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TMI Blog2009 (10) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... g made applicable as per sec- tion 54H of the Act with effect from April 1, 1999, i.e., for the assess- ment year 1999-2000 and not for the current assessment year ? (ii) Whether the Assessing Officer was correct in holding that the compensation received during the current assessment year should be brought to tax under the head 'Capital gains' in accordance with sec- tion 45(5) of the Income tax Act ?" 2. The assessee is a real estate businessman involved in buying and selling of property and in the course of the same, had entered into an agreement executed in his favour for purchasing some agricultural lands, which later came to be acquired by the Government during the period relevant for the assessment year 1993-94. 3. So far as the present appeal is concerned, what is of significance is that the assessee received enhanced compensation in respect of the lands for which acquisition proceedings had begun in the year 1992, on three dates in the year 1997, namely, June 30, 1997, July 15, 1997, and November 6, 1997, because of his efforts to get additional compensation by taking up the matter before the higher forums and tasting success there. 4. The ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to the 1st day of April, 1988 ; (iii) where by reason of the death of the person who made the transfer, or for any other reason, the enhanced compensation or con- sideration is received by any other person, the amount referred to in clause (b) shall be deemed to be the income, chargeable to tax under the head 'Capital gains', of such other person." 5. The assessee filed the returns of income for this assessment year declaring the income of Rs. 58,32,220. 6. Having regard to the considerable amount of income, the Revenue thought it fit to take up the return for scrutiny, by issue of notice under sec- tion 143(2) of the Act. 7. The Assessing Officer noticed that the assessee had claimed the benefit of exemption available under section 54EA of the Act which reads as under : "54EA. (1) Where the capital gain arises from the transfer of a long-term capital asset before the 1st day of April, 2000, (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of the net considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvested in such specified securities out of the net consideration received or accruing as a result of the transfer of the original asset ; (b) 'net consideration', in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by the expenditure incurred wholly and exclusively in connection with such transfer." 8. In respect of the entire additional compensation the assessee claimed relief by showing that the assessee had invested such enhanced compen- sation on July 5, 1997, and July 15, 1997, by purchase of units issued by the Unit Trust of India, one of the notified modes of investment for claiming the benefit under section 54EA of the Act. 9. However, the Assessing Officer on scrutinizing the returns being of the view that while section 54EA, no doubt extended a benefit to claim exemp- tion in respect of the amount invested in the notified bonds or other modes to the extent as indicated in the section itself, that was subject to the con- dition that such investment should have been made within six months from the date of transfer of the original asset and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok, and, therefore, the question of claiming the benefit of sec- tion 54EA by the assessee never arose and, therefore, dismissed the appeal and affirmed the assessment order. 14. The assessee carried the matter further to the Income-tax Appellate Tribunal and met with sweet success. 15. The Income-tax Appellate Tribunal ventured to examine and place importance on the provisions of section 54EA of the Act in preference to the provisions of sub-section (5) of section 45 of the Act and found that, if the receipt of enhanced compensation on the three dates, namely, June 30, 1997, July 15, 1997, and November 6, 1997, are to be taken as amounts received and taxable only during the assessment year relevant for these three dates falling within the corresponding previous year, in the wake of the provisions of sub-section (5) of section 45, such change brought about by the introduction of sub-section (5) of section 45 by the Legislature with effect from April 1, 1999, cannot be lost sight of for the purpose of extending the benefit of the provisions of section 54EA, as for the period relevant for the assessment year 1998-99, the provisions of section 54EA were very much on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 17. It is aggrieved by this order of the Tribunal, the present appeal by the Revenue. 18. We have heard Sri Aravind, learned standing counsel for appellant- Revenue and Sri Parthasarathi, learned counsel for the respondent- assessee. 