Shri Mahesh Nemichandra Ganeshwade,, Pune v. ITO Wd.-3(4),, Pune

ITA 594/PUN/2010 | 2006-2007
Pronouncement Date: 29-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 59424514 RSA 2010
Assessee PAN AAVPG2476R
Bench Pune
Appeal Number ITA 594/PUN/2010
Duration Of Justice 1 year(s) 11 month(s) 10 day(s)
Appellant Shri Mahesh Nemichandra Ganeshwade,, Pune
Respondent ITO Wd.-3(4),, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 29-03-2012
Date Of Final Hearing 14-03-2012
Next Hearing Date 14-03-2012
Assessment Year 2006-2007
Appeal Filed On 19-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMB ER AND SHRI G.S. PANNU ACCOUNTANT MEMBER S. NO ITA NO ASSTT. YEAR APPELLANT RESPONDENT 1 594/PN/10 2006- 07 SHRI MAHESH NEMICHANDRA GANESHWADE 12 KOTHRUD INDUSTRIAL ESTATE PUNE 411 038 PAN AAVPG2476R INCOME-TAX OFFICER WD 3(4) PUNE 2 727/PN/10 2006- 07 ITO WD. 3(4) PUNE SHRI MAHESH NEMICHANDRA GANESHWADE PUNE 3 595/PN/10 2006- 07 SHRI NEMICHANDRA D GANESHWADE PUNE PAN AAVPG2707K INCOME-TAX OFFICER WD. 3(4) PUNE 4 596/PN/10 2006- 07 MRS HANSABAI N GGNESHWADE PUNE I.T.O WD 3(4) PUNE 5 597/PN/10 2006- 07 SHRI DINESH N GANESHWADE PUNE PAN - 0 ADTPG2705Q I.T.O WD. 3(4) PUNE 6 728/PN/10 2006- 07 I.T.O WD 3(4) PUNE SHRI DINESH N GANESHWADE PUNE ASSESSEES BY : SHRI S U PATHAK DEPARTMENT BY : MS ANN KAPTHUAMA DATE OF HEARING : 14.03.2 012 DATE OF PRONOUNCEMENT : 29.03 .2012 ORDER PER G.S. PANNU A.M .: SINCE COMMON ISSUES ARE INVOLVED IN THE CAPTIONED APPEA LS THEY WERE HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. SINCE THE FACTS ARE COMMON AND ARGUMENTS RAISED BY THE PARTIES ARE IDENTICAL WE SHALL TAKE UP THE APPEAL FILED BY THE ASSE SSEE SHRI MAHESH NEMICHANDRA GANESHWADE (ITA NO 594/PN/2010) AS A LEAD CASE. 3. THE GROUNDS OF APPEAL RAISED IN THIS APPEAL ARE AS FOLLOWS: 1. THE LD CIT(A) ERRED IN HOLDING THAT CAPITAL GAIN ON TRANSFER OF LAND AT S. NO 48/1 VILLAGE BAVDHAN KHURD TAL : HAVELI DIST. PU NE WAS ASSESSABLE IN THIS ASST. YEA WITHOUT APPRECIATING THAT AS PER LAW THE SAME WAS NOT TAXABLE IN THIS ASSESSMENT YEAR. 2. THE LD CIT(A) ERRED IN HOLDING THAT THE SALE CON SIDERATION ON TRANSFER OF LAND SHOULD BE ADOPTED AT RS 4 90 00 000/- AS AGAINST RS 2 50 00 000/- WITHOUT APPRECIATING THAT THE ORIGINAL SALE CONSIDERATION W AS ONLY RS 2 50 00 000/- AND ONLY BY WAY OF CORRECTION DEED IN F Y 2007-08 T HE CONSIDERATION WAS INCREASED AND HENCE THERE WAS NO REASON TO ADOPT T HE SALE CONSIDERATION AT RS 4 90 00 000/- AS AGAINST RS 2 50 00 000/- AS DET ERMINED IN THE ORIGINAL AGREEMENT. 3. THE LD CIT(A) ERRED IN HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S 54EC IN RESPECT OF THE INVESTMENT IN THE ELIGIB LE BONDS ON THE GROUNDS THAT THE ASSESSEE HAD NOT INVESTED IN THOSE BONDS W ITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF THE LAND. 3.1 THE LD CIT(A) FAILED TO APPRECIATE THAT THE ASS ESSEE HAD INVESTED IN THE ELIGIBLE BONDS WITHIN A PERIOD OF 6 MONTHS FROM THE RECEIPT OF THE SALE CONSIDERATION AND ACCORDINGLY HE WAS ENTITLED TO C LAIM THE DEDUCTION U/S 54EC. 3.2 THE LD CIT(A) ERRED IN NOT APPRECIATING THAT IF THE ASSESSEE DID NOT RECEIVE THE SALE CONSIDERATION WITHIN 6 MONTHS FROM THE DATE OF TRANSFER HE HAD NO SOURCE TO INVEST THE AMOUNT AND ACCORDINGLY THE BENEFIT O F EXEMPTION U/S 54EC OUGHT TO HAVE BEEN GRANTED IF THE ASSESSEE HAD INVE STED IN THE SPECIFIED BONDS WITHIN 6 MONTHS FROM THE DATE OF RECEIPT OF T HE SALE CONSIDERATION. 4. THE FACTS IN BRIEF ARE THAT THAT THE ASSESSEE JOINT LY OWNED WITH THREE OTHERS A LAND AT SURVEY NO 48/1 VILLAGE BAVDHAN KHURD HAVELI PUNE. THE ASSESSEE ENTERED INTO A JOINT VENTURE DEVELOPMENT AGREE MENT WITH M/S ROHAN BUILDERS AND DEVELOPERS PVT. LTD. DATED 12.7.2005 IN WHICH THE CONSIDERATION WAS FIXED AT RS 2 50 00 000/-.THIS DOCUMENT WAS REGISTER ED LATER BY WAY OF CONFIRMATION DEED DATED 23.1.2007. THEREAFTER A CORR ECTION DEED WAS ENTERED INTO ON 2.7.2007 IN WHICH THE SALE CONSIDERATION WAS INCR EASED TO RS 4 90 00 000/-. OUT OF THE TOTAL SALE CONSIDERATION A T RS 4 90 00 000/- ASSESSEES SHARE WAS 1/4 TH I.E. RS 1 22 50 000/-. ON THESE FACTS THE ASSESSING OFFICER INFERRED THAT THE DATE OF JOINT VENTU RE AGREEMENT I.E. 12.7.2005 WAS THE DATE OF TRANSFER FOR THE CAPITAL ASSE T AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 45(3) OF THE ACT THE CONSIDERA TION OF RS 2 50 00 000/- SUBSEQUENTLY REVISED TO RS 4 90 00 000/- WAS THE CONSIDERA TION ON TRANSFER WHICH WAS LIABLE TO BE CONSIDERED FOR COMPUTATION OF CAP ITAL GAIN IN ASSESSMENT YEAR 2006-07. WHEN CONFRONTED WITH THE ABOVE STAND OF THE ASSESSING OFFICER THE ASSESSEE OBJECTED TO TAXATION OF THE