2019 (7) TMI 420

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....ng the total income at Rs. 7,160/- after claiming deduction of Rs. 49,63,932/- u/s 54EC of the IT Act. During the course of assessment proceedings, the Assessing Officer observed from the details filed by the assessee that the assessee had sold property bearing No.115/5, Old Rajpur, Dehradun for Rs. 58.40 lakhs to Sardar Harcharan singh vide sale deed duly executed on 17.03.2011. The amount of sale consideration was transferred to capital gain account scheme 1988. After that the assessee withdrew the amount from hear capital gain account to purchase REC Bonds on 19th March, 2012. The assessee further stated vide letter dated 4th December, 2015 that she wanted to buy a house property from the amount of sale proceeds and, hence, opened the bank account with Syndicate bank under Capital Gain Account Scheme 1988 and transferred the full consideration of Rs. 58,40,000/- to this account between 23rd to 25th April, 2011. The original return was filed u/s 139 on 6th January, 2012 by claiming exemption u/s 54 of the Act. Neither she nor her husband or children owned any house in Delhi and for her bona fide needs she tried hard to buy a house property in Delhi. Subsequently, in absence of an....

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....n u/s 54EC of the Act. 6. However, the ld.CIT(A) was also not satisfied with the arguments advanced by the assessee. He noticed the provisions of section 54 and 54EC and came to the conclusion that in order to avail the exemption u/s 54EC, the capital gain amount has to be invested in a long-term specified asset within a period of six months from the date of transfer. Since the assessee in the instant case has invested the amount of Rs. 50 lakhs on 21st March, 2012 whereas the property was sold on 17th March, 2011, therefore, the amount invested by the assessee for claiming deduction u/s 54EC is after the period of six months i.e., after one year and four days which is beyond time and, therefore, she is not entitled to claim the exemption u/s 54EC. So far as the argument of the assessee that the amount was invested for purchase of residential property is concerned, he rejected the same on the ground that she was required to invest the amount in another house property if the deal did not materialize instead of investing in REC bonds. He noted that the assessee has not fulfilled the conditions stipulated u/s 54 of the Act. He accordingly confirmed the addition of Rs. 49,63,932/- m....

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....049, he submitted that the Hon'ble Supreme Court has held that strict as well as liberal construction are required to be invoked at different stages of interpreting exemption provisions. Referring to the decision of Hon'ble Supreme Court in the case of Collector of Central Excise, Bombay-I and Anr. Vs. Parle Exports (P) Ltd. (1990) 183 ITR 624 (SC), he submitted that the Hon'ble Supreme Court in the said decision has held that the fairest and most rational method to interpret the will of the law-maker is by exploring his intentions at the time when the law was made, by signs the most natural and probable. And these signs are either the words, the context, the subject-matter, the effects and consequences, or the spirit and reason of the law. Referring to the decision of the Hon'ble Karnataka High Court in the case of CIT vs. Sambandam Udaykumar reported in 345 ITR 389 (Kar.) and the decision in the case of CIT vs. J. Palemar Krishna, reported in 167 ITR 471, he submitted that once it is demonstrated that consideration received on transfer of a capital asset is invested in the residential property, the fact that the transactions involved in purchase or construction of....

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.... a consideration of Rs. 58.40 lakhs. The assessee kept the money in the capital gain account scheme 1988 and transferred the full consideration of Rs. 58.40 lacs to this account between 23rd to 25th April 2011. The assessee accordingly in the return filed under Section 139 on 6th January 2012 claimed exemption under section 54 of the IT Act. Subsequently, the assessee invested an amount of Rs. 49,63,932/- under section 54EC in REC bonds which were allotted to her on 31.03.2012 and the assessee accordingly claimed deduction of the same amount under section 54EC. The Assessing Officer denied exemption under section 54EC on the ground that the assessee applied for the REC bonds on 19th March 2012 which were allotted to the assessee on 31st March 2012 and the assessee has not invested in the REC bonds within the time prescribed under section 54EC, i.e., within a period of 6 months from the date of transfer and, therefore, the assessee is not entitled to the exemption under section 54EC of the Act. I find the Ld. CIT(A) upheld the denial of exemption under section 54EC on the ground that the assessee has not fulfilled the conditions laid down in the said provision. While doing so he ....