TMI Blog2024 (4) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... STICE PURUSHAINDRA KUMAR KAURAV For the Appellant : Mr. Ruchir Bhatia, Sr. Standing Counsel For the Respondent : Mr. Ajay Vohra, Sr. Adv. with Mr. Samarth Chaudhari, Adv ORDER CM APPL. 14523/2024 (Exemption) in ITA 169/2024 Allowed, subject to all just exceptions. Application is disposed of. CM APPL. 14519/2024 (42 Days Delay in Re-filing) in ITA 168/2024 CM APPL. 14524/2024 (42 Days Delay in Re-filing) in ITA 169/2024 Bearing in the mind the disclosures made, the delay of 42 days in re-filing the appeals is condoned. The applications shall stand disposed of. ITA 168/2024 ITA 169/2024 1. The Commissioner impugns the order of the Income Tax Appellate Tribunal [ ITAT ] dated 11 August 2023 and has proposed the following questions for our consideration:- 2.1 Whether Ld. ITAT has erred in not considering the observation made by Ld. AO in disallowing the deduction claimed by the assessee of section 54 of IT Act, 1961? 2.2 Whether Ld. ITAT has also erred in considering the subsequent part payment of loan taken from ICICI for purpose of the said residential house, paid during the previous year, as allowable for exemption u/s 54, even though the loan amount is applied for much earlier and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted December 16, 1993 has made it clear that the earlier Circular No. 471 dated October 15, 1986 in which it was stated that acquisition of flat through allotment by the Delhi Development Authority has to be treated as a construction of flat, would apply to co-operative societies and other institutions. The tax authorities have relied upon the said circular and held that the builder would fall in the category of other institutions and, therefore, booking of the flat with the builder has to be treated as construction of flat by the assessee. In accordance with the said agreement, the assessee was to make payment in instalments and the builder was to construct an unfinished bare shell flat for finishing by the buyers. The possession was granted on March 30, 2013. The lower tax authorities after examining the terms of the agreement, the occupation certificate, and the other letters-offer to finalize the details of interiors, have come to a conclusion that the assessee had booked a semi-furnished flat with the builder, namely, DLF Universal Ltd. in the residential group housing complex named as Magnolias DLF Golf Links. Accordingly, the assessee had a window of three years period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be liberally interpreted. The Supreme Court in CCE v. Favourite Industries (2012) 7 SCC 153 has succinctly observed: '21. Furthermore, this court in Associated Cement Companies Ltd. v. State of Bihar (2004) 7 SCC 642, while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held: (SCC page 648, para 12) 12. Literally 'exemption' is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking, liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his ground. With respect to the deduction under section 54EC of the Act being restricted to Rs. 50,00,000 as against Rs. 1,00,00,000, we may note that the said question has already been answered in the judgment relied upon by the Tribunal to uphold the deletion by Commissioner of Income-tax (Appeals). The High Court of Madras in CIT v. Coromandel Industries Ltd. (supra) has held as under (page 589 of 370 ITR): The issue involved in this appeal is no longer res integra in view of the decision of this court in CIT v. C. Jaichander (order dated September 15, 2014, made in T. C. (A.) Nos. 419 and 533 of 2014 (2015) 370 ITR 579 (Mad), to which one of us R. Sudhakar J. is a party). In the said decision, this court held as under (page 583): The key issue that arises for consideration is whether the first proviso to section 54EC(1) of the Act would restrict the benefit of investment of capital gains in bonds to that financial year during which the property was sold or it applies to any financial year during the six months period. For better understanding of the issue, it would be apposite to refer to section 54EC(1) of the Act, which reads as under: 54EC. Capital gain not to be charged on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakhs rupees. At this juncture, for better clarity, it would be appropriate to refer to the Notes on Clauses Finance (No. 2) Bill, 2014, and the Memorandum Explaining the Provisions in the Finance (No. 2) Bill, 2014, which read as under (see (2014) 365 ITR (St.) 103, 120): Notes on Clauses Finance (No. 2) Bill, 2014: Clause 23 of the Bill seeks to amend section 54EC of the Income- tax Act relating to capital gain not to be charged on investment in certain bonds. The existing provisions contained in sub-section (1) of section 54EC provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has within a period of six months invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset out of total capital gains shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re has chosen to remove the ambiguity in the proviso to section 54EC(1) of the Act by inserting a second proviso with effect from April 1, 2015. The Memorandum Explaining the Provisions in the Finance (No. 2) Bill, 2014, also states that the same will be applicable from April 1, 2015, in relation to assessment year 2015-16 and the subsequent years. The intention of the Legislature probably appears to be that this amendment should be for the assessment year 2015-2016 to avoid unwanted litigations of the previous years. Even otherwise, we do not wish to read anything more into the first proviso to section 54EC(1) of the Act, as it stood in relation to the assessees. In any event, from a reading of section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to Rs. 50,00,000 is incorporated in section 54EC(1) of the Act itself. However, the ambiguity has been removed by the Legislature with effect from April 1, 2015, in relation t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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