Case Law Details
Brief of the Case
Hon’ble Supreme Court has held in the case of Ogale Glass Works Ltd. (1954) 25 ITR 529 (SC) that the cheques not having been dishonoured but having been cashed, the payment relates back to the dates of the receipt of the cheques and as per law, the dates of payments would be the date of delivery of the cheques. In the present case, the assessee had filed an application with National Housing Bank on 23.12.2004 and submitted along with this application Cheque No.669766 dated 23.12.2004. This fact has not been disputed by the Ld. DR appearing on behalf of the revenue. Thus, assessee has clearly made the investment within the period of six months. Hence, the assessee should be granted the benefit of deduction.
Facts of the Case
During the financial year 2004-05, the assesses sold a row house on 27.04.2004 located at Prateek Apartment, Panchpakhadi, Thane for Rs.18,50,000/-. After indexation, the assesses earned long term capital gain of Rs.10,90,176/-. The assessee invested this capital gain in NHB Capital Gain Bonds 2006 on 31st December, 2004 and claimed exemption u/s 54EC.
However, the AO found that the assesses was not eligible for exemption u/s 54EC, since the investment in acquiring NHB Capital Gain Bonds was not made by the assesses within six months from the date of transfer of original asset, as per requirement of section 54EC. The AO observed that the sale of row house (i.e. original asset) was executed on 27.04.2004, as per the registered sale agreement, whereas the assesses has invested the amount in NHB Bonds on 31.12.2004. Thus, as per AO, it was beyond period of six months as stipulated in section 54EC. Accordingly, it was held by the AO that benefit of deduction u/s 54EC was not allowable to the assessee.
Contention of the Assessee
The ld counsel of the assesses submitted that the assesses had complied with the requirement of section 54EC by making investment within the stipulated period of six months and therefore, the assesses should be given the benefit of section 54EC. The Ld. Counsel also placed reliance upon the judgment of Mumbai Bench of Income Tax Tribunal in the case of M/s. Crucible Trading Co. Pvt. Ltd. in ITA No.5994/Mum/2013 dated 25.02.2015 and upon the latest decision of Special Bench of Ahmadabad bench in the case of Alkaben B. Patel (2014) 148 ITD 31 (Ahd). The reliance was also placed by the Ld. Counsel on the judgment of Hon’ble Supreme Court in the case of CIT vs. Ogale Glass Works Ltd. (1954) 25 ITR 529 (SC), wherein it was held by the Hon’ble Supreme Court that in the case of the cheques not having been dishonored but having been encased, the payment related back to the date of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques.
Contention of the Revenue
The ld counsel of the revenue relied upon the order of Ld. CIT (A) and that of the AO and submitted that the benefit has been rightly denied.
Held by CIT (A)
CIT (A) held that going by the date of full and final settlement, the date of transfer would be 29th of June, 2004. According to the CIT (A), the assessee made investment in the bonds on 31.12.2004. It was held by CIT (A) that even if the date of transfer was taken as 29th of June 2004 and date of investment being 31.12.2004, it fell beyond the period of six months and therefore, the assessee was not eligible for deduction u/s 54EC.
Held by ITAT
ITAT held that the Ld. CIT (A) has held that the date of transfer of original asset is 29th of June 2004. The Revenue has not filed any appeal and Ld DR has not disputed the order of Ld. CIT (A) with respect to this finding. Thus, as a matter of fact, the date of transfer of original asset is taken as 29th June 2004. If this is taken as date of transfer then going by the judgment relied upon the Ld counsel passed by Hon’ble Special Bench in the case of Alkaben B. Patel (2014) 148 ITD 31 (Ahd), it could be safely said that the assessee has made investment within the six calendar months. This view has been followed by the Co-ordinate Bench in the case of M/s. Crucible Trading Co. Pvt. Ltd. ITA No.5994/Mum/2013 dated 25.02.2015 .
Further, Hon’ble Supreme Court has held in the case of Ogale Glass Works Ltd. (1954) 25 ITR 529 (SC) that the cheques not having been dishonored but having been cashed, the payment relates back to the dates of the receipt of the cheques and as per law the dates of payments would be the date of delivery of the cheques. Now, if we notice from the facts on record, the assesses had filed an application with National Housing Bank on 23.12.2004 and submitted along with this application Cheque No.669766 drawn on bank of India, Mulund Branch Mumbai, dated 23.12.2004. This fact has not been disputed by the Ld. DR appearing on behalf of the revenue. Thus, assesses has clearly made the investment within the period of 180 days also. Thus, viewed from any angle it can be safely said that the assesses has made investment within the period of six months. The assesses should be granted the benefit of deduction and the same has been wrongly denied to the assesses.
Accordingly appeal of the assesses allowed.
