Income Tax Appellate Tribunal - Pune
Deputy Commissioner Of Income-Tax,, vs Smt. Shanta G. Varde,, Pune on 3 March, 2017
आयकर अपील य अ धकरण] पण
ु े यायपीठ "बी" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI ANIL CHATURVEDI, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.449/PUN/2015
नधा रण वष / Assessment Year : 2011-12
Dy.Commissioner of Income Tax, .......... अपीलाथ /
Circle 1(1), Pune. Appellant
बनाम v/s
Smt. Shanta G. Varde, .......... यथ /
12, Mrutunjay Colony,
Respondent
Kothrud, Pune - 411 029.
PAN - AAOPV 3495N.
अपीलाथ क ओर से / Appellant by : Shri P.S. Naik
यथ क ओर से / Respondent by : Shri C.H. Naniwadekar.
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 08.02.2017 Date of Pronouncement: 03.03.2017
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
This appeal filed by the Revenue is emanating out of the order of Commissioner of Income Tax (A) - 3, Pune dt.16.01.2015 for the assessment year 2011-12.
2. The relevant facts as culled out from the material on record are as under :-
2.1 Assessee is an individual stated to be having derived income from house property and capital gains. Assessee filed her return of income for A.Y. 2011-12 on 23.07.2011 declaring total taxable income of Rs.1,81,01,090/-. The case was selected for scrutiny and 2 ITA No.449/PUN/2015 AY.No.2011-12 thereafter the assessment was framed u/s 143(3) vide order dt.15.01.2014 and the total income was determined at Rs.2,31,01,090/-. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who vide order dt.16.01.2015 allowed the appeal of the assessee. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds:
"1. The LD. Commissioner of Income Tax (Appeals) erred in facts and in law in considering the time limit for reckoning the date for claiming exemption u/s 54EC of the Act within 6 months from the date on receipt of consideration by the assessee, wherein it should be reckoned from the date of transfer of asset which is 30/08/2010 in this case.
2. The LD.Commissioner of Income Tax (Appeals) erred in facts and in law in ignoring the decision of the Hon'ble Bombay High Court in the case of Hindustan Unilever Ltd Vs. Dy. CIT (2010) 191 Taxmann 119."
Both the grounds raised by the revenue being interconnected considered together.
3. AO noticed that during the year, assessee had sold land along with three upper floor residential buildings and two garages situated at Bandra, Mumbai on 30.08.2010 for a total consideration of Rs.2,50,00,000/-. Out of total consideration that was received, Rs.50,00,000/- was invested in Rural Electrification Corporation Bonds and the amount that was invested in aforesaid Bonds was claimed as deduction u/s 54EC of the Act. AO noticed that the consideration on sale of capital asset was received by the assessee on 07.09.2010. According to AO, for claiming deduction u/s 54EC, assessee is required to make investment within a period of six months from the date of transfer of capital asset. In the case of assessee, he noted that since the property was transferred on 30.08.2010, the period of six months expired on 28.02.2011 and 3 ITA No.449/PUN/2015 AY.No.2011-12 since the bonds were allotted on 31.03.2011, the investment in eligible bonds was beyond the stipulated period of six months and therefore the assessee was not eligible for deduction u/s 54EC of the Act. Another reason for the assessee being not eligible for deduction u/s 54EC was that the investment in Bonds was made jointly by assessee with her husband Shri Gajanan Prabhakar Varde and therefore according to AO for that reason also, the assessee was not eligible for deduction u/e 54EC of the Act and accordingly denied the claim of deduction u/s 54EC of the Act. Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who decided the issue in favour of assessee by holding as under :
"3.4 I have considered the submissions made by the appellant and perused material available on record. The only issue disputed relates to the denial of claim of exemption u/s 54EC of the Act. The facts of the case indicate that the appellant sold an ancestral property situated at Bandra, Mumbai on 30th August, 2010 for a total consideration of Rs. 2 crores 50 lacs. The statement of bank account of Central Bank of India, Kothrud, Pune filed by the appellant shows the entire sales consideration to have been received & credited in the account on 07.09.2010. The appellant handed over the cheque to the broker J.M. Financial Services Ltd. On 28.02.2011 as is clearly evident from the transaction receipt-filed by the appellant though, the payment has been debited throw the aforesaid bank account on 1st of March, 2011. The A.O. has denied the exemption contending that the time limit of six months is to be considered from the date of transfer of the asset i.e. 30.08.2010. In this regard the Pune ITAT in the case of Mahesh Nemichandra Ganeshwade & Others Vs ITO 594/PN/10 dated 29-03-2012 also relied upon by the appellant before the A.O. during the assessment proceedings, on similar fact has held as under:
"16. We have carefully considered the rival submissions in this case, the dispute before us is with respect to the claim of exemption of long-term capital gain on sale of land with respect to investments of Rs. 12,50,000/- and Rs. 37,50.000/- made on 03.08.2007 and 27.10.2007 respectively. Section 54EC prescribes that the exemption shall be available if the investment in specified Bonds is made within a period of six months after the date of transfer of the capital asset which, in the present case, is 12.07.2005. The assessee has explained 4 ITA No.449/PUN/2015 AY.No.2011-12 that he could not make the investments within six months from the date of transfer, i.e. 12.07.2005 because the aforestated consideration was received on subsequent dates namely, 12.12.2007, 14.5.2007, 19.6.2007 and 3.7.2007. A technical interpretation of section 54EC in this regard would imply that the exemption from tax on capital gains is not available qua the impugned investment of Rs.50 lakhs. So, however, the plea set-up by the assessee, is on account of the purpose and spirit of the section and on account of the fact that the right to collect such sale consideration arose after the period of six months from the date at transfer. It is pleaded that the requirement of section 54EC stipulating investment in six months from the date of transfer has to be appropriately understood and applied so as to further the purpose and spirit of the section.
