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Exemption u/s 54EC on investment made before transfer not allowable
Case Law Details
- Case Name
- Smt. Dakshaben R. Patel Vs ACIT (ITAT Ahmedabad)
- Appeal Number
- Only available for paid members
- Date of Judgement/Order
- Only available for paid members
- Related Assessment Year
- 2008-09
- Courts
- ITAT Ahmedabad
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ITAT AHMEDABAD
Smt. Dakshaben R. Patel v/s. ACIT
IT APPEAL NO. 2803 (AHD.) OF 2011
[ASSESSMENT YEAR 2008-09]
MAY 31, 2012
ORDER
T.R. Meena, Accountant Member
This is appeal arises out of order of CIT(A)-II, Baroda, order dated 01.09.2011 for assessment year 2008-09. The effective grounds of appeal are as under:-
“1. The Ld. Commissioner of Income Tax (A)-II, Baroda has erred in law and in facts in confirming the action of Ld. AO in the disallowance of exemption claimed u/s 545EC of Rs. 50,00,000/- with respect to investment made in REC Bonds on the ground that the s...
TO ADD: The Order observes, – “There is no direct case law of Section 54EC for claiming of exemption even investment made before, has been brought in the knowledge of the Bench.”
The assessee, however, is noted to have cited and relied on , inter alia, the case of ,-
Bhikulal Chandak (HUF) v. ITO [2009] 126 TTJ 545 (Nagpur) Circular No. 359 dated 10th May 1983 Exemption u/s. 54EC –
holding that ” Investment made prior to the date of transfer out of advance received – eligible”
Whether the cited case, in particular the department’s own referred Circular binding on the Revenue , does not throw sufficient light on the legislative ‘intention’ in regard to the issue, has not been properly stressed; hence not gone into by the tribunal. Assessees may possibly try and find support ; in which event, be expected to take a suitable stand in future.
On the first blush: The Order of the ITAT stands out, is rather puzzling; in that, it is not readily reconcilable with the thus far commonly prevailing understanding of the whole scheme of the entire gamut of provisions of the Act dealing with tax exemption of capital gains arising on housing and certain other capital assets. It calls for a pointed mention that, for the purposes of exemption as provided in section 54, on a reading, in totality, of the entire scheme of the provisions, it is , in one’s conviction, an indisputably admitted position that , for availing of the exemption, a one-to-one correlation of the ‘net consideration’ or ‘amount of capital gains’, as the case may be, with the investment in a ‘new asset’ is not at all warranted. The rationale behind is, otherwise, depending on facts, it could ab ab initio prove to be a non-starter; a situation in which availing of the otherwise clearly intended exemption is rendered well-nigh impossible.
It is quite likely that , as the tribunal is seen to have handed down its view based on a narrow reading and interpretation of the crucial wording , – “at any time within a period of six months after the date of such transfer”, in isolation, without having due regard to the other inter-connected /related provisions, the issue might be agitated, in one’s view deservedly so, in further proceedings.