CAPITAL GAIN IN ASSESSMENT YEAR 2006-07 AND CONTENDED THAT IT SHOULD BE CONSIDERED IN THE ASSESSMENT YEAR 2007-08 SINCE THE JOINT VENTURE AGREEMENT WAS REGISTERED ON 23.1.2007 AND ONLY AFTER WHICH IT WAS ACTED UPON AND I MPLEMENTED. THE ASSESSING OFFICER REJECTED THIS CONTENTION OF THE ASSESSEE AN D CONCLUDED THAT THE TRANSFER HAD ACTUALLY TAKEN PLACE ON ACCOUNT OF THE DEVELOPMENT AGREEMENT IN ASSESSMENT YEAR 2006-07 ITSELF. AS PER THE ASSESSING OFFICER IN SO FAR AS THE YEAR OF TAXABILITY WAS CONCERNED IT WAS TH E YEAR IN WHICH THE TRANSFER TOOK PLACE IN ACCORDANCE WITH THE DEVELOPMENT A GREEMENT AND AS TO THE AMOUNT TO BE TAXED IT WAS IN ACCORDANCE WITH THE T OTAL CONSIDERATION INCLUDING THE REVISED CONSIDERATION RECORDED IN THE BO OKS OF ACCOUNTS AS PER THE PROVISIONS CONTAINED IN SECTION 45(3) OF THE ACT. HE ACCORDINGLY HELD THAT THE CAPITAL GAIN WAS TAXABLE IN THE ASSESSMENT YEAR 2006 -07 AND IT COULD NOT BE TAXED AT ANY OTHER CONSIDERATION THAN WHAT WAS ACTU ALLY RECORDED IN THE BOOKS OF ACCOUNT AS A WHOLE. BEING AGGRIEVED WITH SUCH ORDE R THE ASSESSEE PREFERRED APPEAL TO THE COMMISSIONER OF INCOME-TAX (AP PEALS). 5. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) ASSE SSEE FILED DETAILED WRITTEN SUBMISSIONS ASSAILING THE ORDER OF THE ASSESSING OFFICER. IN SO FAR AS THE TAXABILITY OF CAPITAL GAIN IS CONCERNED THE COMMISSIONER OF INCOME- TAX (APPEALS) AGREED WITH THE CONCLUSION OF THE ASSESSING OFFICER THAT THE CAPITAL GAIN IS TAXABLE IN THE YEAR OF TRANSFER AND T HE DATE OF ENTERING INTO THE DEVELOPMENT AGREEMENT WITH THE BUILDER IS TO BE TREA TED AS DATE OF TRANSFER. HE ALSO NOTICED FROM THE DEVELOPMENT AGREEMENT THAT THE IRRECOVERABLE PERMISSION FOR DEVELOPMENT OF THE SAID LAND WAS GRANTED BY THE ASSESSEE AND THE OTHER MEMBERS OF THE FAMILY BEING THE CO-OWNERS TO THE BUILDER AND THEREFORE THE DATE OF DEVELOPMENT AGREEMENT WOULD BE TREATED AS THE DATE OF TRANSFER. AS PER THE COMMISSIONER OF INCOME-TAX (APPEAL S) MERELY BECAUSE THE DEED WAS REGISTERED IN A LATER ASSESSMENT YEAR OR TH AT THE CONSIDERATION WAS IN ACCORDANCE WITH A CORRECTION DEED MADE LATER WOUL D NOT POSTPONE THE DATE OF TRANSFER OF AN ASSET. HE FURTHER OBSERVED THAT CAPITAL GAIN CAN BE CHARGED ONLY ONCE AND IT CANNOT BE TAXED PARTLY IN T HIS YEAR AND THE REMAINING PART IN A LATER YEAR; SINCE THERE WAS NO SUCH SPECIFIC PROV ISION IN THE ACT OTHERWISE THAN IN THE CASE OF ENHANCED COMPENSATION AS P ROVIDED BY SECTION 45(5) OF THE ACT. AS PER THE COMMISSIONER OF INCOME-TAX (APPEALS) THE CORRECTION DEED WAS MADE FOR CORRECTION IN THE NAME IN O NE OF THE PERSONS AND SECONDLY FOR ENHANCING THE AMOUNT OF CONSIDERATION FROM RS 2 50 00 000/- TO RS 4 90 00 000/- AND BY MERELY ENTERING INTO THE CORRECTION DEED THE INCIDENCE OF TRANSFER OR LEVYING OF CAPITAL GAINS DID N OT GET POSTPONED TO THE LATER YEAR. RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHATURBHUJ DW ARKADAS KAPADIA V. CIT 260 ITR 491 (BOM). HE ACCORDINGLY AFFIRMED THE STAND O F THE ASSESSING OFFICER. 6. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS POI NTED OUT THAT THE FOUR ASSESSEES IN QUESTION ARE CO-OWNERS OF THE LAND FO R WHOSE DEVELOPMENT THEY ENTERED INTO A JOINT VENTURE WITH ROHAN BUILDERS & DEVELOPERS P. LTD IN TERMS OF AN AGREEMENT DATED 12.7 .2005 PLACED AT PAGES 7 TO 32 OF THE PAPER BOOK. AT THE OUTSET THE LEARNED COUNSEL SUBMITTED THAT IN SO FAR AS THE ASSESSMENT YEAR UNDER CONSIDERATION IS CONC ERNED THE AUTHORITIES BELOW HAVE WRONGLY INTERPRETED THE SAME T O HOLD THAT A TRANSFER HAS OCCURRED FOR THE PURPOSES OF DETERMINATION OF CAPITAL G AINS IN THE INSTANT ASSESSMENT YEAR. COUNTERING THE CLAIM OF THE REVENUE THA T A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT HAS TAKEN PLACE ON ACCOUNT OF THE JOINT VENTURE AGREEMENT DATED 12.7.2005 IN THE INSTANT ASS ESSMENT YEAR ITSELF ON THE BASIS OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IT HAS BEEN CONTEN DED THAT THE SAID DECISION IS INAPPLICABLE IN THE PRESENT CASE INASMUCH AS TH E RIGHTS IN THE LAND HAVE NOT BEEN PASSED IN FAVOUR OF ROHAN BUILDERS AS A T RANSFEREE BUT IT IS A CASE WHERE IN TERMS OF A JOINT VENTURE AGREEMENT ASSE SSEE AND ROHAN BUILDERS HAVE COME TOGETHER TO JOINTLY DEVELOP THE LA ND AND SHARE THE PROFITS. IN THIS CONNECTION REFERENCE HAS BEEN MADE TO THE VAR IOUS CLAUSES OF THE JOINT VENTURE AGREEMENT. POINTING OUT TO CLAUSE NO. 2 OF T HE AGREEMENT WHICH DEFINES THE PURPOSE OF THE AGREEMENT IT IS POINTED OU T THAT IT CLEARLY STATES THAT THE PARTIES WISH TO DEVELOP THE LAND JOINTLY AND THE RESPECTIVE OBLIGATIONS OF THE PARTIES HAVE ALSO BEEN PROVIDED FOR. SIMILARLY IT IS