17. In a somewhat similar situation, the requirement of section 54EC to the effect that investment in specified assets is to be made within a period of six months from the date of transfer, was put to some clarification by the CBDT in Circular No.791 (supra). The question arose before the CBDT regarding exemption of a long-term capital asset which had arisen on conversion of a capital asset into stock-in- trade. Such capital gain would arise in the year of conversion, so however, in terms of section 45(2) of the Act, its taxability is postponed to the year in which such stock-in-trade is actually sold or otherwise transferred by the assessee. The question arose as to whether the date of transfer as referred to in section 54E of the Act is the date of conversion at capital asset into stock-in-trade or the date on which the stock-in-trade is sold or otherwise transferred by the assessee. As per the phraseology of sections 54EA, 54EB and 54EC the date of transfer in such cases is the date on which the capital asset is convened by the assessee into stock-in-trade and not the date on which such stock-in-trade is sold or otherwise transferred by the assessee. Thus, as per the aforesaid understanding it may not be possible for an assessee to make the required investment under the aforesaid sections at the point of conversion of capital into stock-in-trade because right to collect sale consideration in such cases arises only at the point of sale or transfer otherwise of stock-in- trade. The CBDT in consultation with the Ministry of Law decided that the period of six months for making investment in specified assets for the purpose of sections 54EA, 54EB and 54EC of the Act should be taken from the date such stock-in-trade is sold or otherwise transferred in terms of section 45(2) of the Act, though the taxability of capital gain was on the basis of 'transfer' as understood in section 45(2) of the Act. Therefore, having regard to the impossibility of performance to invest the amount in specified assets has to be reckoned within six months from rho date of transfer (i.e. the date of conversion of capital asset into stock-in-trade the CBDT appreciated and has clarified that the period of six months for making investment in specified assets has to be reckoned 5 ITA No.449/PUN/2015 AY.No.2011-12 from the date of the sale of such stock-in-trade when the right to collect sale consideration in such cases arose, which was much after the date of transfer as contemplated for the purpose of taxation.
18. In our considered opinion, the interpretation placed by the CBDT in consultation with the Ministry of Law to the condition of making investment within six months from the date of transfer in section 54EC would support the claim of the assessee in this case also tor exemption from capital gain with respect to the impugned sum of Rs. 50 lakhs invested in specified assets on 03.8.2007 and 27.10.2007. In the present case, admittedly the impugned amount of sale proceeds have been received by the assessee much after the date of transfer i.e.. 12.7.2005, so however, it is also emerging from the record that the investments of Rs.12,50,000/- and Rs.37,50,000/- made on 3.8.2007 and 27.10.2007 respectively have been made within six months of receipt of such consideration. Therefore, having regard to the interpretation placed by the CBDT to understand the requirement of making investment within six months from the date of transfer in section 54EC of the Act we are inclined to uphold the plea of the assessee for exemption from fax on capital gains qua impugned amount of Rs. 50 lakhs. Therefore, on this aspect, assessee has to succeed. Thus, this ground of appeal is allowed"
3.5 Further, the Mumbai ITAT in the case of Aquatech Engineers Vs Addl.CIT (cited supra) has held that as the date of actual outflow of fund is considered to be relevant date of investment in specified assets u/s 54EC, it must, on the principle of parity, also take the date of receipt of consideration for determining the period of six months, allowing a time lag for receipt of consideration as in the normal course of banking business.
