TMI Blog2022 (6) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 54EC of the Act. Same view has been taken by Mumbai Bench of the Tribunal in the case of Mr. Yahya E. Dhariwala [ 2011 (11) TMI 381 - ITAT MUMBAI] . Respectfully, following the aforesaid decisions of the Tribunal we hold that the investment made by the Appellant in bonds issued by NHAI on 06.03.2013 falls with the period of six calendar months and thus, meets the requirement of Section 54EC of the Act. Accordingly, we are of the view that the Appellant is entitled to benefit of section 54EC of the Act in respect of amount invested in bonds issued by NHAI. - Decided in favour of assessee. - ITA No. 1718/MUM/2019 - - - Dated:- 20-5-2022 - SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER For the Appellant/ Assessee: Shri K Gopal For the Respondent/Department: Shri Nishant Somaiya ORDER Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant/Assessee has challenged the order, dated 11.01.2019, passed by the Ld. Commissioner of Income Tax (Appeals), [hereinafter referred to as the CIT(A)‟] under Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the Act‟] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file a suit for specific performance (Suit No. 1456 of 2008) against the Developer before the Hon‟ble Bombay High Court. During the pendency of the aforesaid suit, a settlement was reached between the Appellant and the Developer. According to the consent terms, dated 24.03.2012, the Appellant was to receive a payment of INR 60,00,000/- for relinquishing/terminating the right, title, claim and/or interest in the Flat. A Cancellation Deed, dated 11.09.2012, was executed by the Appellant pursuant to the consent term which was registered on 12.09.2012. According to the Appellant the aforesaid transaction resulted in LTCG. The Appellant offered LTCG of at INR 15,94,000/- to tax computed after claiming the benefit of indexation in relation to the cost of acquisition of the Flat and the provisions of Section 54EC having invested INR 16,00,000/- in bonds issued by NHAI on 06.03.2013. However, the Assessing Officer, not being satisfied with the explanation/submission of the Appellant, concluded that the compensation of INR 60,00,000/- received by the Appellant from the Developer was in the nature of Income from Other Sources and therefore, the Assessing Officer computed the Income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation deeds were executed by the Appellant. The first unregistered cancellation deed was executed on 24.03.2012 while the second registered cancellation deed was executed on 11.09.2012. Taking the date of the un-registered cancellation deed (i.e. 24.03.2012) the Assessing Officer concluded that the investment in bonds of NHAI was made on 06.03.2013. According to the Assessing Officer, the investment was made after a gap of 11 months and therefore, the benefit of section 54EC was denied to the Appellant since the requirement of making investment within a period of six months from the date of transfer of asset was not satisfied. 5. Being aggrieved, the Appellant preferred an appeal before the CIT(A) who confirmed the order of Assessing Officer holding INR 44,16,000/- as Income from Other Sources. However, the CIT(A) allowed the alternative ground and permitted additional deduction of INR 2,74,310/- under Section 57(iii) of the Act. The ground relating to claim of exemption under Section 54EC of the Act was disposed of as being academic in nature. 6. Aggrieved by the order dated 11.01.2019 passed by CIT(A) the Appellant has preferred the present appeal. 7. The Ld. Authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- as income from other sources. He relied upon the following decisions/judgments to support his case CIT vs. Tata Services Ltd. (1980) 122 ITR 594X(Bom), Kartick Chandra Mondal vs. Pr.CIT (2020) 113 taxmann.com 586 (Kolkata-Trib), and Mr. Yahya E. Dhariwala vs. DCIT: ITA No. 5501/Mum/2009 decided on 25.11.2011. 8. Per contra, Ld. Departmental Representative relied upon the Assessment Order and the order passed by the CIT(A). He submitted that the Appellant neither had any rights in the Flat nor did the Appellant have any intention to acquire any rights in the Flat. Referring to various clauses of the PA, the Ld. Authorised Representative for the Assessee contended that there was no evidence that a legally enforceable right got vested in the Appellant by virtue of the PA. He submitted that Clause 8 of the PA clearly provided that in case the Developer fails to deliver possession, the Appellant would be entitled to receive back only the money paid by the Appellant along with interest thereupon. Further, Clause (12) of the PA clarified that nothing contained in the PA shall be construed to confer upon the Appellant any right or interest of any kind whatsoever in the Flat till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat till the date the aforesaid amount along with interest is refunded, such amounts and the interest shall constitute a charge on the land and the construction, if any, thereon in which the flat is or was to be constructed. As per Section 11 of MFA a promoter/developer is under obligation to take necessary steps to complete his title and conveyed to the organization of persons who have taken the flats. In case the promoter fails to execute the conveyance as aforesaid, the association of the owners can make application to the competent authority for issuance of a certificate enabling execution of unilateral deemed conveyance in the favour of the society or association of persons who have taken the flats. From the aforesaid, it is clear that provision contained in MFA give certain rights to persons purchasing flats and casts certain obligations of the promoters/developers. It is settled legal position that statutory rights cannot be curtailed by way of a contract. Even Clause 9 of the PA, on which reliance has been placed by Assessing Officer/CIT(A), provides that provision of Clause 9 shall be subject to what is provided in Section 8 of MFA. 11. It is admitted fact that PA is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion. The sub-clauses which deal with what property is not included in the definition of capital asset are not relevant. Under section 2(47), a transfer in relation to a capital asset is defined as including the sale, exchange or relinquishment of the asset or the extinguishment of any right therein or the compulsory acquisition thereof under any law. The word property , used in section 2(14) of the Income-tax Act, is a word of the widest amplitude and the definition has re-emphasised this by use of the words of any kind . Thus, any right which can be called property will be included in the definition of capital asset . A contract for sale of land is capable of specific performance. It is also assignable. (See Hochat Kizhakke Madathil Venkateswara Aiyar v. Kallor Illath Raman Nambudhri, AIR 1917 Mad 358). Therefore, in our view, a right to obtain conveyance of immovable property, was clearly property as contemplated by section 2(14) of the Income-tax Act, 1961. (Emphasis Supplied) 13. In view of the above, we hold that the Appellant had right/interest in the Flat which constituted the capital asset in terms of Section 2(14) of the Act. With the registration of Cancellati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and therefore, the extinguishment such rights/interest could only be achieved only by way of a registered document. Thus, we find merit in the contention of the Appellant that date of registered Cancellation Deed (i.e. 11.09.2012) should be taken as the date of transfer of capital asset. In order to claim benefit of Section 54EC, investment must be made within six month from the transfer of the capital asset. In the case of Kartick Chandra Mondal vs. Pr.CIT (2020) 113 taxmann.com 586 (Kolkata-Trib), it has been held that term month means calendar months (and not a period of 30 days), which should be applied for the purpose of Section 54EC of the Act. Same view has been taken by Mumbai Bench of the Tribunal in the case of Mr. Yahya E. Dhariwala vs. DCIT: ITA No. 5501/Mum/2009 decided on 25.11.2011. Respectfully, following the aforesaid decisions of the Tribunal we hold that the investment of INR 16,00,000/- made by the Appellant in bonds issued by NHAI on 06.03.2013 falls with the period of six calendar months and thus, meets the requirement of Section 54EC of the Act. Accordingly, we are of the view that the Appellant is entitled to benefit of section 54EC of the Act in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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