JAMMI RAMCHANDRA RAO,MUMBAI vs. ITO (IT) 4(1)(1), MUMBAI

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ITA 1757/MUM/2017Status: DisposedITAT Mumbai24 April 2019AY 2012-137 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 found that the assessee had invested Rs. 50 lakhs in FY 2011-12 and Rs. 50 lakhs in FY 2012-13, fulfilling the conditions of Section 54EC. Therefore, the assessee is eligible for the deduction.

What were the facts?

The assessee claimed exemption under Section 54EC for Rs. 1 crore. The AO disallowed Rs. 50 lakhs, presuming the entire investment was made on a single date exceeding the limit. The CIT(A) upheld the AO's order.

What were the issues?

Whether the assessee's claim for exemption under Section 54EC for Rs. 1 crore is valid when investments were made in two different financial years, and if the AO's disallowance based on a mistaken assumption of a single investment date was correct.

Which sections of the Income-tax Act were involved?

Section 54EC,Section 154,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F”

Before: HON’BLE SH. G. S. PANNU, VP & HON’BLE SH. SANDEEP GOSAIN, JM

For Appellant: Ms. Kavita, Shri Rajiv Gubgotra, DR सुनवाईकीतारीख/

Jammi Ramchandra Rao ITO (IT) 4(1)(1), A/4, Gyaneshwari CHS Mumbai, बिधम/ Ltd, Behind Pritam Fast Pin- Food Hotel, Off-Aarey Vs. Road, Goregaon(east), Mumbai-400 063 स्थायीलेखासं./जीआइआरसं./ PAN No. AATPR8931N (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant by : Ms. Kavita Mehendale, AR प्रत्यथीकीओरसे/Respondentby : Shri Rajiv Gubgotra, DR सुनवाईकीतारीख/ : 29.01.2019 Date of Hearing घोषणाकीतारीख / : 24.04.2019 Date of Pronouncement आदेश / O R D E R

Per Sandeep Gosain, Judicial Member:

1.

The present Appeal filed by the assessee is against the order of Ld. CIT (Appeal) – 58, Mumbai dated 11.01.17 for AY 20012-13.

Jammi Ramchandra Rao 2. The brief facts of the case are that the assessee filed its return of income for the year under considering on 25.07.12 declaring total income of Rs 33,43,100/-. Subsequently the case was selected for scrutiny and after serving statutory notices and providing opportunity of hearing, assessment order u/s 143(3) of the I.T. Act was passed on 12.01.15, thereby treating that assessee is not entitled for exemption u/s 54EC of the Act with respect to Rs. 50 lakhs, therefore the same was added to the total income of the assessee.

Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, dismissed the appeal of the assessee regarding rectification of order u/s 154 of the Act. Now before us, the assessee has preferred the present appeal.

3.

The solitary ground raised by the assessee relates to challenging the order of Ld. CIT(A) in rejecting the application for rectification without appreciating that there was a ‘mistake apparent’ on the face of record, more particularly, when the Jammi Ramchandra Rao assessee had already placed evidence of investment u/s 54EC of the Act.

4.

We have heard the counsels for both the parties at length and we have also perused the material placed on record, judgment cited by the parties as well as the orders passed by revenue authorities. We find from the records that assessee had claimed exemption of Rs. 1 crore u/s 54EC of the Act, however, AO had rejected the claim of the assessee to the extent of Rs. 50 lakhs by holding that assessee in this case had claimed deduction of Rs. 1 crore in stead of Rs. 50 lakhs by making a claim of total investment of Rs. 1 crore on 31.05.12 vide Certificate No. 01301721 which exceeds the ceiling of Rs. 50 lakhs in the said section. Thus, the excess investment of Rs. 50 lakhs was not found for qualifying for any exemption u/s 54EC of the Act.

5.

On appeal, Ld. CIT(A) had upheld the order of AO, but later on, an application for rectification of the order u/s 154 fo the Act was filed by the assessee by pointing out that the assessee had invested Rs. 1 crore in two financial years i.e. in FY 2011-

Jammi Ramchandra Rao 12, Rs. 50 lakhs vide certificate no. 0903902 dated 29.02.12 issued by Rural Electrification Corporation Ltd and in FY 2012- 13, Rs. 50 lakhs vide certificate no. 01301721 dated 31.05.12 issued by National Highway Authority of India. Thus, in this way, assessee claimed that the AO had wrongly presumed that the assessee had invested the entire amount of Rs. 1 crore on 31.05.12 vide certificate no. 01301721 in FY 2012-13. Whereas, certificate no. 01301721 was only for Rs. 50 lakhs and the other investment of Rs. 50 lakhs was made vide certificate no. 0903902 dated 29.02.12 issued by Rural Electrification Corporation Ltd. Therefore, according to the assessee, he had made investments in two different financial years i.e. 2011-12 & 2012-13 respectively.

6.

On the contrary, Ld. DR relied upon the orders passed by the revenue authorities.

7.

After having gone through the orders passed by the revenue authorities, we find that assessee had made investment of Rs.1 crore in two financial years i.e. in FY 2011-12, Rs. 50 lakhs

Jammi Ramchandra Rao vide certificate no. 0903902 dated 29.02.12 issued by Rural Electrification Corporation Ltd and in FY 2012-13, Rs. 50 lakhs vide certificate no. 01301721 dated 31.05.12 issued by National Highway Authority of India. Therefore, it is clear that assessee had made investments in two financial years i.e. 2011-12 & 2012-13 and assessee is thus eligible to the deduction as claimed by him u/s 54EC of the Act.

8.

As per section 54EC(1), it is clearly mentioned that the assessee is entitled to make investment in financial year in which the original asset or assets are transferred and also in the subsequent financial years, but the same does not exceed to Rs. 50 lakhs. Therefore, the assessee had fulfilled the two mandatory conditions to claim u/s 54EC of the Act i.e. i) The investments in specified assets should be within six months of the arising gains and ii) The investment cannot exceed Rs. 50 lakhs during any financial year.

Jammi Ramchandra Rao 9. Therefore keeping in view the above provision as laid down in section 54EC of the Act, we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to grant further deduction of Rs. 50 lakhs. With these directions, this ground of appeal raised by the assessee is allowed.

10.

In the net result, the appeal filed by the assessee stands allowed with no order as to cost.

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