TaxTMI 
TaxTMI 
2017 (4) TMI 522
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....pholding the order of AO and dismissing the appeal. 2. The Learned CIT(Appeal) has erred in not appreciating the fact that assessee has rightly invested in Rural Electrification and Highway Authority Bond well within six months from the date of receipt of the amount and in that way he had done everything possible on his part to comply with requirements of Section 54EC of the Act. 3. On the facts and circumstances of the case. The lower authorities erred in failing to appreciate that in case of 'Deemed Transfer" of property under section 2(47)(V) of the Act involving full payment of the consideration amount in a spread over manner. The date of transfer for the purpose of allowing time for investing the consideration amount in specified assets should be the actual date of receipt of each installment of the payment. 4. On the facts and in the circumstances of the case the Learned CIT (Appeal) erred in not taking into consideration the various judicial decision as cited before him. a) Mahesh Nemichand Ganeshwade V/S. ITO (ITAI PUNE) b) Chanchal Kumar Sircar V/S. ITO (2012) 18 taxman com 304 (Kolkata- Trib.) 5. On the facts and in the circumstances of the case of t....
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.... allowed by the AO . But the investments made in Bonds of National Highway Authority of India to the tune of Rs. 21,50,000/- was made on 26-03-2009 while investment in REC Bonds of Rs. 22,00,000/- was made on 26-03-2009 which was beyond the period of 6 months from the date of transfer on 06-08-2008 which is not in consonance of provisions of Section 54EC of 1961 Act and hence claim of the assessee for exemption u/s 54EC of 1961 Act was rejected by the AO , although AO observed that the investment in NHAI Bonds/ REC Bonds were made within 6 months of receipt of last payment by assessee towards sale consideration on transfer of TDR , which was last received on 15-11-2008 and hence in nutshell the exemption to the tune of Rs. 24,85,420/- claimed by the assessee u/s 54EC of 1961 was denied to the assessee and was brought to tax by the AO as being made beyond six months after the date of transfer of TDR being in violation of provisions of Section 54EC of 1961 Act, vide assessment order dated 26-12-2011 passed by the AO u/s 143(3) of 1961 Act. 4. Aggrieved by the assessment order dated 26-12-2011 passed by A.O. u/s 143(3) of 1961 Act , the assessee filed first appeal before the ld. CI....
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....-in-trade is actually sold or otherwise transferred by the assessee. 2. In order to qualify for deduction under section 54E of the Act, the investment in specified assets was required to be made within six months from the date of transfer. A question had arisen as to whether the date of transfer, as referred to in section 54E of the Act, is the date of conversion of the capital asset into stock-in-trade or the date on which the stock-in-trade is sold or otherwise transferred by the assessee. 3. The Board had earlier issued a Circular No. 560 dated 18-5-1990, in consultation with Ministry of Law, clarifying that for purposes of section 54E of the Act, the date of transfer in such cases is the date on which the capital asset is converted by the assessee into stock-intrade and not the date on which such stock-in-trade is sold or otherwise transferred by the assessee. Section 54E became inoperative for transfers made on or after 1-4-1992. 4. Sections 54EA, 54EB and 54EC also provide deduction from longterm capital gain if the sale proceeds/long-term capital gain is invested in specified assets within a period of 6 months from the date of transfer. It is not possible for an ass....
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....learned CIT(A). 6. Aggrieved by the appellate order dated 15-07-2013 passed by the ld. CIT(A), the assessee filed second appeal before the tribunal. 7. The ld. Counsel for the assessee submitted that the assessee had sold TDR against which capital gain was earned of Rs. 47,35,420/-. It was submitted that the assessee had invested in residential flat to the tune of Rs. 22,50,000/- against which Revenue has allowed exemption u/s 54F of 1961 Act. The dispute has arisen w.r.t. investment in REC/NHAI Bonds to the tune of Rs. 43,51,000/- which was made on 26-03-2009 which was beyond six month from the date of agreement for transfer of TDR on 06-08-2008. It was submitted that the assessee had realized the sale proceeds of TDR on various dates from 07-08-2008 to 15-11-2008 and investment in REC/NHAI Bonds were made within six months if calculated from the last date of receiept of consideration on 15-11-2008. The ld. CIT(A) has distinguished the CBDT Circular No. 791 dated 2nd June, 2000 whereby he held that the CBDT circular covers only where the capital asset is converted into stock-in-trade and then the period was to be reckoned from the date of actual sale or transfer of stock-in-....