"3.1 The primary facts are neither disputed nor denied. The issue, as apparent, has two limbs to it. First, is the date of transfer, for which the assessee has relied on the decision in the case of Chanchal Kumar Sircar (supra). Even as observed during the course of hearing, the said decision is clearly inapplicable inasmuch as in that case the consideration for the transfer was received several months after the date of the transfer of the property, rendering actual investment within a period of six months of the transfer impossible, so that the assessee's case (for claiming benefit u/s.54EC) would stand ousted at the very threshold. The tribunal's view of reckoning the commencement date as the date of receipt of the consideration, as against the date of transfer, as clearly postulated by the provision, was guided by the peculiar facts of the case; the provision being a beneficial provision, so that a liberal view thereof ought to be taken where the facts otherwise admit. In the instant case, on the other hand, the assessee has received the payment within a period of ten days. The same, though on a somewhat higher side, inasmuch as a payment by bank instrument would ordinarily 6 ITA No.449/PUN/2015 AY.No.2011-12 stand to be effected/cleared within two to three working days, the time lag cannot be considered as inordinate by any stretch of imagination and, rather, even as pleaded by the ld. AR in his favour, stands received only in the normal course. How could the assessee then seek support from the decision in the case of Chanchal Kumar Sircar (supra), wherein the tribunal was moved by the fact of the impossibility of the compliance of the provision in the facts of the case?
So however, as the Revenue considers the actual outflow of funds as the relevant date of investment (in specified asset u/s. 54EC), it must, on the principle of parity, also take the date of receipt of consideration, allowing a time lag of two to three working days, i.e., as in the normal course of banking business, for the same (receipt). As such, the relevant date would be upon allowing the normative time required for the realization of funds through the bonking channel. We draw support or this proposition from s.27 of the General Clauses Act, 1897. The date of the agreement being 29.02.2008, i.e., the last date of the month of February, the date of receipt would - in the ordinary and regular course - fall sometime in the first week of March, 2008, i.e., even if we do not consider the date of the actual receipt as being date of receipt in the normal course, being sans any details in the matter by the assessee and, thus, not relevant."
Thus, in view of the above ratio of the decisions the time limit of six months for making investment is to be considered from the date of receipt of sale consideration which is 7th Sept., 2010 and the time limit of six months has to be construed as six months from that date of transfer and hence the appellant was supposed to make the investment before 30th March 2011 as six months period should be reckoned from the end of the month in which such transfer takes place as held in Yahya E. Dhariwala Vs DCIT (2012) 49 SOT 458 (Mum). 3.6 In view of the above facts on the first issue and the ratio of judicial decisions in the contention raised by the appellant is found to be acceptable.
3.7 So far as the second issue regarding the investment made in joint name along with the spouse of the appellant is concerned it is noticed that the appellant is a 70 years old lady and, therefore, as a matter of convenience on her part had made the application jointly with her husband Mr. Gajanan Varde. On perusal of the REC Bond it is seen that the first name is of the appellant and the joint name is of her spouse Mr. Gajanan Prabhakar Varde. The payment for the said Bond has been made by the appellant from her own bank account no.1014311221 at Central Bank of India, Kothrud, Pune, hence out of her own funds. In this regard the decision of the Delhi ITAT in the case of ITO Vs Saraswati Ramanathan (cited supra) relied upon by the appellant is relevant wherein it is held that investment made in joint name is sufficient compliance for claiming exemption and it was not the requirement of the section that the investment be made in assessee's exclusive name. It held that where the 7 ITA No.449/PUN/2015 AY.No.2011-12 condition for availing of section 54EC exemption i.e. funds for investment in Bonds must be traceable to the sale proceeds of the capital assets is satisfied, emption cannot be denied. It further held that when the sale proceeds of capital assets has been channelized into the assets in national interest as per the main and vital object of section 54EC, assessee would be eligible for exemption thereunder and the object of joint investment is merely to avoid problems in future. The consequences that flow from including the son's name as a joint name are not relevant for the purpose of granting exemption u/s 54EC to the assessee. In the case of ACIT Vs Vijay S. Shirodkar (2011) 48 SOT 8 (Mum) it was held that even if bonds were taken in the name of wife but assessee is a co-holder of the bond, exemption u/s 54EC is admissible to him.
