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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH AHMEDABAD
PER S. S. GODARA, JUDICIAL MEMBER
This Revenue’s appeal for assessment year 2011-12 arises against the CIT(A)-13, Ahmedabad’s order dated 29.05.2015 in case no. CIT(A)- 13/AHD/Intl.Taxn./89/2014-15, reversing Assessing Officer’s action disallowing
ITA No. 2091/Ahd/15 [ ITO vs. Subhra Anant Raje] A.Y. 2011-12 - 2 -
assessee’s deduction claim of Rs.50lacs u/s.54EC of the Act on the ground that the relevant capital gains had been reinvested to the tune of Rs.50lacs each in a time span of two separate assessment years, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short “the Act”.
Case called twice. None appears at assessee’s behest. Case file reveals that the registry has already sent an RPAD notice to the assessee dated 04.10.2017. He is accordingly proceeded ex parte.
It emerges from the instant case file that there is no dispute between the parties about the fact that assessee had disclosed long term capital gains of Rs.1,60,83,089/- to be arising from surrender of tenancy right as well as sale of shares in a Private Limited Company, received through gift. This followed Section 54EC deduction claim to the tune of Rs.1crore i.e. Rs.50lacs each reinvested from the above capital gains on 27.12.2010 and 25.04.2011 in NHAI and REC bonds in the nature of recognized mode of deduction. The Assessing Officer went in a detailed discussion to conclude that the impugned deduction provision could not be spread over to the maximum amount limit of Rs.50lacs each spread over in two assessment years. He was of the view that the crucial expression “any financial year” meant only one financial year of reinvestment and not more than that. He therefore disallowed assessee’s Section 54EC deduction to the extent of Rs.50lacs in assessment order dated 25.03.2014.
The CIT(A) reverses Assessing Officer’s action as under:
“5. During the appellate proceedings the appellant submitted in the written submission as under: The appellant has stated that her action of investment of Rs. 100 lakhs claimed exempted u/s. 54EC of the Act is fully supported by the decision of IT AT, Ahmedabad in the case of Shri Aspi Ginwala v/s ACIT, Circle 5, Baroda in ITA No. 3226/And/2011. Relevant portion of the judgement is-reproduced as under: "The dispute which remains to be decided by us in this case is whether as per the provisions of section 54EC the assessee is entitled for exemption of Rs. 1
ITA No. 2091/Ahd/15 [ ITO vs. Subhra Anant Raje] A.Y. 2011-12 - 3 -
Crore as six months period for investment in eligible investment involves; financial years. If the answer to this question is "yes", whether investment made by the assessee on 26-05-2008 beyond six months period is eligible for exemption in view of the fact that no subscription for eligible investment was available to the assessee from 1st April, 2008 to 26-05-2008.
8 While going through the proviso of section 54EC, we find that the proviso to section reads as under:-
“[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 rupee]"
It is clear from this proviso that where assessee transfers his capital asset after 30th September of the financial year he gets an opportunity to make an investment of Rs.50 lakhs each in two different financial years and is able to claim exemption upto Rs. 1 Crore u/s 54EC of the Act. Since the language of the proviso is clear and unambiguous, we have no hesitation in holding that the assessee is entitled to get exemption upto Rs. 1 Crore in this case. This view of ours gets support from the following finding of the Hon'ble Supreme-Court in the case of IPCA LAB 266 ITR 521 (SC), wherein it has been held by the Hon'ble Supreme Court that
"even though a liberal interpretation has to be given to such a provision the interpretation has to be as per the wording of the section. If the wording of the section is clear, then benefits which are not available cannot be conferred by ignoring or misinterpreting words in the section"
Here the situation is reverse. Since the wording of the proviso to section 54EC is clear, the benefits which are available to the assessee cannot be denied. In view of above, it is hereby held that the assessee is entitled for exemption of Rs. 1 crore as six months' period for investment in eligible investments involved is two financial years."
DECISION: I have carefully considered the Assessment order and the submissions of the appellant filed during the appellate proceedings discussed above.
In view of the decision of the jurisdictional ITAT on this issue discussed above, this ground of appeal of the appellant is allowed.”
We have heard learned Departmental Representative. Case file perused. It has come on record that the CIT(A) has followed the above co-ordinate bench order in concluding that assessee’s reinvestment of capital gains to the tune of Rs.50lacs each spread over in two financial years falling within 6 months is very much allowable as deduction claim u/s.54 EC of the Act. Hon’ble Madras high court’s
ITA No. 2091/Ahd/15 [ ITO vs. Subhra Anant Raje] A.Y. 2011-12 - 4 -
judgment in CIT vs. C. Jaichander & other connected case Tax Case Appeals 419 & 533 of 2014 decided on 15.09.2014 also adopts a similar reasoning that there is no bar as propagated at Revenue’s behest in allowing such a deduction claim. Their lordships further take into account amendment in Section 54EC (1) by insertion of second proviso w.e.f. 01.04.2015 alongwith relevant explanatory memorandum to conclude that the amendment effect restricting the deduction amount to Rs.50lacs only in any case would apply w.e.f. 01.04.2015 in relation to assessment year 2015-16. We reiterate that we are in assessment year 2011-12 only. The Revenue fails to dispute all these developments on judicial side. We therefore find no reason to interfere with the learned CIT(A)’s order accepting assessee’s deduction claim u/s.54EC of the Act.
This Revenue’s appeal is accordingly dismissed.
[Pronounced in the open Court on this the 1st day of November, 2017.]
Sd/- Sd/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 01/11/2017 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।