Case Law Details
Dr. Arvind S. Phadke Vs ACIT (ITAT Pune)
Material Facts
The assessee filed a Miscellaneous Application under Section 254(2) of the Income Tax Act, 1962 seeking rectification of mistakes apparent from the record in the Tribunal’s order dated 30.04.2014. The assessee had invested ₹50 lakh in NHAI bonds on 28.03.2008 and ₹50 lakh in REC Ltd. bonds on 22.08.2008 and claimed exemption under Section 54EC. The assessee had consistently contended that the date of transfer of the property was 01.03.2008, being the date of handing over possession, whereas the Assessing Officer treated 13.09.2007, the date of registration of the development agreement, as the date of transfer. Consequently, the Assessing Officer and the CIT(A) denied exemption under Section 54EC in respect of both investments. The Tribunal had earlier accepted the assessee’s contention regarding the date of transfer but, due to factual errors in its order, granted deduction only in respect of the REC bonds.
Procedural History
The Assessing Officer denied exemption under Section 54EC for both investments. The CIT(A) confirmed the denial. In the Tribunal’s order dated 30.04.2014, the Tribunal accepted the assessee’s contention regarding the date of transfer but inadvertently recorded incorrect facts regarding the Assessing Officer’s findings and the date of investment in REC bonds. The assessee therefore filed the present Miscellaneous Application under Section 254(2).
Legal Issue
Whether the Tribunal’s earlier order contained mistakes apparent from the record warranting rectification under Section 254(2) of the Income Tax Act, 1962.
Relevant Statutory Provisions
- Section 254(2) of the Income Tax Act, 1962
- Section 54EC of the Income Tax Act, 1962
- Section 2(47) of the Income Tax Act, 1961
Assessee’s Submissions
The assessee pointed out that:
- The Tribunal incorrectly recorded the investment date of REC bonds as 28.02.2008 instead of the correct date, 22.08.2008.
- The Tribunal mistakenly observed that the Assessing Officer had accepted exemption for the NHAI investment made on 28.03.2008, whereas the Assessing Officer had denied exemption for both NHAI and REC investments.
- Since both the Assessing Officer and the CIT(A) had rejected exemption for both investments, the Tribunal ought to have adjudicated and allowed deduction in respect of both investments.
Revenue’s Submissions
The Departmental Representative did not dispute the factual errors pointed out by the assessee and agreed that the mistakes fell within the scope of Section 254(2).
Tribunal’s Findings and Reasoning
The Tribunal found that the investment of ₹50 lakh in REC bonds was in fact made on 22.08.2008 and that its earlier order had incorrectly mentioned the date.
The Tribunal further observed that the Assessing Officer had denied deduction under Section 54EC for both the NHAI and REC bond investments on the ground that the transfer had taken place on 13.09.2007. In its earlier order, the Tribunal had already held that the correct date of transfer was 01.03.2008, making both investments fall within six months of the transfer date.
However, owing to an inadvertent error, the Tribunal had assumed that the Assessing Officer had already allowed deduction in respect of the NHAI bonds and consequently directed relief only for the REC bond investment. The Tribunal held that these were mistakes apparent from the record requiring rectification under Section 254(2).
Accordingly, the Tribunal substituted the relevant portions of paragraphs 5 and 20 of its earlier order. The corrected order records that both investments in NHAI bonds (₹50 lakh on 28.03.2008) and REC Ltd. bonds (₹50 lakh on 22.08.2008) were originally disallowed by the Assessing Officer and the CIT(A), and that both investments qualified for deduction under Section 54EC.
Final Ruling
The Miscellaneous Application was allowed.
The Tribunal modified its earlier order by:
- Correcting the date of investment in REC bonds from 28.02.2008 to 22.08.2008.
- Recording that the Assessing Officer had denied exemption for both the NHAI and REC bond investments.
- Holding that both investments were made within six months from the date of transfer.
- Granting deduction of ₹1,00,00,000 under Section 54EC in respect of both investments.
FULL TEXT OF THE ORDER OF ITAT PUNE
By way of the present Miscellaneous Application, assessee has contended that certain mistakes apparent from record within the meaning of section 254(2) of the Income Tax Act, 1962 (in short “the Act”) have crept into order of the Tribunal dated 30.04.2014.
2. The Miscellaneous Application reads as under :-
“Honourable Bench has noted the Facts in Para 5 of the Order. In brief those are, Assessee has made Investment U/s 54EC as under.
On 28.03.2008 Rs. 50 Lakhs in Bonds of NHAI
On 22.08.2008 Rs. 50 Lakhs in Bonds of REC ltd
Assessee claimed the date of Transfer of property U/s 2(47) of IT Act 1961, as date of handing over possession to purchaser i.e. 01.03.2008.
Whereas Assessing Officer preponed the same to 13.09.2007 being date of Registration of Development Agreement. CIT (A) confirmed Assessing Officer’s action resulting both the investments U/s 54 EC beyond six months from the date of alleged transfer 13.09.2007.
Honourable Bench is pleased to confirm the date of transfer as 01.03.2008 as claimed by the Assessee.
However, in Para 5 of the Order, Honourable Bench may be through inadvertence has mistaken in noting
“As per the Assessing Officer, the investment in the bonds of NHAI made on 28.03.2008 of Rs. 50 Lakhs was within the specified period”
In fact in Para 4.4 and 4.11 of the Assessing Officer’s Order, he has clearly stated that they are out of time and not eligible for exemption.
Also there are typographical errors of date of Purchase of REC bonds, wrongly taken as 28.02.2008 against correct date 22.08.2008
Because of mistaken understanding that Assessing officer has allowed claim of investment in NHAI bonds, invested on 28.03.2008, in Para 20 of the ITAT Order Appellant’s claim only in respect of REC bonds of Rs. 50 Lakhs is allowed.
