TMI Blog2014 (9) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... upon Vivek Jairazbhoy v. Dy. CIT [2014 (9) TMI 419 - ITAT BANGALORE] - the lower authorities were not justified in not allowing exemption u/s 54EC to the assessee in respect of investments made in specified capital bonds of ₹ 1 crore which were within the limit of proviso to section 54EC i.e. ₹ 50 lakhs in a financial year and were within the specified period of six months – thus, the order of the CIT(A) is set aside and the AO is directed to allow exemption to the assessee u/s 54EC in respect of both the investments i.e. ₹ 50 lakhs on 02.08.2008 and ₹ 50 lakhs on 30.06.2008 – Decided in favour of assessee. - ITA No. 2013/Ahd/2011 - - - Dated:- 5-9-2014 - Shri Mukul Kr. Shrawat And Shri N. S. Saini,JJ. For the Petitioner : Shri S. N. Soparkar, AR For the Respondent : Shri V. K. Singh, Sr. DR ORDER Per Shri N. S. Saini, Accountant Member: This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-XVI, Ahmedabad dated 09.06.2011. 2. The sole issue involved in this appeal is that the Commissioner of Income-tax (Appeals) erred in dismissing the appeal of the assessee and restricting the exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008-09. A plain reading of Sec 54EC makes it amply clear that the investment in bonds for the purpose of claiming exemption, in any financial year should not exceed ₹ 50 lacs. Even in the Explanatory Notes to the provisions of the Finance Bill 2007, it has been provided that the investment made in the long term specified asset by an assessee during any financial year does not exceed fifty lac rupees. The Asstt. Commissioner has referred to Circular No.3/2008 dated 12.03.2008, wherein paragraph 28.2 provides for ceiling on investment by an assessee in the bonds. It has been provided that investments in such specified assets to avail exemption under Sec. 54EC, on or after 1st day of April 2007 will not exceed fifty lacs rupees in a financial year . This implies that the investment in the bonds during one financial year should not exceed ₹ 50 lacs. The appellant has invested ₹ 50 lacs in the financial year 2007-08 and another sum of ₹ 50 lacs in the financial year 2008-09. Hence, the stipulation provided in Sec 54EC is complied with the Asst. Commissioner has wrongly disallowed the claim worth ₹ 50 lacs. 4. The Asst. Commissioner has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has, at any time within a period of six months after the date of such transfer, invested in whole or any part of capital gains in the long term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, --- (a) ------- (b) ------- Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees. 2.4 It is evident from the aforesaid provisions of sec. 54EC(1) that before the insertion of proviso to sec. 54EC(1) by the Finance Act, 2007, w.e.f. from 01.04.2007, there was no restriction on the investment of whole or any part of the capital gains in the long-term specified asset. However, such a restriction was introduced by insertion of the proviso to the sec. 54EC(1) of the Act. By the proviso, the investment in specified assets has been restricted to ₹ 50 lakh in any financial year. This is the settled position of law that provisos are mainly inserted to restrict the scope of the section. The proviso to sec. 147 of the Act, second proviso to sec. 43B before omission w.e.f. 01.04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unequivocal, there is no scope for importing any rule of interpretation as submitted by the appellant. The Appex Court in the case of H.H. Lakshmibai Anr. vs. CWT 206 ITR 688 (SC) has held that It is settled law that taxation statute in particular has to be strictly construed and that there is no equity in a taxing provision. The Appex Court in the case of Smt. Taulata Syam Ors. vs. CIT 108 ITR 345 (SC) has held that there is no scope for importing into the statute words which are not there. Such importation would be, not to construe, but to amend the statute. Even if there be a cusus omisus, the defect can be remedied only by legislation and not by judicial interpretation. The intention of the legislation is primarily to be gathered from the words used in the statute. Once it is shown that the case of the assessee comes within the letters of law, he must be taxed, however, great the hardship may appear to the judicial mind to be. From the aforesaid judicial wisdom, it is clear that the view taken by the Assessing Officer in interpreting the proviso to sec. 54EC(1) of the Act was the correct interpretation and the appellant was not justified to claim the exemption of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption u/s 54EC(1) only to ₹ 50 lakhs. The finding so recorded by the Assessing Officer is thereby sustained and the addition of ₹ 50,00,000/- so made is confirmed. All the three grounds of appeal are accordingly dismissed. 