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Income Tax Officer, -25 (1) (4) Mumbai Versus Mr. Baldwin D. Fernandes

2015 (10) TMI 2705 - ITAT MUMBAI

Allowing exemption u/s 54EC - Capital gain not to be charged on investment in certain bonds - assessee did not made any investment within six months from the date of transfer and further did not fulfill the conditions prescribed in the agreement, therefore, exemption was wrongly allowed to the assessee - Held that:- The intent and purpose of section 54EC is the date, when the assessee actually collects/receives the sale consideration and thereafter makes investment within six months and that is .....

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institution and are issued at a later stage, the date of deposit of the amount in the bank or the institution, as the case may be, are the relevant dates for getting the benefit of exemption u/s 54EC. For the purpose of section 54EC, the date of investment is to be regarded as the dates of investment/ the payment received by the authorized bank, thus, we find no infirmity in the conclusion drawn by the Commissioner of Income Tax (Appeals) - Decided against revenue. - ITA NO.5229/Mum/2013 - Dated .....

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sessee did not made any investment within six months from the date of transfer and further did not fulfill the conditions prescribed in the agreement, therefore, exemption was wrongly allowed to the assessee. On the other hand, none was present for the assessee in spite of issuance of registered AD notice, therefore, we have no option but to proceed ex-parte qua the assessee and tend to dispose off this appeal on the basis of material available on record 2.1. If the observation made in the asses .....

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registered on 26/04/2007. As per the development agreement, the terms of the payments were that the assessee has to make the payments as per the schedule mentioned at page 7 of the impugned order, i.e. the different payments were to be made from 09/03/2007 and till 02/04/2011, the last payment of ₹ 5 lakh was to made at the time of conveyance. The assessee received ₹ 45 lakh each on 07th and 08th October and invested the same in REC bond (Rs.50 lakh on 08/03/2008 and ₹ 30 lakh .....

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greement or the date when the assessee actually received the amount? Before coming to any conclusion, we are expected to analyze the provision of section 54EC of the Act. The relevant provision is reproduced hereunder:- 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 .....

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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 longterm 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, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh ru .....

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uisition, the amount of capital gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such long-term specified asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1) shall be deemed to be the income chargeable under the head "Capital gains" relating to long-term capital asset of the previous year in which the long-term specified asset is transferred or converted (otherwise than by transfer) into mon .....

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erm specified asset has been taken into account for the purposes of clause (a) or clause (b) of sub-section (1),- (a) a deduction from the amount of income-tax with reference to such cost shall not be allowed under section 88 for any assessment year ending before the 1st day of April, 2006; (b) a deduction from the income with reference to such cost shall not be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006. Explanation.-For the purposes of th .....

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April, 2006, but on or before the 31st day of March, 2007,- (i) by the National Highways Authority 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 .....

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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 Act, 1988 (68 of 1988) or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956). 2.2. If the aforesaid provision is analyzed, it deals with capital ga .....

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ost in relation to any long term specified asst , means the amount invested in such specified asset out of the capital gains received or accruing as a result of the transfer of the original asset, meaning thereby, the date of receipt or accruing are the important dates for making investment. The property in question, i.e., joint property was sold vide agreement dated 02/04/2008 for a consideration of Rs,1,67,75,000/-. The relevant dates of the receipt of the consideration are summarized as under .....

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aimed deduction u/s 54EC of the Act for the amounts mentioned at serial no. 1 to 3 but denied for the amount mentioned at serial no at 4, by taking the period of six months from the date of agreement i.e. 02/04/2008. The Assessing Officer misdirected himself with respect to the pattern of investment. Unless and until anybody receives the amount, which are paid as a part of the detailed brake up, how the assessee can invest the same. The exemption for the amount, which was denied by the Assessing .....

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