19. The submission of Sri Aravind, learned standing counsel for the Reve- nue, with reference to the statutory provisions of section 54A and 54H, particularly by drawing our attention to the date, from which the provi- sions of section 54EA were introduced on the statute book, the date from which the provisions of section 54H is on the statute book and more importantly the date from which section 54H included within the provisions of sections 54EA and 54EB, which was brought into from April 1, 1999, in terms of the Finance (No. 2) Act, 1998, and incidentally has also drawn our attention to the provisions of sub-section (5) of section 45 of the Act and submitted that the Tribunal has committed a serious error in law in not only extending the non-existent benefit to an assessee, which was not available even in terms of the statutory provisions of section 54H of the Act as on the date when, the assessee had made investments in units, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year relevant for the date of receipt of enhanced compensation and a deemed provision like this, by which an income otherwise assessable in the year of transfer is taken to be assessable in the year of receipt of the additional compensation cannot be extended or imported while understanding the provisions of section 54EA of the Act and a possibility of taking note of the date of receipt of the enhanced compensation for assessment in the corresponding assessment year should be confined to the provisions of section 45 and not imported to section 54EA and for this reason also the Tribunal is in error in drawing sustenance and making a reference to the provisions of sub-section (5) of section 45 of the Act for disturbing the view taken by the Assessing Officer and affirmed by the first appellate authority. 22. Though no specific authority is referred to or relied upon by Sri Aravind, learned standing counsel, it is submitted that in understanding a taxing statute, the principles are fairly well established that a benefit cannot be extended by way of logic or similarity unless given by the Legislature itself and at any rate by a process of interpretation the benefit otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to a technical approach or a pedantic approach and even in a situation giving rise to a resultant absurdity that should be avoided and in support of his submission has placed strong reliance on the judgment of a Division Bench of this court in the case of ITO v. H. P. Vishweswaraiah reported in [2001] 250 ITR 863 (Karn). 27. With reference to the facts of this case, learned counsel pointed out that similar situation had arisen earlier before this court in the context of under- standing a provision of the Act, particularly section 54E of the Act and the provision again being for conferring concession or benefit to an assessee and what happened there was while transfer had taken place during the time when the statutory provisions were on the statute book. The assessee having received additional compensation after the section itself had come to be omitted was nevertheless interpreted in a manner as to extend the benefit to the assessee, as though the section had continued to exist, by construing that the additional compensation received should be deemed to be a compensation received on the date of transfer and this court having accepted such a claim of the assessee by the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the benefit or concession by taking a too technical view of the matter. 31. We are quite conscious that if we approach the present situation too technically in the background of the statutory provisions as was prevalent and as has been very emphatically made clear by Sri Aravind, learned standing counsel for the Department, on the dates relevant for the assess- ment year 1998-99 section 54H of the Act did not contain reference to the provisions of section 54EA of the Act and, therefore, section 54H is of no avail for the present assessee for the assessment year 1998-99 and this aspect if one should go by it, the provisions of section 54H alone is the correct legal position. 32. But the matter does not end with that. We are essentially concerned with a situation where the assessee has claimed a benefit in terms of sec- tion 54EA of the Act and for which purpose he is claiming the benefit of this provision in the background of the provisions of subA-section (5) of section 45 of the Act. We may at once notice that under sub-section (5) of section 45, the enhanced/additional compensation are brought to tax in the assessment year corresponding to the dates on which suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso to ensure an investment of the kinds specified in the modes so that funds being available to the Government for rehabilitation, welfare and developmental work, but to the contrary. 36. We are of the clear view that an interpretation to extend the benefit intended by the Legislature should definitely be preferred to an interpre- tation to deny the benefit by resorting to technical interpretation. 37. Though the Tribunal might not have expressed precisely as we have indicated in this judgment, but the tenor of the approach and the conclu- sion of the Tribunal is not different and it is for this reason, we are not inclined to disturb the judgment of the Tribunal, but affirm it and on the matter of interpretation we do indicate that the provisions of section 54EA is available to the assessee for the period relevant for the assessment year 1998-99 notwithstanding the provisions of section 54H not containing or not making reference to the provisions of section 54EA of the Act for the period corresponding to the assessment year. 38. Accordingly, the first question posed for our answer is answered in favour of the assessee and against the Revenue. The second que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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