6. The Authorized Representative of the assessee reiterated the submissions made before the Commissioner of Income-tax (Appeals) and further relied on the decision of Bangalore Bench of the Tribunal in the case of Vivek Jairazbhoy in ITA No.236/Bang/2012, wherein it was held as under:- 9.4 The issues now before us for adjudication are the following : (i) Whether the proviso to section 54EC of the Act restricts the exemption to ₹ 50 lakhs or does it merely restrict the investment that can be made in a single financial year to ₹ 50 lakhs ? (ii) If the answer to the above is that it is the investment that is restricted and not the exemption, then in view of the fact that NHAI had allotted the Bonds only on 30.6.2008 in respect of the second investment of ₹ 50 lakhs, which is beyond the period of six months from the date of sale of property, can it be said that the second investment of ₹ 50 lakhs is said to have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide for a ceiling on investment by an assessee in such long- term specified assets. Investments in such specified assets to avail exemption under section 54EC, on or after 1st day of April, 2007 will not exceed fifty lakh rupees in a financial year. It is clear from the Circular no.3/2008 of CBDT (supra) that the Government only intended to restrict the investment in a particular financial year and thus has fixed a limit of ₹ 50 lakhs as permissible investment in a particular financial year. It also appears clear that the Government did not intend to restrict the maximum amount of exemption permissible under section 54EC of the Act. The fact that the Legislature has consciously used the words in a financial year in the proviso to section 54EC of the Act also fortifies the same. If the Legislature wanted to restrict the exemption itself to ₹ 50 lakhs it could have simply dispensed with using the words in a financial year 9.8 The judicial decisions relied upon by the learned counsel for the assessee also support the stand of the assessee. The Hon'ble Apex Court while deciding the case of Vikrant Tyres Ltd Vs. First ITO reported in 247 ITR 821 have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 10.1 We now proceed to address the issue at (ii) as laid out in para 9.4 (supra). As per facts on record, the assessee had issued a cheque for ₹ 50 lakhs to NHAI for allotment of Bonds that was encashed by NHAI on 9.6.2008. The sale of the said property took place on 14.12.2007 and the six months period ended on 13.6.2008. NHAI, however, as evident from the record, has allotted the bonds only on 30.6.2008 which is after the six month period. The learned CIT(Appeals) held that the date of allotment is what is to be considered for reckoning the six months period and the same (viz. 30.6.2008) being beyond the period of six months, in the instant case, has denied the exemption claimed under section 54EC of the Act for the second investment of ₹ 50 lakhs. 10.2 The assessee has placed reliance on a decision of the ITAT, Bombay Bench in the case of Kumarpal Amrutlal Doshi Vs. DCIT in ITA No.1523/Mum/2010 dt.9.2.2011 wherein the Tribunal relying on the decision of the Hon'ble Apex Court in the case of CIT Vs. Ogale Glass Works Ltd (25 ITR 529) has held that payment by cheque subsequently realized on the cheque being honoured and encashed relates back to the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein it was held as under:- 7. We have perused the orders and heard the rival submissions. There is no dispute that assessee had transferred the capital asset on which she had claimed exemption under Section 54EC on 18.2.2008. Assessee had also claimed exemption under Section 54EC on investments made in REC and NHAI Bonds. Section 54EC(1), which is relevant to the case, is reproduced hereunder, for brevity:- 54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset (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 capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) If the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) If the cost of the long-term specified asset is less than the capital gain arising from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for investment cannot exceed ₹ 50 lakhs in a financial year. Therefore, if the assessee is able to keep the six months' limit from the date of transfer of capital asset, but, still able to place investment of ₹ 50 lakhs each in two different financial years, we cannot say that the restrictive proviso will limit the claim to ₹ 50 lakhs only. Since assessee here had placed ₹ 50 lakhs in two different financial years but within six months period from the date of transfer of capital asset, assessee was definitely eligible to claim exemption upto ₹ 1 Crore. The same view has been taken by Ahmedabad Bench of this Tribunal in the case of Aspi Ginwala Others (supra). We are, therefore, of the opinion that the assessee has to succeed in this appeal. Claim of the assessee for exemption upto ₹ 1 Crore has to be allowed in accordance with