TMI Blog2017 (3) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahd/2014 - - - Dated:- 16-3-2017 - Shri S. S. Godara, JM and Shri Manish Borad, AM. For The Appellant : Shri D. R. Thakur, AR For The Respondent : Shri K. Madhusudan, Sr.DR ORDER PER Manish Borad, Accountant Member . These cross appeals for Asst. Year 2010-11 are directed against the order of ld. Commissioner of Income Tax(A)-XX, Ahmedabad, dated 27.1.2014 vide appeal no.CIT(A)-XX/161/12-13 arising out of order u/s 143(3) of the Income-tax Act, 1961 (in short the Act) framed on 11.02.2013 by Jt.CIT, Range-12, Ahmedabad. 2. Brief facts of the case as culled out from the records are that assessee is an individual engaged in the business of electrical contractor. Return of income for Asst. Year 2010-11 declaring total income of ₹ 2,00,51,636/- was e-filed on 06.10.2010. Case was picked up for scrutiny assessment through Computer Assisted Scrutiny Selection (CASS) and accordingly notice u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee calling for various details. Details as required by the Assessing Officer were furnished. Ld. Assessing Officer observed that sundry creditors of ₹ 7,02,042/- brought forward from prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income of the assessee. We further observe that assessee even after admitting the addition before ld. Assessing Officer came in appeal before ld. Commissioner of Income Tax(A) against the addition of ₹ 7,02,042/- made u/s 41(1) of the Act but could not succeed as ld. Commissioner of Income Tax(A) confirmed the addition by observing as follows :- 43. I have considered the facts of the case and submission made by the :rpellant The AO has made the addition of ₹ 7,02,042/- made u/s.41(l) of I.T. Act with regard to the creditors namely M/s.Amit Electricals at ₹ 31,910/-, Amit Electrical Company at ₹ 5,86,144/-, M/s.Kiran Electricals ₹ 38,988/-and M/s.Pranav Construction Co. ₹ 45,000/-. The appellant could not substantiate the liability of creditors shown in its books of account. Neither he could furnish any subsequent payment evidences made to them if at all. The appellant did not provide the current addresses of the parties. In view of the aforesaid discussions, as observed in para-3 of the assessment order that the appellant offered the aforesaid credit balances amounting to ₹ 7,02,0427- as income of the assessee for the year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has himself offered to ld. Assessing Officer for making addition of ₹ 7,02,042/-. We, therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) on this issue. Accordingly, the appeal of assessee is dismissed. 9. Now we take up Revenue s appeal in ITA No.975/Ahd/2014 raising following ground of appeal:- 1. The Ld. CIT (A)-XX, Ahmedabad has erred on facts and circumstances of the : case in allowing deduction of ₹ 1 Crore u/s.54EC of the Act when the limit is restricted to ₹ 50 lacs by inserting proviso to clause (i) of section 54EC w.e.f. 01.04.2007. 2. The Ld.CIT(A)-XX, Ahmedabad has erred on facts and circumstances of the case in allowing deduction of further ₹ 50 lacs u/s.54EC of the Act when the investment was made only in the subsequent year. 3. It is therefore, prayed that the order of the CIT(A) be set aside and that of the Assessing Officer be restored to the above extent. 10. Brief facts relating to this ground are that assessee sold a plot of land situated at Bopal and received ₹ 4,00,50,000/- out of which he claimed exemption u/s 54F of the Act for purchasing a residential bungalow at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent treatment for the assesses who sold the property from 1st April to 30th September with the assessee who sold during 1st October to 31st March. He mentioned that as per the proviso to Section 54EC(1) the investment in the long term specified asset in any financial year does not exceed ₹ 50 lakhs. 3.4. In the instant case the appellant has sold a plot of land on 14.12.2009 and on the capital gain arised thereupon the appellant has claimed the deduction u/s.54EC of Rs.l crore for the specified investment made in bonds of NHAI on 31.1.2010 at ₹ 50 lakhs and another investment of ₹ 50 lakhs on 31.05.2010. The AO has granted the deduction on the investment in bonds u/s.54EC made on 31.1.2010 but did not grant the deduction for the investment made on 31.5.2010 for the reason that the subsequent investment was beyond the completion of the financial year under consideration in which transfer of the immovable property taken place. In support, he has relied upon the decision of Hon'ble ITAT in the case of ACIT, Cir.2, Ajmer Vs. Shri Rajkumar Jain Sons (HUF)(2012) 50 SOT 21. 