3.8 In view of the above facts and ratio of the aforesaid judicial decisions the grounds of appeal no. 1, 2 & 3 raised by the appellant are allowed."
Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us.
4. Before us, Ld.D.R. supported the order of Ld. CIT(A). On the other hand, Ld.A.R. reiterated the submissions made before AO and Ld. CIT(A) and supported the order of Ld. CIT(A).
5. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to deduction u/s 54EC of the Act. We find that Ld. CIT(A) while deciding the issue has noted that though the property was transferred on 30.08.2010, the sale consideration was received and credited in the bank account of the assessee on 07.09.2010 and the assessee had handed over the cheque for investment in Rural Electrification Corporation Bond to the broker on 28.08.2011 which is within the period specified u/s 54EC of the Act even though the account of the assessee was debited on 31.03.2011. Before us, no material has been placed by Revenue to show that the assessee was not having the funds as on the issue of cheque for investment or the cheque issued by assessee was dishonoured 8 ITA No.449/PUN/2015 AY.No.2011-12 on account of insufficiency of funds. We find that Ld. CIT(A) after considering the decisions of Tribunal cited in his order has held that the time limit of six months for making investment is to be considered from the date of receipt of sale consideration. We further find that the Co-ordinate Bench of the Tribunal in the case of Yogesh Maturadas and Shri Janak Maturadas in ITA No.1350/Mum/2010 dt.11.07.2012 (TS - 569-ITAT-2012 (Mum) and after relying on the CBDT Circular No.791 dt.26.02.2000 has held that period of six months for making 54EC investment is to be counted from the date of receipt of sales consideration and not from the date of transfer. Further the provisions of Sec.54EC are beneficial provisions. It is a settled provision of law that in construing a beneficial enactment, the view that advances the object of the beneficial enactment and serves its purpose must be preferred to one which obstructs the objects and paralyses the purpose of beneficial enactment and for this proposition, we rely on the decision in the case of CIT Vs. Rajesh Kumar Jalan (2006) 286 ITR 274 (Gau). We further find that Hon'ble Karnataka High Court in the case of CIT Vs. Shri A. Suresh Rao reported in (TS-688-HC 2013 (Kar) and after relying on the decision of Apex Court in the case of Smt. Saroj Aggarwal Vs. CIT (1985) 156 ITR 497 (SC) has held that facts should be viewed in natural perspective, having regard to the compulsion of the circumstances of a case. Too hyper technical or legalistic approach should be avoided in looking at a provision which must be equitably interpreted and justly administered. It has further observed that Courts should place an interpretation making a benevolent and justice oriented inference and the facts must be viewed in the social milieu of a country. 9 ITA No.449/PUN/2015
AY.No.2011-12
6. With respect to the investment being had jointly by the assessee with her husband, we find that Ld. CIT(A) has given a finding that the payment was made from the bank account of the assessee, the investment was out of her own funds and as a matter of convenience, the application was jointly made by the Assessee with her husband. The aforesaid findings of Ld. CIT(A) has not been controverted by Revenue. We also find that the Hon'ble Karnataka High Court in the case of Director of I.T. International Tax Vs. Mrs. Jennifer Bhide reported in (2012) 349 ITR 80 (Kar) has held that for the purposes of Sec. 54/54EC, it is not necessary that purchase of property or investment in specified bonds must be in the name of assessee only. Further, it is not the case of Revenue that the husband of assessee contributed any portion of consideration for the acquisition of bonds. Before us, Revenue has not placed any material to show that the provision of Sec.54EC of the Act requires that the investment in specified bonds must be in the name of assessee only. Considering the totality of the aforesaid facts and relying on the decisions cited herein above, we find no reason to interfere with the order of Ld.CIT(A) and thus the grounds raised by the Revenue are dismissed.
7. In the result, the appeal of the Revenue is dismissed.
Order pronounced on the 3rd day of March, 2017.
Sd/- Sd/-
(VIKAS AWASTHY) (ANIL CHATURVEDI)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
पण
ु े Pune; दनांक Dated : 3rd day of March, 2017.
Yamini 10 ITA No.449/PUN/2015 AY.No.2011-12 आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT-Central, Pune.
4. CIT(A)- 11.
5. #वभागीय &त&न'ध, आयकर अपील य अ'धकरण, "बी" / DR, ITAT, "B" Pune;
6. गाड, फाईल / Guard file.
आदे शानस ु ार/ BY ORDER,स // True Copy // // True Copy // // True copy // सहायक रिज12ार/ Assistant Registrar, आयकर अपील य अ'धकरण ,पुणे / ITAT, Pune.