Section 54EC of the Act. 8. The Authorized Representative of the assessee further relied on the decision of the Panaji Bench of the Tribunal in the case of Ms. Raina Faleiro, reported in 33 taxmann.com 611, wherein it was held as under:- 2. The only issue involved in this appeal filed by the Revenue relates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bangalore Bench in case of Vivek Jairazbhoy v. Dy. CIT [ITA No. 236/Bang/2012, dated 14-12-2012] and Ahmedabad Bench in the case of Aspi Ginwala, Shree Ram Engg. Mfg. Industries v. Asstt CIT [2012] 20 taxmann.com 75/52 SOT 16 (Ahd.). In the case of Aspi Ginwala, the co-ordinate bench has held as under : 7. We have heard both the parties and perused the records and find that the assessee and his brother Shri Rustom Ginwala sold a property on 22-10-2007 for ₹ 6.21 Crores. The assessee and his brother had 50% share in this property. The assessee made investment of ₹ 50 lakhs on 31 -12-2008 in REC Bonds and ₹ 50 lakhs on 26-05-2008 in NHAI Bonds and claimed exemption of ₹ 1 Crore u/s 54EC of the Act. The investment in REC Bonds was allowed by the AO as it was within the time limit of six months prescribed in section 54EC of the Act, while the investment in NHAI Bonds which was made only on 26-05-2008 was not allowed as according to the lower authorities the assessee is only entitled for exemption u/s 54EC upto ₹ 50 lakhs only. The assessee's case, however, is that as per the proviso to section 54EC, investment made on or after 1st April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion upto ₹ 1 Crore in this case. This view of ours gets support from the following finding of the Hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR 521 /135 Taxman 594 (SC), wherein it has been held by the Hon'ble Supreme Court that - even though a liberal interpretation has to be given to such a provision the interpretation has to be as per the wording of the section. If the wording of the section is clear, then benefits which are not available cannot be conferred by ignoring or misinterpreting words in the section Here the situation is reverse. Since the wording of the proviso to section 54EC is clear, the benefits which are available to the assessee cannot be denied. In view of above, it is hereby held that the assessee is entitled for exemption of ₹ 1 crore as six months' period for investment in eligible investments involved is two financial years. 9. Now, coming to the second aspect of the matter, whether investment of ₹ 50 lakhs made in NHAI Bonds on 26-05-2008 can be considered to be made within six months period as per the proviso to sec. 54EC, we find that the assessee was to make investment in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue, we are left with no option but to hold that the investments made by the assessee on 26-05-2008 beyond six months is eligible for exemption in view of the fact that no subscription for eligible investment was available to the assessee from 1st April, 2008 to 26-05-2008. 10. In the result, both the appeals are allowed. 4. We have also noted that subsequently, a contrary view has been taken by Jaipur bench in Asstt. CIT v. Raj Kumar Jain Sons (HUF) [2012] 19taxmann.com 27/50 SOT 213 (JP.). Subsequent to that decision, the Bangalore bench in the case of Vivek Jairazbhoy (supra) vide order dtd. 14.12.2012 took view in favour of the assessee. From the provisions of Sec. 54EC we noted that the limit of ₹ 50,00,000/- as given under the proviso is per person per financial year. The plain reading of the section as well as the proviso clearly suggests the same interpretation. There is no ambiguity in the interpretation. Had there been an intention of the legislature to restrict the exemption to ₹ 50,00,000/-, the legislature would have provided the embargo in this regard. Restriction relates only to the investment made in any financial year by the assessee. Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. If the legislature wanted to restrict the exemption itself to ₹ 50,00,000/-, it could have have simply dispensed with using the words 'in a financial year'. The Hon'ble Supreme Court while deciding the case of Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821/115 Taxman 202 laid down law of interpretation of the statute by holding therein as under : It is settled principle of law that the courts while construing Revenue Acts have to give a fair and reasonable construction to the language of a statute without leaning to one side or the other, meaning thereby that no tax or levy can be imposed on a subject by an Act of Parliament without the words of the statute clearly showing an intention to lay the burden on the subject. In this process, the courts must adhere to the words of the statute and the so called equitable construction of those words of the statute is not permissible. The task of the court is to construe the provisions of the taxing enactments according to the ordinary and natural