3.5. On the other side the appellant has claimed that the investment limit of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made within six months period as per the proviso to section 54EC, it is found that the assessee was to make investment in such bonds between 1.4.2008 to 21.4.2008. There is no dispute about the fact that subscription of eligible bonds was closed during this period till 26.5.2008 and on the 1st day of the reopening of the subscription, the assessee made this investment. Under the circumstances, the assessee was prevented by sufficient cause which was beyond his control in making investment in these bonds within the time prescribed. Further various judicial authorities have taken a view that exemption should be granted in such case where there is a delay in making investment due to non-availability of the bonds and have held that it is a reasonable cause and the exemption should be granted. Thus, it is held that the investment made by the assessee on 26.5.2008 beyond six months was eligible for exemption in view of the fact that no subscription for eligible investment was available on the assessee from 1.4.2008 to 26.5.2008. Further, in the case of Smt.Shriram Indubal Vs. ITO, Business Ward-VI(3), Chennai [2013] 32 taxmann.com 118 (Chenniai - Trib.) Section 54EC of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not limit exemption claim to ₹ 50 lakhs only - Whether following same, exemption claimed by assessee upto Rs.l crore was allowed - Held, yes. It is seen from the various decisions of the ITAT referred above except Jaipur Bench, the investment made u/s.54EC to the extent of Rs.l crore in two financial years but within 6 months from the date of transfer has been granted. The case laws relied upon by the appellant support the contentions of the appellant. Since the jurisdictional Hon'ble ITAT Bench-C, Ahmedabad in the case of Aspi Jinwala has granted such deductions and the same is binding upon this office. Hence, the claim of the appellant is accepted and disallowance made by the A.O. towards deduction u/s.54EC of the Act is deleted. Thus, this ground of appeal is allowed. 14. We further observe that Hon. Madras High Court in the case of CIT vs. C. Jaichander (supra) has dealt with very similar issue and has upheld the order of the Tribunal, Chennai Bench by observing as follows :- 4. We have heard Mr.J.Narayanasamy, learned Senior Standing Counsel appearing for the Revenue; Mrs.Pushya Sitaraman, learned Senior Counsel appearing for the respondent in T.C.(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the mandate of Section 54EC(i) of the Act, the time limit for investment is six months and the benefit that flows from the first proviso is that if the assessee makes the investment of ₹ 5O,oo,ooo/- in any financial year, it would have the benefit of Section 54EC(i) of the Act , -: 8. The legislature noticing the ambiguity in the above said provision, by Finance (No.2) Act, 2014, with effect from 1.4.2015, inserted after the existing proviso to sub-section (i) of Section 54EC of the Act, a second proviso, which reads as under: # Provided further that the investment made by an assessee in the long-term specified 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 lakh rupeesj 9. At this juncture, for better clarity, it would be appropriate to refer to the Notes on Clauses 7-Finance Bill 2014 and the Memorandum explaining the provisions in the Finance (No.2) Bill, 2014, which read as under: #Notes on Clauses T Finance Bill 2014: Clause 23 of the Bill seeks to amend section 54EC of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed to insert a proviso in sub-section (i) so as to provide that the investment made by an assessee in the long-term specified asset, out of capital gains arising from transfer of one or more original asset, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years.# 10. The legislature has chosen to remove the ambiguity in the proviso to Section 54EC(i) of the Act by inserting a second proviso with effect from 1.4.2015. The memorandum explaining the provisions in the Finance (No.2) Bill, 2014 also states that the same will be applicable from I.4.2015 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(i) of the Act, as it stood in relation to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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