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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by revenue for Assessment Year [AY] 2012-13 contest the order of Ld. Commissioner of Income-Tax (Appeals)-30 [CIT(A)], Mumbai, Appeal No. CIT(A)-30/AC19(3)/686/2014-15 dated 11/01/2016 by raising following effective grounds of appeal:-
Rajnikant Dalal Assessment Year-2012-13 1. Whether on the facts and in the circumstances of the case and as per law, the Ld. CIT(A) has erred in allowing the limit of exemption u/s 54EC of the Income-tax Act, 1961 to Rs 1 crore in one Assessment Year despite the fact that such an interpretation of the Statue leads to discrimination against various tax payers? 2. Whether on the facts and in the circumstances of the case and as per law, the Ld. CIT(A) has erred in following the ratio laid down by Hon’ble ITAT Jaipur Bench in the case of ACIT vs. Raj Kumar and Sons (HUF) [19 taxmann.com 27] wherein it is held that the assessee is entitled to the extent of Rs.50 Lacs u/s 54EC of the Act.? 3. Whether on the facts and in the circumstances of the case and as per law, the Ld. CIT(A) has erred in allowing the exemption limit u/s 54EC of the Act to Rs. 1 crore and thereby permitting the ‘timing’ of the sale of immovable assets as the sole determination factor for claiming deduction u/s 54EC, which has never been the intention of the Legislature.?
None has appeared for assessee and no valid adjournment application is on record. Left with no option, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative, Shri Ram Tiwari.
The only dispute under appeal is quantum of deduction as available to the assessee u/s 54EC. The assessment for impugned AY was framed u/s 143(3) on 10/02/2015 wherein the assessee reflected certain capital gains on shares and claimed deduction u/s 54EC for Rs.1 crore. The Ld. AO, relying upon proviso to Section 54EC, as inserted by Finance Act, 2007, restricted the deduction to Rs.50 Lacs since the stated deduction, in the opinion of Ld. AO could not exceed Rs.50 Lacs in total. The assessee submitted that the stated limit of investment was per financial year only and did not restrict the overall deduction u/s 54EC provided other conditions were fulfilled. However, the same did not find favor with Ld. AO.
Aggrieved, the assessee contested the same with success before Ld. CIT(A) vide impugned order dated 11/01/2016, wherein Ld. CIT(A)
Rajnikant Dalal Assessment Year-2012-13 relying upon certain judicial pronouncements, allowed the claim of the assessee. Aggrieved, the revenue is in further appeal before us.
The Ld. DR submitted that the findings of Ld. AO were in line with the decision of Jaipur Tribunal rendered in ACIT Vs. Raj Kumar Jain & Sons (HUF).
We have carefully heard the submissions and perused relevant material on record including judicial pronouncements. The short dispute before us is with respect to quantum of deduction u/s 54EC as available to the assessee during impugned AY. At the outside, it would be prudent to appreciate relevant extract of provisions of Section 54EC which reads as follows:- “54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45: Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.] Provided further that the investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. (emphasis supplied by us)
Rajnikant Dalal Assessment Year-2012-13 Upon perusal, we find that if twin conditions viz. investment within a period of 6 months with a cap of Rs.50 Lacs in one financial year is fulfilled by the assessee, he is entitled to claim the said deduction for any amount within these parameters. The relevant provision nowhere restricts the extent of overall deduction or put a cap on maximum amount in any manner. Further, it is noted that second proviso has been made effective only w.e.f. 01/04/2015. The same, in our opinion, being substantiate provisions, are prospective in nature and do not apply to the case of the assessee. Our view fortified by various judicial pronouncements where similar views have been expressed, the foremost of which of which are listed below:- (i) CIT Vs. C.Jaichander (370 ITR 579 Madras High Court) as followed subsequently by the same court in CIT Vs. Coromandel Industries Ltd. [370 ITR 586] (ii) M/s C.R.Developments Pvt. Ltd. Vs. JCIT (ITA No. 4277/Mum 2012 Mumbai Tribunal) (iii) Dr.Kumar M.Dhawale Vs ACIT (ITA No. 7585/M/2012 Mumbai Tribunal) (iv) Mrs. Lilavati M.Sayani Vs ITO (49 Taxmann.com 579 Mumbai Tribunal) (v) Mrs. Rati Virwani Vs. ACIT (ITA No. 817/Mum/2013 Mumbai Tribunal)
In view of the above stated position, we hold that deduction during impugned AY could be claimed by the assessee up-to Rs.1 crore subject to fulfillment of other condition viz. investment within 6 months from the date of earning of capital gain.
From assessee’s submissions, as extracted by Ld. CIT(A) on page number-4, it appears that the investment of Rs.50 Lacs each has been made by the assessee on 30/01/2012 & 31/03/2012 i.e. within the same financial year, against which the deduction was available only to the extent of Rs.50 Lacs.
Rajnikant Dalal Assessment Year-2012-13 7. Therefore, on totality of facts, while confirming the stand of Ld. CIT(A) in principle, the matter stand remitted back to the file of Ld. AO for verification of the fact that the investments of Rs.50 Lacs each were made in different financial years and both the investment were made within 6 months as per the requirement of Section 54EC. Needless to add that investment of Rs.1 crore in single financial year would entitle the assessee to claim deduction only to the extent of Rs.50 Lacs. The assessee is directed to provide requisite documentary evidences in this regard.
Resultantly, the appeal stand partly allowed for statistical purposes.