meaning of the language used and then to apply that meaning to the facts of the case and in that process if the tax payer is brought within the net he is caught, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, passed by the A.O. and directed him to reframe the assessment order after verifying the bond certificate and after giving adequate opportunity to the assessee of being heard. He further directed that the assessment order may be reframed in accordance with law. 4. Aggrieved by this order of ld. CIT, these appeals has been filed before us. At the time of hearing ld. counsel of the assessees' only grievance was that ld. CIT, while directing the A.O. to reframe the assessment order in accordance with law, has also made certain observations in his order on the issue of allowability of deduction u/s 54EC of the Act which are contrary to the decision of Hon'ble ITAT, Ahmedabad Bench in the case of Shri Aspi Ginwala and Shri Rustom Ginwala in ITA No.3226 and 3227/Ahd/2011 for the assessment year 2008-09. He, therefore, submitted that the direction of ld. CIT may kindly be modified to the extent that the A.O. will reframe his assessment order in accordance with law ignoring the observation made by ld. CIT on allowability of deduction u/s 54EC of the Act. Ld. D.R. did not object to this submission of the assessee. Therefore, the direction of ld. CIT is modified and the A.O. is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by cl. (i) shall not be allotted the bonds notified as 'long term specified asset' by this Notification, for any amount which exceeds the amount of fifty lakhs rupees as reduced by the aggregate of the investment, if any, made by him in the bonds notified as 'long term specified asset' by the Central Govt. for the purposes of Section 54EC of the I.T. Act, 1961, in the Official Gazette vide Notification No. SO. No.963(E) dated 29th June, 2006 or Notification No. SO No.964(E) dated 29th June, 2006.'' The Notification imposed two conditions (1) No more bonds will be issued by any person, if he has already made an investment of an amount aggregating more than ₹ 50 lakhs in the bonds already notified in notification no. 963E dated. 29 June, 206 or 964E dated 29th June, 2006 (2) Persons not covered under the first condition, no person is allotted any bonds, notified as 'long term capital asset' which exceeds ₹ 50 lakhs as reduced by the aggregate investment, if any, made by him in the bonds notified as 'long term specified asset'. The Hon'ble Madras High Court in the case of Areva T D India Ltd. v. Asstt. CIT [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 It is also proposed to amend the said Section so as to provide for a ceiling on investment by an assessee in such long term specified assets. Investments in such specified assets to avail exemption u/s 54EC on or after 1st day of April, 2007 will not exceed fifty lakh rupees in a financial year''; It is true that Tribunal under law has no authority to decide the ultra virus provisions. However, whole construing the provision, one can definitely look into the facts as to whether the interpretation placed by the Tribunal is fairly applicable. The ld. DR during the course of proceedings before us has fairly contended that the interpretation which the ld. AR wants to place on the proviso to Section 54EC will enable the assessee to claim exemption of around ₹ 1.00 crore. In case, the transfer of assets has taken place from Ist Oct. to 31st March because the assessee will be able to invest ₹ 50.00 lacs in a financial year in which the transfer has taken place and ₹ 50.00 lacs in subsequent financial year. However, the assessee's who have earned the capital gain on transfer of assets from Ist April to 30th Sept. will be able to have deduction only of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the action of the Assessing Officer. 13. Before us the Authorized Representative of the assessee submitted that the issue is covered in favour of the assessee by the following decisions of the Tribunal:- i) ITAT Bangalore in the case of Shri Vivek Jairazbhoy in ITA No.236/Bang/2012 ii) ITAT Chennai in the case of Smt. Sriram Indubal, reported in 32 taxmann.com 118 iii) ITAT Panaji in the case of Ms. Raina Faleiro, 33 taxmann.com 611 iv) ITAT Ahmedabad in the case of Smt. Pritiben Gautambhai Adani, in ITA No.808/Ahd/2012 14. On the other hand, the Departmental Representative supported the order of the lower authorities and relied upon the decision of Jaipur A Bench of the Tribunal in the case of ACIT v. Shri Raj Kumar Jain Sons (HUF) (supra). 15. We find that the first proviso to section 54EC, inserted by the Finance Act, 2007, w.e.f. 01.04.2007, reads as under:- Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees. 16. The CBDT vide its Circular No.3/2008 dated 12.03.2008 at paragraph 28.2 thereon opined as under: 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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