POINTED OUT THAT AS PER CLAUSE 5 OF THE AGREEMENT THE ASSESSEE HAD PERMITTED RO HAN BUILDERS TO ENTER UPON THE LAND AND COMMENCE THE DEVELOPMENT WORK ALONGWITH THE ASSESSEE JOINTLY. THEREFORE IT IS NOT A CASE OF PER SE TRANSFER OF LAND/DEVELOPMENT RIGHTS TO ROHAN BUILDERS AS A TRANSF EREE. IN SO FAR AS CLAUSE 5B IS CONCERNED THE SAME PROVIDES THAT THE ASSESSEE SHALL N OT BE ENTITLED TO REVOKE THE PERMISSION GRANTED TO ROHAN BUILDERS. IN THI S CONNECTION IT IS POINTED OUT THAT THE SAID CLAUSE MEANS THAT IF ROHAN BUILDERS VIOLATES THE AGREEMENT ASSESSEE COULD WITHDRAW THE PERMISSION GRANTED AND IT IS NOT A CASE OF TRANSFER OF RIGHTS IN THE LAND IN FAVOUR OF RO HAN BUILDERS. IN SUPPORT OF ITS PLEA REFERENCE HAS ALSO BEEN MADE TO CLAUSE 9 OF TH E AGREEMENT WHICH STATES THAT POSSESSION WILL BE PASSED IN FAVOUR OF THE ULTI MATE BUYERS OF THE FLATS AND WHAT IS ALLOWED AS A PERMISSION TO THE BUILDE RS IS TO BE ACCEPTED AS A LICENSE TO COMMENCE CONSTRUCTION. FURTHER-MORE IN TERMS OF CLAUSE 3 OF THE AGREEMENT THE VALUE OF THE LAND HAS BEEN DETERMINED AT RS 2 50 00 000/- AND APART THEREFROM THE ASSESSEE WAS ENTITLED TO A SHARE IN THE PROFITS FROM THE DEVELOPMENT OF THE LAND JOINTLY WITH ROHAN BUILDERS. IT IS ASSERTED BY THE ASSESSEE THAT IT IS NOT A CASE WHEREBY ACCEPTING THE CONSIDERA TION OF RS 2 50 00 000/- WHICH WAS SUBSEQUENTLY REVISED TO RS 4 90 00 000/- THE ASSESSEE HAS LOST ALL THE RIGHTS IN THE LAND IN FAVOUR OF ROHAN BUILDERS. ON THE CONTRARY THE RELATION BETWEEN THE ASSESSEES AND ROHAN B UILDERS IS THAT OF MEMBERS OF A JOINT VENTURE WHEREBY THE ASSESSEE BRINGS IN THE LAND AND ROHAN BUILDERS UNDERTAKES CONSTRUCTION OF FLATS AND THE P ROFITS THEREUPON ARE SHARED BY THE MEMBERS OF THE JOINT VENTURE. THEREFORE IN THIS CONNECTION IT IS CONTENDED THAT THE PROVISIONS OF SECTION 53A OF THE TRA NSFER OF PROPERTY ACT 1882 CANNOT BE APPLIED SO AS TO CONSTRUE THE AGREEMENT DATED 12.7.2005 AS A TRANSFER OF LAND FOR THE PURPOSES OF TAXING THE CAPIT AL GAINS IN THE INSTANT ASSESSMENT YEAR. 7. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BY POINTING OUT THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) CLEARLY BRINGS OUT THAT AFTER INSERTION OF CLAUSES (V) AND (VI) IN SECTION 2(47) OF THE ACT THE EXPRESSION TR ANSFER WILL INCLUDE ANY TRANSACTION WHICH ALLOWED POSSESSION TO BE TAKEN/RETAINED I N PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53 A OF THE TRANSFER OF PROPERTY ACT 1882 AND THEREFORE IN THIS CASE THE ASSESSEE GRANT ED POSSESSION WITH AN IRREVOCABLE PERMISSION FOR DEVELOPMENT OF THE LAND IN FAVOUR OF THE BUILDER I.E. ROHAN BUILDERS AND THEREFORE THE DATE OF DEVE LOPMENT AGREEMENT DATED 12.7.2005 IS LIABLE TO BE TREATED AS THE DATE OF TRAN SFER FOR THE PURPOSE OF ASCERTAINING THE YEAR OF TAXABILITY OF CAPITAL GAINS. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. CHA PTER IVE OF THE ACT PROVIDES FOR TAXABILITY OF CAPITAL GAINS. SECTION 45 (1) PROVIDES THAT ANY PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL BE CHARGEABLE TO TAX UNDER THE HEA D CAPITAL GAINS AND IT IS FURTHER EXPLAINED THAT SUCH PROFITS SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TAKES PLACE. IN SO FAR AS THE PRESENT CASE IS CONCERNED THE ONLY DISPUTE REVOLVES AROUND THE POINT O F TIME AT WHICH THE TRANSFER IS SAID TO HAVE TAKEN PLACE. THE CAPTIONED ASSE SSEES ARE CO-OWNERS OF A LAND WHICH HAS BEEN THE SUBJECT-MATTER OF A JOINT VENTURE AGREEMENT DATED 12.7.2005 BETWEEN THE ASSESSEE AND THE BUILDER M /S ROHAN BUILDERS & DEVELOPERS PVT. LTD. IN TERMS OF THE SAID JOINT VENTUR E AGREEMENT ASSESSEES AND THE BUILDER DECIDED TO UNDERTAKE A SCHEME TO DEVEL OP THE SAID LAND IN CO- OPERATION WITH EACH OTHER. THE ASSESSEES ON THEIR PART BR OUGHT IN THE LAND AND THE BUILDER CONSTRUCTED THE FLATS THEREON IN TERMS OF TH E PROVISIONS OF THE AGREEMENT DATED 12.7.2005. NOTABLY IN TERMS OF THE SA ID AGREEMENT THE CONSIDERATION FOR THE LAND WAS FIXED AT RS 2 50 00 000/ - WHICH HAD SINCE BEEN REVISED UPWARDS TO RS 4 90 00 000/- IN TERMS OF A SUBSEQU ENTLY EXECUTED CORRECTION DEED DATED 24.7.2007. THE MOOT QUESTION IS A S TO WHETHER IN TERMS OF CLAUSES (V) AND (VI) OF SECTION 2(47) OF THE ACT AN EVENT OF TRANSFER HAD TAKEN PLACE AS A RESULT OF THE EXECUTION OF THE AGREEMEN T IN THE INSTANT YEAR ON 12.7.2005. THAT THE SAID AGREEMENT INDEED ENVISAGES A TRANSFER IS NOT DISPUTED BY THE ASSESSEE ONLY POINT DISPUTED IS THE TIMI NG OF TRANSFER. THE POINT OF CONTENTION RAISED BY THE ASSESSEE IS THAT THERE IS NO TRANSFER IN TERMS OF GIVING POSSESSION OF LAND TO ROHAN BUILDERS IN THIS Y EAR INASMUCH AS SUCH POSSESSION IS INTENDED ONLY FOR