BIMAL NATUBHAI DESAI,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX,

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ITA 161/PUN/2017Status: DisposedITAT Pune07 February 2019AY 2013-145 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amendment to Section 54EC by the Finance Act, 2014, which introduced a new proviso, was prospective. Therefore, for the assessment year in question, the assessee was entitled to claim exemption on the entire investment made within the prescribed time.

What were the facts?

The assessee claimed exemption under Section 54EC for investments made in REC bonds from long-term capital gains. The Assessing Officer and CIT(A) restricted the exemption to Rs. 50,00,000/- based on the limit then applicable.

What were the issues?

Whether the restriction of exemption under Section 54EC to Rs. 50,00,000/- was applicable for the assessment year 2013-14, considering the amendments to the section.

Which sections of the Income-tax Act were involved?

Section 54EC

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI R.S. SYAL & SHRI VIKAS AWASTHY, JM

For Appellant: Shri Pramod Shingte
For Respondent: Shri Ashok Babu

आदेश / ORDER

PER VIKAS AWASTHY, JM :

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Pune dated 07-11-2016 for the assessment year 2013-14. The assessee in present appeal has assailed the

2 ITA No.161/PUN/2017, A.Y. 2013-14

order of Commissioner of Income Tax (Appeals) on solitary issue of restricting exemption u/s. 54EC of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) to Rs.50,00,000/-. The grounds raised by the assessee reads as under : “1) On the facts in the circumstances of the case and I law the Lower Authorities have erred in restricting the claim of Exemption u/s. 54EC of the Income Tax Act, 1961 from Rs.97,32,657/- to Rs.50,00,000/- by disregarding appellants contention and clear provision of law. The appellant craves for to leave, add, alter, modify, delete above ground of appeal before or at the time hearing, in the interest of natural justice.”

2.

Shri Pramod Shingte appearing on behalf of the assessee submitted that the assessee in his return of income claimed exemption u/s. 54EC of the Act in respect of investment made in Rural Electrification Corporation (REC) Bonds Rs.97,32,657/- out of Long Term Capital Gains arising on buy back of shares of Desai Brother Ltd. The ld. AR submitted that the buy back of shares took place on 27-03-2013. The consideration received was invested for purchase of REC Bonds on 28-03-2013 Rs.50,00,000/- and on 27-04-2013 Rs.47.50 Lacs. The said investment was made within six months from the date of buy back of shares. The Assessing Officer restricted the exemption to Rs.50 Lacs only on the ground that the exemption admissible under the provisions of section 54EC is restricted to Rs.50 Lacs. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) rejected the contentions of assessee and confirmed the findings of Assessing Officer.

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2.1 The ld. AR submitted that in assessment year 2012-13 on identical set of facts the assessee had claimed exemption u/s. 54EC to the tune of Rs.1 crore. The Assessing Officer and Commissioner of Income Tax (Appeals) restricted the assessee’s claim to Rs.50,00,000/- for similar reasons. The assessee carried the matter in appeal before Tribunal in ITA No. 40/PUN/2016. The Tribunal vide order dated 31-10-2017 following the decision of Hon’ble Madras High Court in the case of Commissioner of Income Tax Vs. C. Jaychander reported as 370 ITR 579 allowed assessee’s entire claim of exemption. The ld. AR furnished copy of order of Tribunal in ITA No. 40/PUN/2016 (supra).

3.

Shri Ashok Babu representing the Department vehemently defended the order of Commissioner of Income Tax (Appeals). However, the ld. DR fairly admitted that the Tribunal in immediately preceding assessment year has allowed the exemption to the assessee u/s. 54EC on the entire amount of investment. The ld. DR informed that the Department has filed appeal before the Hon’ble High Court against the said order of Tribunal.

4.

Both sides heard. The orders of authorities below perused. The only issue raised by the assessee in appeal is against restricting the claim of exemption u/s. 54EC to the extent of Rs.50,00,000/-. We find that on similar set of facts the assessee had approached the Tribunal in assessment year 2012-13 in ITA No. 40/PUN/2016 (supra). The ground of appeal raised by assessee in present appeal is identical to the one raised in appeal for assessment year 2012-13, except for the amounts. The Co- ordinate Bench of Tribunal allowed assessee’s claim by following the order

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of Hon’ble Madras High Court in the case of Commissioner of Income Tax Vs. C. Jaychander (supra) and in the case of Commissioner of Income Tax Vs. Coromandel Industries reported as 370 ITR 586. The relevant extract of the findings of Tribunal on this issue reads as under : “11. In view of the ratio laid down by the Hon’ble High Court of Madras, which undoubtedly, is not the jurisdictional High Court but the said view has persuasive value and has been applied by the Pune Bench of Tribunal in another case and hence, we find no merit in the observations of the CIT(A) in this regard. Accordingly, we reverse the findings of the CIT(A) and hold that the amendment by the Finance (No.2) Act, 2014 w.e.f. 01.04.2015 by which proviso has been inserted after the proviso to section 54EC(1) of the Act is to be applied prospectively from assessment year 2015-16 onwards. Accordingly, the year under appeal being assessment year 2012-13, the assessee is entitled to claim the deduction under section 54EC of the Act at Rs.1 crore i.e. on account of investment made in the financial year in which the asset was sold at Rs.50 lakhs and further deduction of Rs.50 lakhs which was made in the subsequent financial year, though within period of six months from the date of sale of asset. Accordingly, we allow the claim of assessee and direct the Assessing Officer to allow the deduction under section 54EC of the Act at Rs.1 crore. The ground of appeal raised by the assessee is thus, allowed.”

5.

The Revenue has not brought to our notice any contrary decision by the Hon’ble High Court or the Hon’ble Apex Court. Though the DR has submitted that an appeal has been filed against the order of Tribunal before the Hon’ble High Court, no order has been placed on record to show that the order of Tribunal has been either reversed or stayed by the Hon’ble High Court. Thus, in view of undisputed facts and the decision of Co- ordinate Bench in assessee’s own case we hold that the assessee is eligible for claiming exemption u/s. 54EC on the entire amount of investments made in REC Bonds within the specified mandatory time period. Consequently, the ground No. 1 raised in appeal by the assessee is allowed

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and the findings of Commissioner of Income Tax (Appeals) are modified, accordingly.

6.

In the result, the appeal of assessee is allowed.

Order pronounced on Thursday, the 07th day of February, 2019.

Sd/- Sd/- (R.S. Syal) (Vikas Awasthy) VICE PRESIDENT JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 07th February, 2019. RK आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-1, Pune 3. 4. The Pr. Commissioner of Income Tax-1, Pune ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रतत// True Copy// आदेशानुसार / BY ORDER,

तनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune

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