Appellant in fact also has relied on Pune ITAT decision in case of Kirankumar Popatlal Shah ITA No 285/Pn/2013 dated 31.01.2014
There is mistake apparent on Statement in ITAT Order that
‘Assessing Officer has allowed claim of NHAI Bonds purchased on 28.03.2008’ in fact has not allowed.
Since Assessing Officer & CIT (A) have not allowed the deduction for the Claim of Purchase of NHAI Bonds, the same need be adjudicated by the Honourable Bench.
Appellant prays for adjudication in respect of the same.”
3. The first mistake pointed out by the assessee is that in para 5 of the order, the date of investment in the bonds of REC Ltd. has been noted as 28.02.2008, which is incorrect. It is submitted that the correct date is 22.08.2008. In this context, reference has been made to the discussion in the assessment order to substantiate that the date of investment of Rs.50,00,000/-made in the bonds of REC Ltd. is indeed 22.08.2008. Secondly, it is pointed out that in para 5 itself, the Tribunal has wrongly noted that the investment made in the bonds of NHAI on 23.02.2008 of Rs.50,00,000/- was held by the Assessing Officer within the period prescribed in section 54EC of the Act. In this context, the Ld. Representative for the assessee pointed out that the Assessing Officer denied the claim of deduction u/s 54EC of the Act in relation to both the investments i.e. investment made in the bonds of NHAI on 28.03.2008 of Rs.50,00,000/- as well as the investment of Rs.50,00,000/-made in the bonds of REC Ltd. on 22.08.2008. In this manner, it is pointed out that the CIT(A) had also sustained the action of the Assessing Officer denying the claim of deduction u/s 54EC of the Act with respect to both the investments.
4. The aforesaid errors in para 5 of the order of the Tribunal pointed out by the applicant have not been contested or controverted by the Ld. Departmental Representative.
5. In-fact, assessee had made investment of Rs.50,00,000/- in the bonds of REC Ltd. on 22.08.2008. The aforesaid claim of the assessee was denied on the ground that the property giving rise to capital gains was transferred on 13.09.2007 and therefore the investments made for claiming exemption u/s 54EC of the Act were not made within six months from the said date of transfer i.e. 13.09.2007. The claim of the assessee was that the date of transfer of property has to be understood as 01.03.2008 and therefore both the investments were within the period of six months from the date of transfer and thus eligible for the claim of exemption u/s 54EC of the Act. The Tribunal in its order dated 30.04.2014 (supra) upheld the plea of the assessee that the date of transfer of the property is to be understood as 01.03.2008 and as a consequence, the impugned investments in the bonds of NHAI and REC Ltd. qualified for exemption u/s 54EC of the Act.However, the Tribunal inadvertently considered that the investment of Rs.50,00,000/- made in the investment of NHAI bonds on 28.03.2008 stood allowed by the Assessing Officer. The Tribunal merely directed for the allowance of deduction u/s 54EC of the Act in relation to the investment of Rs.50,00,000/- made in the bonds of REC Ltd. on 22.08.2008. Therefore, on this aspect also, the assessee has pointed out that the error needs to be corrected.
6. Ostensibly, the Ld. Departmental Representative converged with the stand of the assessee that the aforesaid mistakes are within the purview of section 254(2) of the Act.
7. As a consequence, we direct the following modification in the order of the Tribunal dated 30.04.2014 (supra).
8. The following portion of para 5 :
“5. As per the Assessing Officer, the investment in the bonds of NHAI made on 28.03.2008 of Rs.50,00,000/- was within the specified period whereas the balance investment of Rs.50,00,000/- made in the bonds of REC Ltd. on 28.02.2008 was beyond the period prescribed in section 54EC of the Act. Accordingly, he allowed exemption to the extent of Rs.50,00,000/- relating to the investment in the bonds of NHAI and the balance of Rs.50,00,000/- invested in the bonds of REC Ltd. on 28.02.2008 was denied. The CIT(A) has also sustained the action of the Assessing Officer on the ground that the investment made in the bond of REC Ltd. of Rs.50,00,000/- on 22.08.2008 was not within six months from the date of transfer of asset, and accordingly claim of Rs.50,00,000/- was denied. The assessee is in appeal before us on the aforesaid issue.”
shall be substituted by the following :
“5. As per the Assessing Officer, the investments in the bonds of NHAI made on 28.03.2008 of Rs.50,00,000/- and Rs.50,00,000/- in the bonds of REC Ltd. on 22.08.2008 was beyond the period prescribed in section 54EC of the Act. Accordingly, he disallowed exemption relating to the investment in the bonds of NHAI and REC Ltd. The CIT(A) has also sustained the action of the Assessing Officer and accordingly, the assessee is in appeal before us on the aforesaid issue.”
9. Similarly, following portion appearing in para 20 of the order :
“20. …….. In this view of the matter, the investments in the bonds of REC Ltd. of Rs.50,00,000/- made by the assessee on 22.08.2008 is within the period of six months from the date of transfer as prescribed in section 54EC of the Act and accordingly the assessee is eligible for deduction of Rs.50,00,000/- u/s 54EC of the Act also.”
shall be substituted by the following :
“20. ……………………… In this view of the matter, the investments in the bonds of NHAI and REC Ltd. of Rs.50,00,000/- made by the assessee on 28.03.2008 and 22.08.2008 respectively are within the period of six months from the date of transfer as prescribed in section 54EC of the Act and accordingly the assessee is eligible for deduction of Rs.1,00,00,000/- u/s 54EC of the Act.
10. As a consequence, the Miscellaneous Application is allowed, as above.
Order pronounced on 20th February, 2015.
Author Bio
