TMI Blog2017 (4) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, we are of the considered view that the assessee is eligible for exemption u/s 54EC of the Act and addition of ₹ 24,85,420/- made by the AO and as confirmed by learned CIT(A) is not sustainable in eyes of law and is hereby ordered to be deleted. The alternate ground raised by the assessee that capital gain on sale of TDR is not taxable has become academic and infructuous and the said question of law is kept open - I .T.A. No.5802/Mum/2013 - - - Dated:- 10-4-2017 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri M. Subramanian For The Revenue : Shri Rajesh Kumar Yadev ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 5802/Mum/2013 is directed against the appellate order dated 15th July, 2013 passed by learned Commissioner of Income Tax (Appeals)- 22, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2009-10, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 26th December, 2011 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income Tax Act,1961 (Hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45,92,750/- vide agreement dated 06-08-2008 and long term capital gains to the tune of ₹ 47,35,420/- were computed by the assessee as per provisions of the Act. It was observed by the AO that the assessee has purchased a flat of ₹ 22,50,000/- for which exemption u/s 54F of 1961 Act was claimed and the balance amount of capital gain of ₹ 24,85,420/- was claimed to be invested in NHAI/REC Bonds on 26-03-2009 and exemption u/s 54EC of 1961 Act was claimed by the assessee. The date of agreement for transfer of TDR was dated 06-08-2008. The AO observed that the last date of making investment in REC/NHAI Bonds for claiming exemption u/s 54EC of 1961 Act was within 6 months of date of transfer of TDR on 06-08-2008 which should have been done on or before 06-02-2009 , while in the instant case the assessee had invested in REC Bonds on 26-03-2009 which is beyond 6 months from the date of transfer of TDR on 06-08-2008. The AO observed that the assessee is not entitled for claiming exemption u/s 54EC of 1961 Act as the investments in REC/NHAI bonds were made beyond six months from the date of transfer of TDR. The AO observed that assessee had claimed that the said payments o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that it made following investments for claiming exemption u/s 54EC of 1961 Act which is within time prescribed under 1961 Act if reckoned from the last date of receiving the payment on 15- 11-2008 under an agreement for transfer of TDR dated 06-08-2008 : Date of payment Particular Amt. Section 22.10.2008 Flat 22,75,000 54F 26.03.2009 National Highway Bond 21,50,000 54EC 26.03.2009 Rural Electrification Bond 22,00,000 54EC Total 66,25,000 It was submitted by assessee before learned CIT(A) that dispute is only with respect to allowability of exemption u/s 54EC of 1961 Act and unless payments are received towards sale consideration of TDR, the assessee is not in a position to make investments in REC/NHAI Bonds and hence period of six months for making investment in REC/NHAI bonds should be reckoned from the last date of rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 months for making investments in specified assets for the purpose of sections 54EA, 54EB and 54EC should be taken from the date such stock-in-trade is sold or otherwise transferred, in terms of section 45(2) of the Act. Circular : No. 791, dated 2-6-2000. The assessee also relied upon the decision of ITAT, Pune in the case of Mahesh Nemichand Ganeshwade v. ITO (2012) 73 DTR (Pune) (Trib.) 1 and decision of ITAT, Kolkatta in the case of Chanchal Kumar Sircar v. ITO (2012) 18 taxmann.com 304(Kol-trib.). The learned CIT(A) rejected the contention of the assessee on the ground that the assessee had to make investment of the whole or any part of the capital gains within a period of 6 months in long term specified assets from the date of transfer for claiming exemption u/s 54EC of 1961 Act. The learned CIT(A) observed that in the present case the date of transfer of TDR is the date on which the assessee had entered into an agreement for sale of the TDRs which was on 06-08-2008. The ld. CIT(A) observed that section 54EC of 1961 Act has never used the word consideration as it uses the word transfer only, which in the instant case was on 06-08-2008 and the investment in NHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned counsel for the assessee that gains arising from sale of TDR are not taxable and relied upon decision of Hon ble Apex Court in the case of CIT v. B.C.Srinivasa Setty (1981) 128 ITR 294(SC) . 8. The ld. D.R. submitted that the ld. CIT(A) was quite right in distinguishing the CBDT circular. It is submitted that the assessee cannot be allowed deduction u/s 54EC of the Act as the investment have not been made within six months from the date of transfer. 