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TMI Blog2024 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal:- "(1) That on facts, and in law, the learned National Faceless Appeal Centre (NFAC) has grievously erred in confirming the disallowance of claim or deduction of Rs. 50,00,000/- u/s. 54EC of the Act. (2) That on facts and in law, the entire claim of deduction ought to have been allowed as prayed for. (3) The appellant craves leave to add, alter, amend any ground of appeal." 3. The brief facts of the case are that an immovable property known as "Deepavali," located on S.V. Road, Andheri (West), Mumbai, measuring 2865.60 square meters, was jointly purchased by brothers Shri Vijay Chaturbhai Patel and Dr. Kirti Chaturbhai Patel on October 27, 1959, for a total consideration of Rs.61,000/-, including documentation expenses. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property as of April 1, 1981, as the cost of acquisition. The AO eventually accepted this substitution and determined the cost of acquisition at Rs.11,56,641/- and the indexed cost at Rs.67,31,650/-. The primary issue under the present appeal is the admissibility of a deduction claimed under Section 54EC for an investment of Rs.50,00,000/- in bonds of the National Highway Authority of India (NHAI). The AO initially allowed this deduction in the assessment order dated December 30, 2011. However, upon reviewing the circumstances, the CIT noted that the investment was made on June 25, 2008, with a deemed allotment date of July 31, 2008. As the transfer of the property occurred at a later date on August 16, 2008, and the CIT(A) found the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made within a period of six months from the date of transfer of assets. The ITAT vide order dated 12.07.2017 had restored the matter to the file of AO for reconsideration of the deduction in light of the CBDT Circular clarifying that investments made prior to transfer of asset, out of the advances received are also eligible for exemption under Section 54EC of the Act. We observe that vide order sheet dated 26.06.2024 this Bench had directed the Ld. Counsel for the assessee to file bank statement of the assessee, which had been earlier filed with the AO in the second round of proceedings, to prove the nexus between the advance received by the assessee on account of sale of property and investment made in the NHAI Bonds as per Section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALIFIES FOR EXEMPTION CIRCULAR : NO. 359 [F. NO. 207/8/82-IT(A-II)], DATED 10-5-1983 1. Section 54E provides for exemption of long-term capital gains if the net consideration is invested by the assessee in specified assets within a period of six months after the date of such transfer. A technical interpretation of section 54E could mean that the exemption from tax on capital gains would not be available if part of the consideration is invested prior to the date of execution of the sale deed as the investment cannot be regarded as having been made within a period of six months after the date of transfer. 2. On consideration of the matter in consultation with the Ministry of Law, it is felt that the foregoing interpretation would go agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not dispute the same before us. Moreover, on almost identical fact, this Court in Mrs. Parveen P. Bharucha v. Dy. CIT [2012] 348 ITR 325/[2013] 212 Taxman 66/[2012] 28 taxmann.com 274, held that the earnest money received on sale of asset. When invested in specified bonds under Section 54EC of the Act, is entitled to the benefit of Section 54EC of the Act, this was in the context of reopening of an assessment and reliance was placed upon DBDT Circular No. 359 dated 10th May, 1983 in the context of Section 54E of the Act. 7. Mr. Bajpayee, learned Counsel for the Revenue very fairly points out that the Revenue had preferred an appeal against the order of the Tribunal in Bhikulal Chandak HUF (supra) to this Court (Nagpur Bench) being Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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