FURTHER DEVELOPMENT WORK TO BE CARRIED OUT BY ROHAN BUILDERS JOINTLY WITH THE ASSESSEE AND NOT AS AN IN DEPENDENT TRANSFEREE. THE PROVISIONS OF CLAUSES (V) AND (VI) OF SECT ION 2(47) OF THE ACT WHICH PROVIDES THE MEANING OF THE EXPRESSION TRANSFER HAVE BEEN EXHAUSTIVELY EXPLAINED BY THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA). IT HAS BEEN EXP LAINED BY THE HONBLE HIGH COURT THAT IN SITUATIONS ATTRACTING CLAUSES (V) AND (VI) OF SECTION 2(47) OF THE ACT CAPITAL GAINS WILL BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTED OR COMPLETE UNDER THE GENERAL LAW. IT HAS BEEN EXPLAINED THAT IN TERMS OF THE AFORESAID CLAUSES OF SECTION 2(47) OF THE ACT ANY TRANSACT ION INVOLVING ALLOWING OF POSSESSION TO BE TAKEN OR RETAINED IN PART PERFORMAN CE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT WOULD COME WITHIN THE AMBIT OF THE EXPRESSION TRANSFER. IT HAS BEEN EXPLAINED THAT FOR THIS PURPOSE THERE SHOULD BE A CONTRACT FOR CONSIDERATION; I T SHOULD BE IN WRITING; IT SHOULD BE SIGNED BY THE TRANSFEROR; IT SHOULD PERTAIN TO TRANSFER OF AN IMMOVABLE PROPERTY; TRANSFEREE SHOULD HAVE TAKEN POSSESSI ON OF THE PROPERTY; LASTLY TRANSFEREE SHOULD BE READY AND WILLING TO PERF ORM THE PART OF CONTRACT. AS PER THE HONBLE HIGH COURT EVEN ARRANGEMENTS CONF IRMING PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE ALSO FALL UNDER SE CTION 2(47) OF THE ACT. IN THIS MANNER THE PLEA OF THE ASSESSEE BEFORE THE HONBL E HIGH COURT THAT NO TRANSFER TAKES PLACE TILL EXECUTION OF THE CONVEYANCE WAS REJECTED BY THE HONBLE HIGH COURT. THE HIGH COURT DEALT WITH A SITU ATION WHERE THE ASSESSEE WAS FOUND TO ENTER INTO CONTRACT FOR DEVELOPING PROPER TY WITH THE BUILDERS AND IN TERMS WITH THE ARRANGEMENT WITH THE BUILDERS IT CO NFERRED PRIVILEGES OF OWNERSHIP WITHOUT EXECUTING CONVEYANCE AND TO PLUG THAT LOOPHOLE AS PER THE HONBLE HIGH COURT CLAUSE (V) WAS INSERTED IN SECTION 2( 47) OF THE ACT WITH EFFECT FROM 1.4.1988. 9. CONSIDERED IN THE ABOVE BACKGROUND IN OUR VIEW TH E IMPUGNED AGREEMENT ENTERED ON 12.7.2005 WHICH CONTEMPLATES TAKIN G OVER OF POSSESSION OF THE PROPERTY BY ROHAN BUILDERS FOR DEVELOP MENT FULFILLS THE REQUIREMENTS OF SECTION 2(47)(V) AS UNDERSTOOD AND EXPLA INED BY THE HONBLE HIGH COURT AND THEREFORE TRANSFER IN TERMS OF SECT ION 2(47)(V) HAS TAKEN PLACE DURING THE YEAR UNDER CONSIDERATION. THE PLEA OF THE ASSESSEE THAT THERE IS NO TRANSFER IN FAVOUR OF ROHAN BUILDERS AS AN INDEP ENDENT TRANSFEREE IS NOT RELEVANT TO DETERMINE THE QUESTION AS TO WHETHER QUA THE ASSESSEES A TRANSFER AS ENVISAGED UNDER SECTION 2(47)(V) OF THE A CT HAS TAKEN PLACE OR NOT. EVEN IF FOR THE SAKE OF ARGUMENT IT IS ACCEPTED THA T ROHAN BUILDERS HAVE NOT TAKEN POSSESSION OF THE PROPERTY AS TRANSFEREE PER SE YET THERE IS A TRANSFER RESULTING ON ACCOUNT OF HANDING OVER POSSESSION QUA ASSESSEE AND SUCH POSSESSION IS TAKEN BY ROHAN BUILDERS AS PART OF THE JO INT VENTURE WHICH IS AGAIN DISTINCT FROM THE ASSESSEE. BE THAT AS IT MAY IN OUR VIEW THE CONTROVERSY ON THE TIMING OF THE TAXABILITY OF CAPITAL GAINS IN THIS CASE IS LIABLE TO BE HELD IN FAVOUR OF THE REVENUE INASMUCH AS CAPIT AL GAINS ON TRANSFER OF LAND ARE LIABLE TO BE TAXED IN THE INSTANT ASSESSMENT Y EAR ON THE STRENGTH OF THE AGREEMENT DATED 12.7.2005. 10. ANOTHER ASPECT DISPUTED BY THE ASSESSEE IS WITH REGARD TO THE ADOPTION OF FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMP UTATION OF CAPITAL GAIN. IN THIS CASE IN TERMS OF THE AGREEMENT DATED 12.7.2005 TH E CONSIDERATION WAS FIXED AT RS 2 50 00 000/- WHICH HAS SINCE BEEN UPWARDLY REVISED BY ANOTHER AGREEMENT STYLED AS CORRECTION DEED DATED 2.7.2007. IN TERMS OF THE DEED DATED 2.7.2007 THE CONSIDERATION WAS INCREASED TO RS 4 9 0 00 000/-. THE ASSESSING OFFICER AND THEREAFTER THE COMMISSIONER OF INCO ME-TAX (APPEALS) HAVE CONSIDERED THE ENHANCED CONSIDERATION OF RS 4 90 00 000/- FOR THE PURPOSE OF COMPUTING CAPITAL GAINS IN THE HANDS OF THE FOUR CO-OWNER ASSESSEES. THOUGH THE ASSESSEE DISPUTES THE AFORESAID POSITION WE FIND NO JUSTIFIABLE REASON TO DEVIATE FROM WHAT HAS BEEN ADJ UDICATED BY THE LOWER AUTHORITIES ON THIS ASPECT. THEREFORE ON THIS ASPECT ALSO THE ASSESSEE HAS TO FAIL. IN THIS MANNER IN SO FAR AS GROUND NOS. 1 & 2 ARE CONCERNED THE SAME ARE DISMISSED. 