TMI Blog1987 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Ashwin J. Shah. S/Shri Naresh J. Shah and Bipin J. Shah are married having two minor sons each. Shri Ashwin J. Shah is unmarried. The assessee HUF held properties including one immovable property situated at Elisbridge T. P. S. 3, city of Ahmedabad bearing Plot No. 516/1/B admeasuring about 1046 sq. yds. On 21-12-1979, there was a partial partition amongst the members of the assessee-HUF in respect of the said property. On the same date, the said property was sold for a consideration of Rs. 8,36,770. Each of the members of the assessee-HUF.received his share out of the sale realisations which was credited to their respective accounts in the books of Gujarat Pharmaceuticals Chemicals Works, in which some of the members of the assessee-H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In appeal before the Commissioner (Appeals), the assessee strongly urged that the ITO/IAC were not justified in denying exemption to the assessee as contemplated u/s. 54E of the Act. In this connection, it was stated that once the application for recognition of partial partition was rejected by the ITO, and the members of the assessee-HUF had invested sale realisations in the said bonds, it has to be held that assessee-HUF had made the said investment. In this view of the matter, the assessee was entitled to claim exemption as contemplated u/s. 54E of the Act. The Commissioner (Appeals), in his order under appeal, after stating that he had upheld the action of the ITO in not recognizing the partial partition, accepted the assessee's content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eners had to borrow funds from other sources. These diversion of funds have otherwise been within constituents of the HUF. Therefore, the assessee-HUF had all along been in possession and control of the funds, which it received on the sale of the immovable property. (iv) The investment in 7-Year Rural Bonds has been made within the time schedule of 6 months from the date of the sale of the property. Even if, theoretically speaking, it is argued that the assessee-HUF had to borrow funds.at the time of making the investment, this would not be relevant for deciding the applicability of exemption under section 54E. (v) For the purpose of section 54E the only test is the quantum of the sale proceeds, the date of the sale and the arrear inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 7. The learned representative for the department strongly relied on the order of the ITO as well as the directions issued by the IAC u/s. 144A of the Act and vehemently argued that the Commissioner (Appeals) was not justified in accepting the assessee's contention regarding exemption u/s. 54E of the Act. According to him, in order to claim exemption u/s. 54E of the Act, the person should be the same for realising sale consideration and investing the same in the Rural Bonds. However, in the instant case, according to him, the person who had realised the sale consideration were different from the persons who had invested in the Rural Bonds. He also took us through the IAC's directions issued u/s. 144A of the Act, with a view to strengthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the Commissioner (Appeals) was fully justified in accepting the assessee's claim for exemption under that section. He, therefore, urged that we should uphold the order of the Commissioner (Appeals). 8. We have considered the rival submissions of the parties and we are constrained to observe that the revenue ought not to have come up in appeal in the present case in view of the fact that there is no ambiguity in understanding the provisions of section 54E of the Act. During the course of his argument, the learned counsel for the assessee has rightly pointed out that the purpose of section 54E of the Act was to arrest inflation. The Legislature itself has appreciated the fact that it would not always be possible to invest the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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