9. We have considered rival contentions and also perused the material available on record including case laws relied upon. The assessee had sold TDR for ₹ 1,45,92,750/- vide agreement for sale dated 06-08-2008 against which payments were received by the assessee over a period of time from 07- 08-2008 to 15-11-2008 and long term capital gain of ₹ 47,35,420/- were computed. The assessee and his brother had surrendered their right in the plot of land bearing CTS No. 138B and 138/2B to Municipal Corporation of Greater Mumbai(MCGM) and in lieu of this MCGM had issued development rights certificate dated 29-07-2008 for 1355.70 square meters area of FSI . The said TDR equivalent of 14592.75 square feet was transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Capital gain not to be charged on investment in certain bonds. 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 the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45 : [Provided that the investment made on or after the 1st day of April, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988); or (ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), and notified by the Central Government in the Official Gazette for the purposes of this section with such conditions (including the condition for providing a limit on the amount of investment by an assessee in such bond) as it thinks fit:] [Provided that where any bond has been notified before the 1st day of April, 2007, subject to the conditions specified in the notification, by the Central Government in the Official Gazette under the provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007, such bond shall be deemed to be a bond notified under this clause;] [(ba) long-term specified asset for making any investment under this section on or after the 1st day of April, 2007 means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold part of his immovable property and received first payment from CPI(M) on 01.07.2004 and from remaining three purchasers on 02.07.2004 as part payment although the possession was also handed over to these purchasers. It is also a fact that the sale deed was registered, in the case of CPI(M) on 27.06.2005 and in the case of other three purchasers on 28.09.2005. The assessee has deposited the sale consideration within one month of receipt with NABARD for availing exemption u/s. 54EC of the Act. In such circumstances whether the assessee is eligible for claim of exemption or not ? In our view, in this type of case, the period of six months for making deposit u/s. 54EC of the Act should be reckoned from the dates of actual receipt of the consideration, because in the present case the assessee has received part payment as on the date of execution of agreement and handing over of possession of the property and received part payment after six months at the time of registration of sale deed or even after that in few of instances, as is evidently clear from the above chart at para 3 page 3 of this order. We are of the view that if the period is reckoned from the date of agreement and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enactment of section 54E of the Act. 7. Similar situation was analysed by Hon'ble Allahabad High Court in the case of CIT v. Janardhan Dass [2008] 299 ITR 210/ 170 Taxman 113 wherein Hon'ble High Court observed that section 54B(2) of the Act, provides that where the transfer of the asset is by way of compulsory acquisition under any law and the compensation amount awarded for such acquisition is enhanced by any court, Tribunal or other authority, the capital gains attributable to the enhanced value of the compensation shall be dealt with as provided for in section 54B(2), according to which if the enhanced compensation as received has been invested in agricultural land within two years of its receipt, to that extent no capital gains tax will be charged. This provision gives an insight that section 54B of the Act has taken into consideration the possibility of enhancement of compensation amount by the court, Tribunal, etc., at the subsequent stages. If the agricultural land is purchased within a period of two years from such enhancement, the capital gain or no capital gain, as the case may be, will be charged under section 54B(2) of the Act. In other words, the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital Gains Scheme of 1983, on October 1, 1991, i.e., within six months from the date of receipt of the additional compensation and sought exemption under section 54E of the Act. The Assessing Officer denied this exemption on the ground that the capital gain arose in respect of transfer of the original asset prior to March 31, 1983, when the UTI Capital Gains Scheme, 1983, was not in force. On appeal, the Commissioner (Appeals) upheld the disallowance made by the Assessing Officer. On further appeal, the Tribunal held that the assessee was entitled for the exemption under section 54E. On a reference, the Hon'ble Court held that the assessee received the amounts in 1991-92. Admittedly, the amounts were deposited by the assessee within six months from the date of its receipt, in the UTI Capital Gains Scheme, which is one of the units as specified asset mentioned in Explanation 1(c)(ii) to section 54E of the Act. The assessee was entitled to exemption under section 54E of the Act. 9. In view of the above consistent principle adopted by Hon'ble High Courts in respect to interpretation of a beneficial provision i.e. exemption provision under capital gains tax, we have to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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