11. THE NEXT ISSUE RELATES TO GRANTING OF EXEMPTION U NDER SECTION 54EC OF THE ACT IN RESPECT OF THE INVESTMENT IN ELIGIBLE BONDS. AS PER THE ASSESSING OFFICER THE INVESTMENT IN ELIGIBLE BONDS WAS NOT MADE BY THE ASSESSEE WITHIN THE STIPULATED PERIOD OF 6 MONTHS FROM THE DATE OF TR ANSFER OF LAND. THE CONTENTION OF THE ASSESSEE WAS THAT THE INVESTMENT WAS MADE WITHIN 6 MONTHS FROM THE DATE OF RECEIPT OF SALE CONSIDERATION AND THE REFORE IT WAS ENTITLED TO EXEMPTION UNDER SECTION 54EC OF THE ACT. THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE WAS MAKING THE INVESTMENTS IN THE SPECIFIED BON DS ONLY AFTER RECEIVING THE PAYMENTS FROM TIME TO TIME DURING THE A SSESSMENT YEAR 2006-07 2007-08 AND 2008-09 ETC. AND THEREFORE HE DID NO T GRANT EXEMPTION UNDER SECTION 54EC CONSIDERING THE DATE OF TRANSFER OF THE LAND AS 12.7.2005. BEING AGGRIEVED ASSESSEE TOOK UP THE MATTER IN APPEAL TO THE COMMISSIONER OF INCOME-TAX (APPEALS). 12. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) A SSESSEE FILED DETAILED WRITTEN SUBMISSIONS CHALLENGING THE ORDER OF TH E ASSESSING OFFICER. THE COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE AFFIRMED THE DECISION OF THE ASSESSING OFFICE R BY HOLDING AS FOLLOWS: 5.3 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED THAT THE INVESTMENT IN TH E SPECIFIED BONDS FOR THE PURPOSE OF SECTION 54EC OF THE ACT WAS NOT MADE WITHIN THE STI PULATED PERIOD OF 6 MONTHS FROM THE DATE OF TRANSFER WHICH HAS BEEN HELD TO BE 12. 7.2005. ONLY AN AMOUNT OF RS 25 00 000/- WAS RECEIVED WITHIN THIS TIME LIMIT WHI CH HAS ALREADY BEEN CONSIDERED BY THE AO. THE FACT THAT THE AMOUNTS WERE RECEIVED SUB SEQUENTLY AND THE DEPOSITS WERE MADE IN THESE BONDS WITHIN A PERIOD OF 6 MONTHS FRO M THE DATE OF RECEIPTS WAS NOT RELEVANT AS IT IS NOT AS PER THE PROVISIONS OF THE ACT. EVEN THE CBDT CIRCULARS CITED BY THE APPELLANT WERE ON DIFFERENT ISSUES AND IN DIFFE RENT CONTEXT AND NOT WITH REFERENCE TO THE PROVISIONS OF SECTION 54EC OF THE ACT. CIRCU LAR NO 791 IS IN CONTEXT OF SECTION 45(2) R.W.S 2(47) OF THE ACT WHICH RELATES TO THE C ONVERSION OF CAPITAL ASSETS INTO STOCK IN TRADE WHEREAS THE CIRCULAR NO 359 IUS WITH REFE RENCE TO THE PROVISIONS OF SECTION 54E WHEN THE CONSIDERATION IS RECEIVED IN ADVANCE. ACCORDINGLY THE APPELLANTS CONTENTION IS NOT FOUND TO BE ACCEPTABLE ND THIS GR OUND OF APPEAL IS THEREFORE DISMISSED. AGGRIEVED BY SUCH DECISION ASSESSEE IS IN APPEAL BEFORE US IN TERMS OF THE AFORESTATED GROUND OF APPEAL NO. 3. 13. SECTION 54EC OF THE AC PRESCRIBES THAT CAPITAL GAIN A RISING ON TRANSFER OF A LONG TERM CAPITAL ASSET IS NOT CHARGEABLE TO TAX IN CASE THE WHOLE OR ANY PART OF THE CAPITAL GAINS IS INVESTED IN CERTAIN SPECIFIED BONDS. IN THIS CASE THE BONE OF CONTENTION IS THE CONDITION PRESCRIBED IN SECTION 54EC(1) THAT INVESTMENT IN THE SPECIFIED BONDS IS REQUIRED TO BE MAD E WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER. THERE IS NO DISPUTE THAT THE ASSESSEE HAS EARNED CAPITAL GAINS ON TRANSFER OF A LONG TERM C APITAL ASSET BEING THE LAND AND THEREFORE INVESTMENTS MADE IN SPECIFIED BONDS WOU LD BE ELIGIBLE FOR EXEMPTION UNDER SECTION 54EC. IN ORDER TO APPRECIATE T HE DISPUTE WE MAY REFER TO THE FOLLOWING TABULATION IN THE CASE OF MR MAHESH GANESHWADE WHICH IS AS PER PAGE 57 OF THE PAPER BOOK FILED BEFORE US:- S. NO. DATE OF PAY RECD NAME OF THE BANK CHE.NO AMOUNT PARTICULAR DATE OF INVESTMEN T AMT . INVESTED 1 12.07. 05 JANATA SAH. BK. 518553 2500000 NATIONAL BK FOR AGRICULTURAL AND RURAL DEVELOPMENT 05.01.06 2500000 2 31.05. 06 JANATA SAH. BK. 583873 2500000 NATIONAL HIGHWAY AUTHORITY OF INDIA 31.08.06 250000 3 12.02. 07 HDFC BANK LTD 368096 1250000 RURAL ELECTRIFICATION CORPORATION LTD. 03.08.07 1250000 4 14.05. 07 19.06. 07 03.07. 07 HDFC BANK LTD JANATA SAH. BK. HDFC BANK LTD 413183 672122 413300 1175000 1250000 1250000 } RURAL ELECTRIFICATION CORPORATION 27.10.07 3750000 5 17.09. 07 HDFC BANK LTD 45024 2325000 NIL 12250000 10000000 IN SO FAR AS THE INVESTMENT OF RS 25 LAKHS ON 5.1.2006 I S CONCERNED THE ASSESSING OFFICER GRANTED RELIEF UNDER SECTION 54EC OF TH E ACT AS IT WAS INVESTED WITHIN A PERIOD OF SIX MONTHS FROM THE DATE O F TRANSFER I.E. 12.7.2005. BEFORE US THE ASSESSEE HAS STAKED HIS CLAIM FOR RELIEF UND ER SECTION 54EC ON ACCOUNT OF INVESTMENTS OF RS 12 50 000/- AND RS 37 50 000 /- MADE ON 3.8.2007 AND 27.10.2007 RESPECTIVELY. THE REVENUE HAS DENIED THE CLAIM ON THE GROUND THAT SUCH AMOUNTS HAVE NOT BEEN INVESTED WI THIN A PERIOD OF 6 MONTHS FROM 12.7.2005 I.E. THE DATE OF TRANSFER OF THE LAND AND THEREFORE THE CONDITION PRESCRIBED UNDER SECTION 54EC HAS NOT BEEN FU LFILLED. 14. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE CONSIDERATION OF RS 2 50 00 000/- WAS FINALIZED IN THE AGREEMENT DATED 12.7.2005 WHICH HAS BEEN FURTHER REVISED TO RS 4 90 00 000/- IN THE SUBSEQUENT AGREEMENT DATED 2.7.2007. IT IS FURTHER PO INTED OUT THAT THE CONSIDERATION HAS BEEN RECEIVED BY THE ASSESSEE ON VARIOUS DATES FALLING BEYOND THE PERIOD OF 6 MONTHS FROM THE DATE OF TRANS FER I.E. 12.7.2005 AND THEREFORE IT WAS NOT POSSIBLE FOR THE ASSESSEE TO HAVE I NVESTED THE AMOUNTS IN THE SPECIFIED BONDS WITHIN A PERIOD OF 6 MONTHS FROM 1 2.7.2005. IT IS POINTED OUT THAT IN SO FAR AS THE PRESENT CLAIM OF THE ASSESSEE FO R A FURTHER RELIEF ON THE INVESTMENT OF RS 50 LAKHS IS CONCERNED IT IS EVIDENT THA T SUCH INVESTMENTS HAVE BEEN MADE WITHIN A PERIOD OF 6 MONTHS FROM THE DATE OF RECEIPT OF THE CONSIDERATION. THE LEARNED COUNSEL SUBMITTED THAT IF A TECHNICAL INTERPRETATION OF SECTION 54EC IS ADOPTED ASSESSEE WOULD UNJUSTLY BE DEN IED THE RELIEF. AS PER THE ASSESSEE THIS WOULD BE AGAINST THE PURPOSE AND SPIRIT OF THE SECTION AND IN THIS REGARD HE HAS REFERRED TO CBDT CIRCULAR NO 359 DATED 10.5.1983 WHICH IS ISSUED WITH RESPECT TO THE SCHEME OF EXEMPTION UND ER SECTION 54E OF THE ACT. SECTION 54E OF THE ACT PROVIDES FOR EXEMPTION OF LONG TERM CAPITAL GAINS IF THE NET CONSIDERATION WAS INVESTED BY THE ASSESSEE IN SPECIFIED BONDS WITHIN A PERIOD OF 6 MONTHS AFTER THE DATE OF SUCH TRA NSFER. ON BEING APPROACHED WITH THE SITUATION WHERE PART OF THE CONSID ERATION WAS INVESTED PRIOR TO THE DATE OF TRANSFER THE CBDT CIRCULAR EXP LAINED THAT HAVING REGARD TO THE PURPOSE AND SPIRIT OF THE SECTION EVEN IF THE ASSESS EE INVESTS PART OF THE CONSIDERATION IN THE SPECIFIED BONDS BEFORE THE DATE OF TRANSFER THE AMOUNT SO INVESTED WOULD QUALIFY FOR DEDUCTION UNDER SECTION 54E OF THE ACT. IN THIS MANNER IT IS SOUGHT TO BE POINTED OUT THAT IN THE P RESENT CASE ALSO THE PURPOSE AND SPIRIT OF SECTION 54EC HAS BEEN COMPLIED WIT H BY THE ASSESSEE INASMUCH AS THE ASSESSEE HAS INVESTED THE CONSIDERATION IN THE SPECIFIED ASSETS AS AND WHEN IT WAS RECEIVED AND IN SO FAR AS THE PER IOD OF 6 MONTHS FROM THE DATE OF TRANSFER IS CONCERNED THE SAME IS NOT RELEVANT BECAUSE AS ON THE DATE OF TRANSFER THE ENTIRE CONSIDERATION HAD NO T BEEN RECEIVED. FURTHER RELIANCE HAS ALSO BEEN PLACED ON THE CBDT CIRCULAR NO 79 1 DATED 2.6.2000 WHEREIN ALSO THE PURPOSE AND SPIRIT OF THE SECTIONS 54EA 54EB AND 54EC PREVAILED ON THE CBDT TO CLARIFY THAT RELIEFS UNDER T HE SAID SECTIONS ARE AVAILABLE EVEN IN CASES WHERE TECHNICALLY THE ASSESSEE HA D NOT INVESTED IN SPECIFIED BONDS WITHIN A PERIOD OF 6 MONTHS. IN THIS VI EW OF THE MATTER THE LEARNED COUNSEL HAS SUBMITTED THAT THE ASSESSEE BE GRANTE D RELIEF UNDER SECTION 54EC WITH RESPECT TO THE INVESTMENTS OF RS 12 50 0 00/- AND RS 37 50 000/- MADE IN SPECIFIED BONDS ON 3.8.2007 AND 2 7.10.2007 RESPECTIVELY. 15. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE APPEARING FOR THE REVENUE HAS POINTED OUT THAT THE AFORESAID RELIEF IS NOT ALLOWABLE INASMUCH AS THE PHRASEOLOGY OF SECTION 54EC MA KES IT MANDATORY THAT INVESTMENTS HAVE TO BE MADE IN SPECIFIED ASSET WITHI N A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER AND IN THIS CASE SUCH CONDITION HAS NOT BEEN FULFILLED WITH REGARD TO THE AMOUNTS OF RS 12 50 000/ - AND RS 37 50 000/- PAID ON 3.8.2007 AND 27.10.2007 RESPECTIVELY. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THIS CASE THE DISPUTE BEFORE US IS WITH RESPECT TO THE CLAIM OF EXEMPT ION OF LONG TERM CAPITAL GAIN ON SALE OF LAND WITH RESPECT TO INVESTMENTS OF RS 12 50 000/- AND RS 37 50 000/- MADE ON 3.8.2007 AND 27.10.2007 RESPECTIV ELY. SECTION 54EC PRESCRIBES THAT THE EXEMPTION SHALL BE AVAILABLE IF TH E INVESTMENT IN SPECIFIED BONDS IS MADE WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF TRANSFER OF THE CAPITAL ASSET WHICH IN THE PRESENT CASE IS 12.7.2005. TH E ASSESSEE HAS EXPLAINED THAT HE COULD NOT MAKE THE INVESTMENTS WITHI N SIX MONTHS FROM THE DATE OF TRANSFER I.E. 12.7.2005 BECAUSE THE AFORESTAT ED CONSIDERATION WAS RECEIVED ON SUBSEQUENT DATES NAMELY 12.12.2007 14.5. 2007 19.6.2007 AND 3.7.2007. A TECHNICAL INTERPRETATION OF SECTION 54EC I N THIS REGARD WOULD IMPLY THAT THE EXEMPTION FROM TAX ON CAPITAL GAINS IS NOT A VAILABLE QUA THE IMPUGNED INVESTMENT OF RS 50 LAKHS. SO HOWEVER THE PLEA SET-UP BY THE ASSESSEE IS ON ACCOUNT OF THE PURPOSE AND SPIRIT OF THE SECTION AND ON ACCOUNT OF THE FACT THAT THE RIGHT TO COLLECT SUCH SALE CONSIDERATION AROSE AFTER THE PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER. IT IS PLEADED THAT THE RE QUIREMENT OF SECTION 54EC STIPULATING INVESTMENT IN SIX MONTHS FROM THE DATE OF TRANSFER HAS TO BE APPROPRIATELY UNDERSTOOD AND APPLIED SO AS TO FURTHER THE PURPOSE AND SPIRIT OF THE SECTION. 