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....ssee on 26-03-2009 and the assessee had claimed exemption u/s 54EC of the Act, which was denied by authorities below as the said investment in NHAI/REC Bonds were made beyond period of six months from the date of transfer of TDR on 06-08-2008 which infringes provisions of Section 54EC of 1961 Act and hence as per authorities below , the assessee is not entitled for exemption u/s 54EC of 1961 Act. However , we find that the said investments have been made within six months from the date of receipt of last installment of sale consideration of TDR which was received on 15-11-2008 , the total consideration having been received over a period of time spread from 07-08- 2008 to 15-11-2008, as detailed above. The assessee received first payment of Rs. 19,92,750/- on 07-08-2008 which was paid by the assessee for architect fees and also share of his brother in TDR. The second installment of Rs. 35,00,000/- was received on 26-09-2008 and if the period of six month is reckoned from this date of second installment, the assessee has made the investment within time stipulated u/s 54EC of 1961 Act of six months as investment in REC/NHAI Bonds of Rs. 43,51,000/- was made on 26-03-2009. Section 54EC....
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.... to have converted (otherwise than by transfer) such specified asset into money on the date on which such loan or advance is taken. [(3) Where the cost of the long-term specified asset has been taken into account for the purposes of clause (a) or clause (b) of sub-section (1),- (a) a deduction from the amount of income-tax with reference to such cost shall not be allowed under section 88 for any assessment year ending before the 1st day of April, 2006; (b) a deduction from the income with reference to such cost shall not be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006.] Explanation.-For the purposes of this section,- (a) "cost", in relation to any long-term specified asset, means the amount invested in such specified asset out of capital gains received or accruing as a result of the transfer of the original asset; [(b) "long-term specified asset" for making any investment under this section during the period commencing from the 1st day of April, 2006 and ending with the 31st day of March, 2007, means any bond, redeemable after three years and issued on or after the 1st day of April, 2006, but on or before the 31st....
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....jective of the beneficial provision of Section 54EC of 1961 Act is to encourage investments out of sale proceeds received or accruing to the tax-payer from sale of long term capital assets and the tax-payer cannot be asked to do impossible in cases where genuinely the sale considerations are not received at the time of transfer of long term capital asset in terms of agreement for sale/transfer of long term capital asset. The assesssee has rightly relied upon the decision of the Kolkata Bench of this Tribunal in the case of Chanchal Kumar Sircar v. ITO in ITA No. 1146/Kol/2011 & ITA No. 1147/Kol/2011 (2012) 18 taxmann.com 304(Kol.trib.) for assessment year 2005-06 vide common order dated 21st February, 2012, wherein on similar facts, the deduction u/s 54EC of 1961 was allowed by the Kolkata-tribunal. The relevant extract of the decision of Kolkata tribunal is reproduced hereunder : "6. We have heard rival contentions and gone through facts and circumstances of the case. From the date of receipt of sale consideration and date of deposits with NABARD (dates mentioned in para 3 page 3 of this order) clearly reveals that deposit is made within one month of the receipt of sale conside....
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....ot remain always so and if a construction results in equity rather than in injustice, then such construction would be preferred to the literal construction. The Hon'ble Court also observed that under the provisions of section 54E of the Act, what is to be invested in specified assets is "the consideration or any part thereof" and unless the consideration is received, or accrues, there is no question of investing it. The second proviso to sub-section (1) of section 54E inserted with effect from April 1, 1984, states that in the case of compulsory acquisition of property under a statute, if the full amount of compensation awarded for such acquisition is not received by the assessee on the date of such transfer, the period of six months referred to in sub-section (1) shall, in relation to so much of such compensation as is not received on the date of the transfer, be reckoned from the date on which such compensation is received by the assessee. It would be consistent with reason to construe this proviso as being merely clarificatory. In other words, the provision made by the second proviso to sub-section (1) of section 54E should be deemed to have prevailed even prior to April 1, ....
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....income-tax as the date on which the compensation amount is paid to such assessee. The period of two years for the purposes of examination under section 54B of the Act will commence from the date of receipt of compensation and not from the date of acquisition of the agricultural land. 8. In another similar situation Hon'ble Andhra Pradesh High Court in the case of Darapaneni Chenna Krishnayya (HUF) v. CIT [2007] 291 ITR 98 wherein Hon'ble High Court observed that land belonging to the assessee was acquired by the Government of Andhra Pradesh in terms of the provisions of the Land Acquisition Act during 1981-82. The Land Acquisition Officer awarded compensation at the rate of Rs. 20,000 per acre. Not satisfied with the award, the assessee sought a reference and the civil court enhanced the compensation to Rs. 71,380 per acre. On appeal, the High Court enhanced the compensation to Rs. 2,83,000 per acre. By virtue of the orders of the High Court, the assessee received additional compensation amounting to Rs. 15,26,135 and interest on the additional compensation amounting to Rs. 28,58,622 on April 9, 1991, and on receiving the amounts, he invested the entire additional compen....