TaxTMI 
TaxTMI 
2009 (6) TMI 605
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....stment made in specified bonds of Rs. 13,00,000 under s. 54EC is not entitled to deduction and exemption from capital gain. 5. That learned CIT erred in determining the income under the head long-term capital gains of Rs. 13,35,342. 6. Any other ground that may be taken at time of hearing." 2. Narrating the facts in brief, the learned Authorised Representative for the appellant-assessee submitted before the Bench that the assessee-HUF sold the property by a registered sale deed on 9th Oct., 2003. The HUF received advances before the transfer and the money was deposited in the specified bonds as required under s. 54EC. On the basis of the same, the appellant claimed exemption under s. 54EC to the extent of Rs. 13 lakhs. The AO allow....
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....s before the due date with advance receive is sufficient compliance to the requirement under s. 54EC. The assessee stated that he had invested the sale consideration in purchase of the bonds on receipt of advance and, therefore, the assessee had fulfilled the requirement of s. 54EC. He also stated that the provisions of s. 54E on which the Board has issued the said circular and s. 54EC are identical in the language employed and the intent. So, he pleaded that the land purchased by him with advance received before registration of the transfer is entitled to the incentive under s. 54EC. The assessee's reliance on the Board's Circular No. 359, dt. 10th May, 1983 to say that purchase of bonds before the due date with advance received is suffici....
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....ix months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital, gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whore of such capital gain shall not be charged under s. 45; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the ca....
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.... or (iva) the maturity or redemption of a zero coupon bond; or (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882; or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other AOP or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring or enabling the enjoyment of, any immovable property." 6.1 Thus, cl. (v) of s. 2(47) is explicitly clear that by possession or retention in part performance of contract as referred to in s. 53A of the Tr....
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....hereof." 6.3 Therefore, if by way of a part performance of a contract as contemplated in s. 53A of the Transfer of Property Act (i.e., agreement to sale) the assessee has received advance payments and deposited the same in specified bonds, he cannot be charged of defrauding the law. Holding this view of the matter, we emphatically hold that when there is no bar to take possession by an agreement and transfer can be treated to have taken place on the basis of an agreement and advance payments. Simply because the sale deed was executed later on, the assessee cannot be charged of default of violation of the provision of s. 54EC in this particular case. 6.4 Even with regard to ownership of house property, the Hon'ble apex Court in the cas....