17. IN A SOMEWHAT SIMILAR SITUATION THE REQUIREMENT OF SECTION 54EC TO THE EFFECT THAT INVESTMENT IN SPECIFIED ASSETS IS TO BE MADE W ITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER WAS PUT TO SOME CLARI FICATION BY THE CBDT IN CIRCULAR NO 791 (SUPRA). THE QUESTION AROSE BEFORE THE CBDT REGARDING EXEMPTION OF A LONG TERM CAPITAL ASSET WHICH HAD ARISEN ON CONVERSION OF A CAPITAL ASSET INTO STOCK-IN-TRADE. SUCH CAPITAL GAIN WOU LD ARISE IN THE YEAR OF CONVERSION SO HOWEVER IN TERMS OF SECTION 45(2) OF THE ACT ITS TAXABILITY IS POSTPONED TO THE YEAR IN WHICH SUCH STOCK-IN-TRADE IS ACTUA LLY SOLD OR OTHERWISE TRANSFERRED BY THE ASSESSEE. THE QUESTION AROSE AS TO WHE THER THE DATE OF TRANSFER AS REFERRED TO IN SECTION 54E OF THE ACT IS THE DATE OF CONVERSION OF CAPITAL ASSET INTO STOCK-IN-TRADE OR THE DATE ON WHICH T HE STOCK-IN-TRADE IS SOLD OR OTHERWISE TRANSFERRED BY THE ASSESSEE. AS PER THE PHRA SEOLOGY OF SECTIONS 54EA 54EB AND 54EC THE DATE OF TRANSFER IN SUCH CASES IS THE DATE ON WHICH THE CAPITAL ASSET IS CONVERTED BY THE ASSESSEE INTO STOCK-IN-T RADE AND NOT THE DATE ON WHICH SUCH STOCK-IN-TRADE IS SOLD OR OTHERWISE TRANS FERRED BY THE ASSESSEE. THUS AS PER THE AFORESAID UNDERSTANDING IT MAY NOT BE POSSIBLE FOR AN ASSESSEE TO MAKE THE REQUIRED INVESTMENT UNDER THE A FORESAID SECTIONS AT THE POINT OF CONVERSION OF CAPITAL INTO STOCK-IN-TRADE B ECAUSE RIGHT TO COLLECT SALE CONSIDERATION IN SUCH CASES ARISES ONLY AT THE POINT OF SALE OR TRANSFER OTHERWISE OF STOCK-IN-TRADE. THE CBDT IN CONSULTATION WI TH THE MINISTRY OF LAW DECIDED THAT THE PERIOD OF SIX MONTHS FOR MAKING INVESTM ENT IN SPECIFIED ASSETS FOR THE PURPOSE OF SECTIONS 54EA 54EB AND 54EC OF THE ACT SHOULD BE TAKEN FROM THE DATE SUCH STOCK-IN-TRADE IS SOLD OR OTHERWI SE TRANSFERRED IN TERMS OF SECTION 45(2) OF THE ACT THOUGH THE TAXABILIT Y OF CAPITAL GAIN WAS ON THE BASIS OF TRANSFER AS UNDERSTOOD IN SECTION 45(2) O F THE ACT. THEREFORE HAVING REGARD TO THE IMPOSSIBILITY OF PERFORMANCE TO INVEST THE AMOUNT IN SPECIFIED ASSETS WITHIN SIX MONTHS FROM THE DATE OF TRANSF ER (I.E. THE DATE OF CONVERSION OF CAPITAL ASSET INTO STOCK-IN-TRADE) THE CBDT A PPRECIATED AND HAS CLARIFIED THAT THE PERIOD OF SIX MONTHS FOR MAKING INVE STMENT IN SPECIFIED ASSETS HAS TO BE RECKONED FROM THE DATE OF THE SALE OF SUCH STOCK -IN-TRADE WHEN THE RIGHT TO COLLECT SALE CONSIDERATION IN SUCH CASES AROSE WHICH WAS MUCH AFTER THE DATE OF TRANSFER AS CONTEMPLATED FOR THE PURPOSE O F TAXATION. 18. IN OUR CONSIDERED OPINION THE INTERPRETATION PLA CED BY THE CBDT IN CONSULTATION WITH THE MINISTRY OF LAW TO THE CONDITION OF MAKING INVESTMENT WITHIN SIX MONTHS FROM THE DATE OF TRANSFER IN SECTION 54EC WOULD SUPPORT THE CLAIM OF THE ASSESSEE IN THIS CASE ALSO FOR EXEMPTION FROM CAPITAL GAIN WITH RESPECT TO THE IMPUGNED SUM OF RS 50 LAKHS INVESTED IN SPE CIFIED ASSETS ON 3.8.2007 AND 27.10.2007. IN THE PRESENT CASE ADMITTE DLY THE IMPUGNED AMOUNT OF SALE PROCEEDS HAVE BEEN RECEIVED BY THE ASSESSEE MUCH AFTER THE DATE OF TRANSFER I.E. 12.7.2005 SO HOWEVER IT IS AL SO EMERGING FROM THE RECORD THAT THE INVESTMENTS OF RS 12 50 000/- AND RS 37 50 000 /- MADE ON 3.8.2007 AND 27.10.2007 RESPECTIVELY HAVE BEEN MADE WITHIN SIX MONTHS OF RECEIPT OF SUCH CONSIDERATION. THEREFORE HAVING REGARD TO THE INT ERPRETATION PLACED BY THE CBDT TO UNDERSTAND THE REQUIREMENT OF MAKING INVE STMENT WITHIN SIX MONTHS FROM THE DATE OF TRANSFER IN SECTION 54EC OF TH E ACT WE ARE INCLINED TO UPHOLD THE PLEA OF THE ASSESSEE FOR EXEMPTION FROM TAX ON CAPITAL GAINS QUA IMPUGNED AMOUNT OF RS 50 LAKHS . THEREFORE ON THIS ASPE CT ASSESSEE HAS TO SUCCEED. THUS THIS GROUND OF APPEAL IS ALLOWED. 19. IN THE RESULT THE APPEAL OF THE ASSESSEE (ITA NO 59 4/PN/10) IS PARTLY ALLOWED. 20 SIMILARLY OTHER THREE APPEALS OF THE CO-OWNERS NAM ELY ITA NOS 595/PN/10 596/PN/10 & 597/PN/10 PERTAINING TO THE ASSESSMENT YEAR 2006- 07 WHICH ARE ON IDENTICAL DISPUTES ARE ALSO DISPOSED OFF IN THE AFORESAID LIGHT AND TREATED AS PARTLY ALLOWED. 21. THE REVENUE VIDE ITA NO 727/PN/10 IN THE CASE OF MAHESH N GANESHWADE AND ITA NO 728/PN/10 IN THE CASE OF DINESH N GANESHWADE HAS RAISED A GROUND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE UNDER SECTION 54B OF THE ACT. 22. THE RELEVANT FACTS ARE THAT THE ASSESSEE MAHESH N G ANESHWADE HAD CLAIMED EXEMPTION OF RS 10 50 000/- UNDER SECTION 54B OF THE ACT IN RESPECT OF PURCHASE OF AGRICULTURE LAND. ACCORDING TO T HE ASSESSING OFFICER KEEPING IN VIEW THE NATURE OF CONSTRUCTION BUSINESS AND FO RMATION OF JOINT VENTURE FOR THE SAID PURPOSE IT COULD NOT BE ACCEPTED THAT THE LAND WAS PURCHASED BY THE ASSESSEE FOR BEING USED FOR AGRICULTURE P URPOSES. ACCORDING TO HIM SINCE THE ASSESSEE WAS VENTURING INTO REAL ESTATE B USINESS THE LAND COULD NOT HAVE BEEN PURCHASED FOR AGRICULTURE PURPOSES AND THEREFORE HE DENIED THE CLAIM MADE BY THE ASSESSEE UNDER SECTION 54B O F THE ACT. 23. