TMI Blog2014 (12) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 54EC that the investment in the specified assets has to be made within period of six months after the date of such transfer but the Board has clearly laid down in the circular under para (2) that in its option it is felt that if statutory interpretation is taken that the investment has to be made after the date of transfer, this interpretation would go against the purpose and spirit of the section - the Board have decided that if the assessee invests the earnest money on the advance received in the specified assets before the date of the transfer of the assets, the amount so invested will qualify for exemption u/s 54E of the Income-tax Act, 1961 - it is apparent that each of the assessee has invested into the REC Bond even though prior to the transfer but out of the part of the consideration received on the sale of the assets in respect of which the capital gain has been assessed – similar matter has been decided in SUBHASH VINAYAK SUPNEKAR Versus ASSTT COMMISSIONER OF INCOME TAX RANGE-2, PUNE [2013 (9) TMI 2 - ITAT PUNE] - the order of the CIT(A) is set aside and the AO is directed to allow deduction to all the assessees u/s 54EC – Decided in favour of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the return was filed by the legal representative on behalf of Late Shri Gopal Das, in the submission and statement of facts. Before the CIT(A), the assessee states that the income tax return for the assessment year 2009-10 was filed by the assessee on 29.9.2009 by e-filing. The assessee does not state the fact that the return was filed by the legal heir Shri Gopal Das Nema. This fact that the assessee has expired has also been stated before the CIT(A) by way of taking ground no.2. Under these facts and circumstances, we do not find any merit in the ground taken by the assessee as it can at the most be regarded to be an irregularity not the illegality. We, therefore, dismiss this ground. 5. Ground no. 2 in I.T.A.No. 423/Ind/2013, Ground No. 2 in I.T.A.No. 424/Ind/2013, Ground no. 3 in I.T.A.No. 425/Ind/2013 and Ground no. 2 in I.T.A.No. 426/Ind/13, both the parties agreed, is the common ground and whatever view this Tribunal may take on the basis of ground no.2 in I.T.A.No. 423/Ind/2013, the same view may be taken in the other appeal. This ground reads as under :- 2. That the ld. CIT(A) erred on facts and in law in upholding the action of the Assessing Officer in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax authorities below as well as the submissions made before us from both the sides. We noted that this is an undisputed fact that all the four assessees entered into an agreement with Shri Deepak S/o Shri Nanak Ram Ji Kalra, R/o 6, Shriram Nagar, Indore, for the sale of survey no. 1465 measuring 1.49 acres situated at Keshar Bagh Road, Indore, property for a consideration of ₹ 7 crores. As per the terms clause (2) of agreement, the consideration has to be paid as under :- Cheque No.501186 dated 22.1.2008 95,00,000/- Cheque No. 501182 dated 24.1.2001 80,000/- Payment to be made till 01.05.2008 as per convenience ₹ 5,25,00,000/- 11. Subsequently, the possession letter was executed on 25.03.2008 and as per clause (2) of the possession letter, the copy of which is available from pages 51 to 56. As notarized, it was mentioned that as on that date each of the owner has delivered possession to the buyer as on 25.2.2008. As on that date, the consideration was paid by issuing the following cheques in favour of the respective coowners : (i) SHRI HEMANT KUMAR NEMA : ₹ 50,00,000/- by cheuqe no. 573711 dated 25.3.2008 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains in respect of the said property in the hands of the each of the coowner in the aforesaid assessment year in view of the provisions of Section 2(47). The only contention of the Revenue before us is that since the provisions of Section 54EC specifically provides that the deduction u/s 54EC has to be made if the investments are made within a period of six months after the date of such transfer. In this regard, the assessee has relied on the following circular issued by the Department, which reads as under :- Circular No. 359 dated 10th May, 1983. Sub : Section 54E Whether the investment of earnest money or advance received in specified assets before the date of transfer vitiates claim for exemption Clarification regarding. Section 54E of the Income-tax Act, 1961, provides for exemption of long-term capital gains if the net consideration is invested by the assessee in specified assets within a period of six months after the date of such transfer. A technical interpretation of Section 54E could mean that the exemption from tax on capital gains would not be available if part of the consideration if invested prior to the date of execution of the sale deed as the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived on the sale of the assets in respect of which the capital gain has been assessed. 14. We noted that the similar issue has arisen before the Pune Bench B of I.T.A.T. in I.T.A.No. 1672/PN/2011 and I.T.A.No. 152/PN/2012 in the case of Subhash Vinayak Supnekar, Pune, in which the Hon'ble Tribunal while allowing the relief to the assessee held as under :- We find the CBDT vide Circular No.359 (F.No.207/8/82- IT(A-ll) dated 10-05-1983 has held that earnest money or advance is a part of the sale consideration and therefore if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of the asset, the amount so invested will qualify for exemption u/s. 54E. Although in the instant case the issue is u/s.54EC, however, we find the language in the above section is similar to that of section 54. Therefore, we find force in the arguments of the Ld. Counsel for the assessee that earnest money or advance money is a part of sale consideration. 8.2 We find the Nagpur Bench of the Tribunal in the case of Bhikulal Chandak (HUF) V s. ITO 126 TTJ 545 has held that assessee cannot be treated as defaulter in making investment in bon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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