th Dec, 1973 and 25th March, 1974. As on the date of such transfers, the assessee had held the said immovable property for the period of more than 24 months, but less than sixty months. The assessee claimed that as on the date of transfer of the capital assets concerned, the definition of short-term capital asset under section 2(42A) of the IT Act, 1961, it was required that the assessee should have held the capital asset for not more than 24 months immediately preceding the date of transfer, it was a transfer of long-term capital assets by the assessee. He, therefore, claimed that income arising out of the said transaction is liable to be assessed to tax as long-term capital gains. He claimed deductions as are applic....
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....xed does not voluntarily pay. (iii) Insofar as the first part of imposition of tax is concerned, namely what persons in respect of what property are liable to pay tax is to be determined with reference to law as on the date on the occurrence of event which creates or attracts the liability to tax, unless the statute by express or by necessary implication provides otherwise. In computing such liability what is to be excluded, or included or conditions or allowances of deductions or exemptions and like matters of law as it exists on 1st of April of the relevant assessment year govern the assessment. (iv) Applying the aforesaid principles, if we view the facts of the present case the taxable event which attracted liability to tax was the transfer of immovable property as a result of which the income in the nature of capital gain arose during the previous year. (v) The next question which calls for consideration is whether the charge having attracted on the date of transfer, further question whether the transfer is of long-term capital assets or short-term capital assets is to be determined as per law in force on the 1st of April, 197....
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....n never claim deduction u/s.54EC if the contention of the learned D.R. is to be accepted, because the period of 6 months from the date of transfer would expire well before the 1st day of the Assessment Year. We therefore reject the argument of the learned D.R. in this regard. We hold that investment in NABARD Bonds by the Assessee at the relevant point of time has to be regarded as investment in long term specified asset within the meaning of section 54EC of the Act. 15. The next issue whether the assessee had made investment within a period of 6 months from the date of transfer of the long term capital asset has to be examined. In this regard there is no dispute that the date of transfer of the long term capital asset is 9-8-2005. There is also not dispute that the period of 6 months from the date of transfer is on or before 9-2-2006. The assessee sent the application to NABARD by courier on 7-2-2006. The assessee along with the application for investment in NABARD bonds of the value of Rs. 20.00 lakhs also enclosed a cheque dated 7-2-2006 drawn on Mandvi Co.-operative Bank Ltd., Mumbai. The said application had reached the office of NABARD on 9-2-2006. The NABAD had issued bonds....