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (A PPEALS) ASSESSEE MADE DETAILED WRITTEN SUBMISSIONS ASSAILING THE ORDER OF THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE ASSESSING OFFICERS INFERENCE WAS WITHOUT ANY BASIS. ACCORDING TO H IM THE ASSESSEE HAD A BACKGROUND OF HAVING BEEN INVOLVED IN AGRICULTURAL A CTIVITIES AND MERELY BECAUSE BY WAY OF THE STATED JOINT VENTURE DEVELOPMENT AGREEMENT ASSESSEE AND THE THREE CO-OWNERS OF THE FAMILY ENTERED INTO A REAL ESTATE BUSINESS DID NOT DE BAR THEM TO PURCHASE LAND FOR BEING USED FOR AG RICULTURE PURPOSES. HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLA IM OF THE ASSESSEE UNDER SECTION 54B OF THE ACT SUBJECT TO FULFILLMENT OF OTHER CONDITIONS PRESCRIBED UNDER THE SECTION. THE FINDINGS OF THE COMMI SSIONER OF INCOME-TAX (APPEALS) IN THIS REGARD ARE AS FOLLOWS: 6.1. I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND MATERIAL AVAILABLE ON RECORD. AFTER CAREFUL PERUSAL OF THE SAME I AM OF THE CONSIDERED VIEW THAT THE AOS INFERENCE IS WITHOUT ANY BASIS. THE APPELLANT HAS G OT A BACKGROUND OF HAVING BEEN INVOLVED IN AGRICULTURAL ACTIVITIES. MERELY BECAUSE BY WAY OF THIS JOINT VENTURE DEVELOPMENT AGREEMENT THE APPELLANT AND THE THREE CO-OWNERS OF THE FAMILY HAVE ENTERED INTO A REAL ESTATE BUSINESS DOES NOT DEBAR THEM TO PURCHASE LAND FOR BRING USED FOR AGRICULTURE PURPOSES. THE AO CANNOT PREDIC T THAT THE LAND WILL NOT BE USED FO AGRICULTURE PURPOSES AND IN ITSELF THIS IS NOT PROV IDED IN THE SCHEME OF THE ACT. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD WHICH COULD HAVE SHOWN THAT AFTER PURCHASE THE LAND WAS NOT BEING USED FOR AGRICULTURE PURPOSE S. THEREFORE THE AOS CONCLUSION CANNOT BE SUSTAINED IN LAW. THE AO IS DIRECTED TO A LLOW THE CLAIM U/S 54B IN CASE THE OTHER CONDITIONS GIVEN IN THIS SECTION ARE SATISFIE D. THIS GROUND OF APPEAL IS THEREFORE TREATED TO BE ALLOWED. AGAINST THIS FINDING OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) REVENUE IS IN APPEAL BEFORE US. 24. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E HAS SUBMITTED THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD VENTUR ED INTO A REAL ESTATE BUSINESS AND THEREFORE THERE WAS NO POSSIBILITY O F THE ASSESSEE UNDERTAKING AGRICULTURE ON THE NEW LAND PURCHASED AND T HUS THE CLAIM UNDER SECTION 54B OF THE ACT HAS BEEN RIGHTLY DENIED. 25. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE R ESPONDENT-ASSESSEE HAS DEFENDED THE ACTION OF THE COMMISSIONER OF INCOME-TA X (APPEALS) BY POINTING OUT THAT THERE IS NO PRESUMPTION THAT A PERSO N UNDERTAKING REAL ESTATE BUSINESS WOULD NOT PUT ITS OTHER LANDS FOR AGRICULTURAL P URPOSES AND IN THIS CASE THE CLAIM HAS BEEN DENIED ON MERE PRESUMPTIONS. 26. HAVING CONSIDERED THE RIVAL SUBMISSIONS IN OUR VIEW THE COMMISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN A LLOWING THE CLAIM UNDER SECTION 54B OF THE ACT. THE REASONING ADOPTED BY THE ASSESSING OFFICER IS MISPLACED AND IT IS BASED ON MERE SURMISES. IN THIS CASE THE ASSESSEE PURCHASED LAND FOR USE FOR AGRICULTURAL PURPOSES AND CLA IMED EXEMPTION IN TERMS OF SECTION 54B OF THE ACT. THE CLAIM HAS BEEN DENI ED MERELY ON THE GROUND THAT THE ASSESSEE WOULD NOT PUT SUCH LAND FOR AG RICULTURAL PURPOSES AND SUCH PRESUMPTION HAS BEEN MADE BY THE ASSESSING OFFICE R FOR THE REASON THAT THE ASSESSEE HAS OTHERWISE ENTERED INTO A REAL ESTA TE BUSINESS. IN FACT WE FIND THAT THERE IS NO ASSERTION BY THE ASSESSING OFFIC ER THAT THE NEW LAND PURCHASED FOR AGRICULTURAL PURPOSES IS BEING ACTUALLY PU T TO USE FOR ANY OTHER PURPOSE. IT IS ONLY AN APPREHENSION ON THE PART OF TH E ASSESSING OFFICER THAT THE ASSESSEE MAY NOT USE IT FOR AGRICULTURAL PURPOSES. IN OUR CONSIDERED OPINION THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS CO RRECTLY DISAGREED WITH THE ASSESSING OFFICER AND HELD THAT IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SUPPORT HIS THEORY THE CLAIM OF DEDUCTION UNDER SECTION 54B OF THE ACT IS ALLOWABLE. AS A RESULT THEREOF WE AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A PPEALS) AS ABOVE AND THE REVENUE HAS TO FAIL. 27. IN THE RESULT THE APPEALS OF THE REVENUE (ITA N OS 727/PN/10 AND 728/PN/10) ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF MARCH 2012. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED 29 TH MARCH 2012 B COPY TO:- 1) ASSESSEES 2) ITO WD. 3(4) PUNE PUNE 3) THE CIT(A)-II PUNE 4) CIT-II PUNE 5) DR A BENCH I.T.A.T. PUNE. 6) GUARD FILE TRUE COPY BY ORDER SR. PS ITAT PUNE