TMI Blog2015 (7) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in Bombay Housing Corporation (2001 (2) TMI 1020 - ITAT MUMBAI) clearly supports the claim of the assessee in this regard - Decided in favour of assessee. - ITA No.1129/Bang/2014 - - - Dated:- 10-7-2015 - SHRI N.V. VASUDEVAN AND SHRI JASON P. BOAZ, JJ. For The Appellant : Shri P. Dhivahar, Jt. CIT(DR) For The Respondent : Shri Vishnu Bharath, CA ORDER Per N.V. Vasudevan, Judicial Member This appeal by the Revenue is against the order dated 13.5.2014 of the CIT(Appeals)-II, Bangalore relating to assessment year 2005-06, 2. The only issue that arises for consideration in this appeal is as to whether the CIT(Appeals) was justified in allowing the claim of assessee for exemption u/s. 54EC of the Income-tax Act, 1961 [ the Act ]. The facts and circumstances under which the appeal arises are as follows. 3. The Assessee is a HUF by name T.N.N. Shetty (HUF). The Department had information that one of the member of the HUF, Shri T.N. Nanjunda Shetty had deposited money in REC Bonds during the previous year ending 31.3.2005. This is because while making the said deposit, T.N. Nanjunda Shetty had given his individual PAN: AASPN 9963. In the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I had sold two residential flats at Kumara Park for the sale consideration of ₹ 6527000/- and the proceeds I had deposited with M/s. Tallam Textiles during the year 03/04 (Ass 04/05). I had withdrawn the amount from M/s. Tallam Textiles and invested in Bonds with in six months and the proof was filed with the Income Tax Department. I had Credit balance in my account on 1/4/2003 ₹ 2.25 Crs and as on 31/3/2004 ₹ 2.18 crores and had Credit balance more than 2 Crs throughout the period and I have not borrowed any amount to invest in the Bonds. I had not given any declaration to the effect that I have borrowed and invested and in fact the firm M/s. Tallam Textiles had made error in their letter Dt. 21/8/2007, for which details furnished with the Income Tax Officer Ward 3(4) Bangalore. I should not be made victim for the mistake of the firm who had given wrong information. I have legitimately claimed the exemption and the assessment completed is in order and therefore no revision of the order is required. To this effect, I am swearing this day of 13th March 2013 and state that what is stated is true and correct to the best of my information and facts, which are in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been clearly held by the Hon ble ITAT, Ahmedabad that the source of funds for investment in the specified assets is irrelevant if the investment had been made within the period of six months from the date of sale of the immovable property. The relevant portion from the said judgement is reproduced below: 8. We have considered the rival submissions of the parties and we are constrained to observe that the revenue ought not to have come up in appeal in the present case in view of the fact that there is no ambiguity in understanding the provisions of section 54E of the Act. During the course of his argument, the learned counsel for the assessee has rightly pointed out that the purpose of section 54E of the Act was to arrest inflation. The Legislature itself has appreciated the fact that it would not always be possible to invest the sale realizations immediately after the sale transaction. Therefore, six months time is given for the investment in the Rural Bonds. It is not expected of an assessee to keep the sale realizations intact and invest the same money in the Rural Bonds within a period of six months. In this view of the matter, we entirely agree with the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made before the CIT(Appeals). 11. We have given a very careful consideration to the rival submissions. The evidence filed by the assessee before the CIT(A), in our view, clearly demonstrates that there was no loan taken by the assessee from M/s. Tallam Textiles. It was a case where assessee deposited the sale proceeds in his capital account (current account) and withdrew monies therefrom and made investments in the Bonds. Therefore, there was no question of denying exemption to the assessee u/s. 54EC on the premise that assessee took a loan from Tallam Textiles and made investments in the Bonds and not out of sale proceeds received on sale of capital asset. 12. Even assuming that the assessee had taken loan and made investments in REC Bonds, that cannot be a bar to claim exemption u/s. 54EC of the Act. In our view, the decision of the Mumbai Bench of the Tribunal in Bombay Housing Corporation (supra) clearly supports the claim of the assessee in this regard. In the aforesaid decision, the brief facts giving rise to the issue were that during the relevant accounting year, the assessee, which was a partnership firm disposed of its entire business as a going concern for a pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is achieved in both the cases. We are of the view that in giving effect to the object, we should shun a wooden approach. 10. We suppose that the requirement of the section would have been met if the assessee had first paid over the amount of ₹ 1.42 crores borrowed from Vaswani Trust to its partners and thereafter taken out an equal amount from the partners accounts for being invested in the bonds. In that case, it would not have been possible to say that the bonds were purchased out of borrowed monies. The amount invested would have been traceable to the sale proceeds advanced to the partners. The facts that instead of doing that, the borrowed amount was directly invested in the bonds should not, in our view, make any difference to the principle. 14. In our view, therefore, the claim of the assessee in the present case for exemption u/s. 54EC ought to have been allowed and was rightly allowed by the CIT(A). The order of the CIT(Appeals), therefore, does not call for any interference. Consequently, the appeal by the Revenue is dismissed. 15. In the result, appeal by the revenue is dismissed. Pronounced in the open court on this 10th day of July, 2015. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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