2014 (1) TMI 1758

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....f the case, in brief, are that the assessee is an individual and filed his return of income on 10-10-2011 disclosing income of Rs. 21,32,710/-. During the course of assessment proceedings the Assessing Officer noted that the assessee has disclosed income from capital gains on transfer of land at Baramati. From the transfer document he noted that there are 3 co-owners viz., Ajitkumar Popatlal Shah, Kirankumar Popotlal Shah and Smt. Sarika Sanjaykumar Shah. The co-owners are from the same family and the total consideration involved in the transfer is Rs. 3,51,00,000/-. From the computation of total income of the assessee the Assessing Officer noted that the assessee has claimed exemption of Rs. 1 Crore u/s. 54EC of the Act. From the REC bond certificates the Assessing Officer noted that the assessee has invested Rs. 50 lakhs on 30-11-2008 and another Rs. 50 lakhs on 30-04-209. He, therefore, asked the assessee to explain as to why exemption u/s.54EC should not be restricted only to the investment made in F.Y. 2008-09 since the transfer of the capital asset took place in F.Y. 2008-09 relevant to A.Y. 2009-10 in respect of which exemption is being claimed. The assessee replied th....

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....s within a period of 6 months from the date of sale of the property. He also relied on the decision of the Ahmedabad Bench of the Tribunal in the case of Shri Aspi Ginwala Vs. ACIT vide ITA No.3226/Ahd/2011 order dated 30-03-2012 for A.Y. 2008-09 and the Chennai Bench of the Tribunal in the case of Smt. Sriram Indubal Vs. ITO vide ITA No.1950/Mds/2012 order dated 30-01-2013 for A.Y. 2008-09 and M/s. Coromandel Industries Pvt. Ltd. Vs. ACIT vide ITA No.411/Mds/2013 order dated 25-06-2013 for A.Y. 2009-10. Referring to the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. reported in 88 ITR 192 he submitted that when two views are possible the view which is favourable to the assessee should be accepted. He accordingly submitted that the claim of the assessee should be allowed. 6. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 7. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions relied on by both the sides. The only dispute to b....

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....only. The assessee's case, however, is that as per the proviso to section 54EC, investment made on or after 1st April, 2007 in the Long Term Specified Asset by an assessee during any financial year should not exceed Rs. 50 lakhs. The assessee's case is that since the property was sold on 22-10-2007 he could have invested in eligible investment within six months i.e. on or before 21-04-2008 in order to avail exemption u/s 54EC of the Act. There is no dispute about Rs. 50 lakhs invested on 31-122007 in REC Bonds. The dispute is only about further investment of Rs. 50 lakhs in NHAI Bonds made on 26-05- 2008. Since six months in this case involves two financial years, the assessee's case is that if he had deposited another Rs. 50 lakhs from 1st April, 2008 to 21-04-2008, he was entitled for exemption u/s 54EC of the Act. As during this period from 01-04-2008 to 26-05-2008 subscription in eligible investment was closed, the investment made by the assessee on 26-05-2008 i.e. 1st day of the reopening of the subscription of eligible investment in NHAI Bonds should be treated in time. There is also no dispute about the fact that subscription to the eligible investment was closed....

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.... period as per the proviso to sec. 54EC, we find that the assessee was to make investment in such Bonds between 01-04-2008 to 21-04-2008. There is no dispute about the fact that subscription of eligible Bonds was closed during this period till 26-05-2008 and on the 1st day of the reopening of the subscription, the assessee made this investment. Under the circumstances, we are of the considered opinion that the assessee was prevented by sufficient cause which was beyond his control in making investment in these Bonds within the time prescribed. We further find that various judicial authorities have taken a view that exemption should be granted in such cases where there is a delay in making investment due to non-availability of the bonds and have held that it is a reasonable cause and the exemption should be granted. In the case of Ram Aganval v. Jt. CIT [2002] 81ITD163 (Mum), it has been held as under: "In regard to claim of exemption under section 54F we may mention that it is found by the learned CIT(A) that the bank was closed on 31- 8-1995 on account of strike as certified by the officials of the concerned bank. From the certification given by the bank officials, the assessee....

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....ided the embargo in this regard. Restriction relates only to the investment made in any financial year by the assessee. Making of the investment is a condition for availing of the exemption. Condition for availing of the exemption requires that the investment can be made within a period of 6 months. If 6 months falls within a different financial year, as has happened in this case, in our opinion, this Tribunal cannot add the embargo that the assessee cannot make the investment to avail of the exemption under Section 54EC in the different financial year if he had already made the investment in the financial year in which the capital asset is transferred. In our opinion, the language of Section 54EC is clear and unambiguous and it leads to the interpretation that the assessee can make the investment in two different financial years provided in a financial year the investment made did not exceed Rs. 50,00,000/-. We have also gone through the circular no. 3/2008 dtd. 12.3.2008 issued by the CBDT being an explanatory note on the provisions relating to direct taxes in Finance Act, 2007. In para 28.2 thereof the reason for it to set the limit on the quantum of the investment by a perso....