Case Law Details
Pr. CIT Vs Shri Mahipinder Singh Sandhu (Punjab and Haryana HC)
Assessing Officer rejected the objection of the assessee regarding withdrawal of exemption under Section 54EC of the Act by noticing that the assessee was not eligible for exemption under Section 54EC since the investment was not made within six months after the date of transfer which is an eligibility criterion for claiming the exemption. The said findings of the Assessing Officer were upheld by the CIT(A) in appeal. On further appeal, the Tribunal upheld the action of the Assessing Officer in reopening of the assessment. However, the Tribunal deleted the addition of ` 40,28,748/-made by the Assessing Officer and upheld by the CIT(A). The Tribunal held that admittedly the amount of ` 18,00,000/- was deposited in the Escrow Account. Both the transferrer and the transferee had common rights over the said amount as the said amount was deposited in the Escrow Account as a security in respect of future liabilities of the company/ transferor. There was no certainty about the quantum of amount likely to be received by transferor or transferee out of the said amount deposited in Escrow Account. Since, there was no certainty of the time of release of the said amount or the part of the amount to either of the parties as dispute between the parties had occurred and the litigation was going on, it cannot be said that the assessee had got a vested right to receive the amount in question. It was only at the end of the litigation that the rights and liabilities of the transferor and transferee were ascertained and thereupon the share of the assessee was passed on to the assessee for which the assessee offered capital gains in the immediate assessment year 2010-11. Further, the Tribunal had held the assessee entitled to the benefit of deduction under Section 54EC of the Act as the amount was invested by him in the Rural Electrification Corporation Ltd. bonds in the year of receipt which was also the year of taxability of the capital gains so received.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 14.3.2018 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh Bench, ‘B’, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 650/Chd/2017, for the assessment year 2008-09, claiming the following substantial questions of law:-
i) Whether on the facts and circumstances of the case, the ITAT’s order is perverse as the agreement to sell was executed on 19.11.2007 and the assessee had received 90% of the total consideration amounting to ` 4,71,69,579/- which was more than 90% of the total consideration in the F.Y. 2007-08 relevant to A.Y. 2008-09 and had the requisite funds to invest within six months of the transfer to claim the benefit under section 54EC?
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