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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
28/04/2016 सुनवाई क" तार"ख / Date of Hearing : 15/06/2016 आदेश क" तार"ख /Date of Order: आदेश / O R D E R Per Ashwani Taneja (Accountant Member): This appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals), Mumbai- 34 {(in short ‘CIT(A)’}, dated 31.7.2014 passed against 2 Neena Nareshsinghi assessment order u/s 143(3) dated 12.03.2013 for the Assessment Year 2010-11 on the following grounds: “
1.Whether in fact and in law the learned Commissioner of Income Tax (Appeals) is correct in denying the deduction of Rs. 50,00,000 u/s 54EC out of Total Investment of Rs. 1,00,00,000/-. (a) Where assessee has made investment of Rs. 50,00,000/- each in two financial years but within six months of sale of original asset. (b) Where the assessee has made investment within six months from the end of the month in which original asset was sold. (c) Whether assessing officer is correct in treating the date of sale of original asset on 6th October 2009, instead of 101h October, 2009 on the facts of the case and calculating the period of six months for investment in long term specified assets accordingly.
2. Whether in fact and in law the learned Commissioner of Income Tax (Appeals) is correct that the residential house acquired by assessee, though under construction, should have been acquired by the assessee within two years to allow deduction u/s 54F of Rs. 86,00,000/-. (a) On the ground that the new residential asset under construction, which was purchased by the assessee by allotment letter, is right for acquisition and not a residential house under construction. (b) On the ground that the new residential house under construction is not acquired within two years though as per Income Tax Act, u/s 54F, the residential house under construction is required to be acquired in three years.
3. The appellant craves leave to add amend and/or after any of the above grounds of appeal."
During the course of hearing, arguments were made by Shri Bharat P. Shah & Shri Pathik B. Shah, Authorised Representative (AR) on behalf of the Assessee and by Shri Vivekanand Ojha, Departmental Representative (DR) on behalf of the Revenue.
3 Neena Nareshsinghi
Ground No.1: This ground relates to disallowance of Rs.50,00,000/- u/s 54EC out of aggregate investment of Rs.1,00,00,000/- in two different financial years, for Rs.50,00,000/- in each year. In this regard, it is noted that assessee had made deduction u/s 54EC on account of investment within six months from the end of month in which the transfer of the asset had taken place which has been denied by the AO inter alia on the ground that investment was not within a period of six months. As per the assessee, the date of transfer of asset was on 10.10.2009 whereas, as per the AO the date of transfer of asset was on 06.10.2009. During the course of hearing, the Ld. Counsel of the assessee submitted that there were two agreements, one pertaining to the assessee and other for the buyer, which lead to confusion with regard to dates. On the other hand, the AO held that the actual date of agreement was on 06.10.2009 only but subsequent agreement dated 10.10.2009 has been created just to get benefit of deduction u/s 54EC.
3.1. We have gone through the orders of the lower authorities and also gone through the copies of agreements placed before us. It is noted that there is a confusion with regard to the dates, which have neither been properly explained by the assessee before lower authorities nor it has been addressed properly by the lower authorities. Even before us, Ld. Counsel was not able to explain as to how there could be two agreements. How could there be ‘one’ agreement of two dates. There should be only ‘one’ agreement. Even if separate 4 Neena Nareshsinghi agreement is made for the buyers, the date is supposed to be same. We find that none of the authorities have looked into the aspect of dates properly. As per AO, the date of six months should be reckoned from 06.10.2009 and therefore date of investment being 08.04.2010 shall fall beyond the period of six months, whereas the assessee says that the six months period should be reckoned from the date 10.10.2009 which is actual date of transfer of original asset and if it is so done then the investment made on 08.04.2010 shall fall within the stipulated period of six months. In view of all these facts, ascertaining correct date of transfer becomes crucial. In view of these circumstances, we send this issue back to the file of the AO who shall give adequate opportunity of hearing to the assessee to submit requisite details and documents as may be considered appropriate by the assessee which shall be objectively taken into account by the AO to decide this issue afresh. The assessee is also free to take all other factual and legal issues including its alternative arguments with regard to computation of period of six months from the end of the month in which the transfer of the asset has taken place.
3.2. Further the connected issues raised in this regard was whether the assessee can be allowed the investment in respect of 50 lakhs in one financial year and the second investment in next financial year but within the stipulated period of six months. It was stated that this issue is in favour of the assessee in view of various judgments of the Tribunal. The 5 Neena Nareshsinghi reliance in this regard has been placed on the following judgments: i. Shri Aspi Ginwala v. ACIT (ITA No.3226/Ahd/2011 dated 30th March 2012.) (Ahmadabad-Trib.) ii. Mrs. Lilavati M. Sayani v. ITO 49 taxmann.com 579 (Mumbai-Trib.)
3.3. Per contra Ld. DR was not able to point out any contrary judgment.
3.4. We have gone through the judgments relied upon before us. In the case of Shri Aspi Ginwala (supra), it was held as under: “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"
6 Neena Nareshsinghi 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.”
3.5. Similarly, the same view has been taken by the coordinate bench in the case of Mrs. Lilavati M. Sayani (supra). Thus, respectfully following these judgment and in absence of any contrary judgment having been brought before us, we allow the aggregate claim of the assessee for Rs. 1 crore subject to the decision to be taken by the AO in terms of issue sent back to the file of AO for verification of dates.
Ground No.2: In this ground, the assessee had raised an issue that the AO had wrongly denied the benefit of deduction u/s 54F for Rs.86 lakhs, on the ground that the Flat was under construction and was not acquired within prescribed period of two years. It has been alleged by the lower authorities that since assessee had acquired the Flat by way of a purchase, this exercise should have been completed within two years, but not done by the assessee.
4.1. During the course of hearing before us, it was submitted that the assessee had made investment in a Flat which was under construction, and this fact has not been denied. But since the construction was not completed by the builder, therefore, this transaction was cancelled and resultantly the assessee offered the corresponding income in A.Y. 2013-14, 7 Neena Nareshsinghi and for confirming this fact copy of income tax return was filed before us.
4.2. Per contra, the Ld. DR stated that in case the income has already been offered by the assessee, then this issue can to be decided on merits.
4.3. We have gone through the facts of the case and find that assessee had duly made investment in the Flat which was under construction. The facts in this regard are not under dispute. The completion of construction was not in control of the assessee. Since the construction of flat could not be completed, therefore, corresponding income as stipulated in section 54F was offered in the return for A.Y. 2013-14. Our attention was drawn in this regard and copy of computation sheet filed along with return for A.Y. 2013-14 showing that a sum of Rs.86 lakhs was shown as long term capital gain on which the tax at the rate of 20% has been paid by the assessee. We find that entire exercise has been done in the bonafide manner and there was no deliberate attempt of any tax evasion. The assessee has filed its return for the impugned year as well as for A.Y. 2013-14, in accordance with law. The lower authorities were not able to controvert or contradict the factum of making investment in the Flat at the time of filing of return for the impugned year in which deduction u/s 54F was claimed in accordance with law. In view of these circumstances, we find that addition has been wrongly made 8 Neena Nareshsinghi by the lower authorities, in this regard and therefore, the same is direct to be deleted. Thus ground no.2 is deleted.
In the result, this appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 15th June , 2016. (Joginder Singh) (Ashwani Taneja) "या"यक सद"य / JUDICIAL MEMBER लेखा सद"य / ACCOUNTANT MEMBER मुंबई Mumbai; "दनांक Dated: 15/06 /2016 ctàxÄ? P.S/."न.स.