Rohit Sawhney, New Delhi v. ACIT, New Delhi

ITA 724/DEL/2017 | 2013-2014
Pronouncement Date: 29-11-2019 | Result: Allowed

Appeal Details

RSA Number 72420114 RSA 2017
Assessee PAN AMNPS4870R
Bench Delhi
Appeal Number ITA 724/DEL/2017
Duration Of Justice 2 year(s) 9 month(s) 20 day(s)
Appellant Rohit Sawhney, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 29-11-2019
Assessment Year 2013-2014
Appeal Filed On 08-02-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI O.P. KANT ACCOUNTANT MEMBER ITA NO.724/DEL/2017 ASSESSMENT YEAR: 2013-14 SH. ROHIT SAWHNEY Z-48 OKHALA INDL. AREA PHASE-II NEW DELHI VS. ACIT CIRCLE-28(1) NEW DELHI PAN :AMNPS4870R (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST O RDER DATED 29.12.2016 PASSED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-10 NEW DELHI [IN SHORT LEARNED CIT(A) ] FOR ASSESSMENT YEAR 2013-14 RAISING FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN UP- HOLDING THE ORDER OF ASSESSING AUTHORITY WHEREIN SH E HAD MADE THE ADDITION OF RS.50 LAKHS BY RESTRICTING THE EXEMPTIO N U/S 54EC UP TO RS.50 LAKHS OUT OF TOTAL CLAIM IN RESPECT OF RS.1 C RORE ON INVESTMENT IN BONDS MADE WITHIN SIX MONTHS OF SALE OF PROPERTY IN TWO DIFFERENT FINANCIAL YEARS AMOUNTING TO RS.50 LAKHS IN EACH FI NANCIAL YEAR. APPELLANT BY MS. GARGI SETHEE ADV. SHRI ARTA TRANA PANDA ADV. RESPONDENT BY SHRI SURENDER PAL SR.DR DATE OF HEARING 11.09.2019 DATE OF PRONOUNCEMENT 29.11.2019 2 ITA NO.724/DEL/2017 2. THAT THE PETITIONER ASSESSEE CRAVES THE LEAVE TO THIS HONBLE COURT TO ADD DELETED AND MODIFY ANY OR ALL THE CLAUSES OF G ROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME ON 21.09.2013 DECLARING TOTAL INC OME OF RS.1 51 77 310/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED AND COMP LIED WITH. THE ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SOLD A PROPERTY AND WORKED OUT LONG TERM CAPITAL GAIN TO THE TUNE OF RS.1 93 16 30 9/-. AGAINST THE LONG TERM CAPITAL GAIN COMPUTED THE ASSESSEE C LAIMED DEDUCTION OF RS. 1 CRORES UNDER SECTION 54EC OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT). IN SUPPORT OF THE C LAIM THE ASSESSEE SUBMITTED THAT HE INVESTED IN REC BONDS FOR RS.50 L AKHS EACH IN THE MONTH OF JANUARY 2013 AND IN THE MONTH OF APRI L 2013. ACCORDING TO THE ASSESSING OFFICER IN TERMS OF PRO VISIONS OF SECTION 54EC OF THE ACT THE ASSESSEE WAS ENTITLED FOR THE INVESTMENT OF RS.50 LAKHS MADE IN THE FINANCIAL YEA R 2012-13 ONLY. ACCORDING TO THE ASSESSING OFFICER THE ASSE SSEE HAS ABUSED PROVISIONS OF THE LAW WHICH IN CLEAR TERMS LIMIT T HE INVESTMENTS UNDER SECTION 54EC UP TO RS. 50 LAKHS ONLY. THE ASS ESSING OFFICER HELD THAT REPLY OF THE ASSESSEE WAS NOT TEN ABLE AND THE INTENTION OF THE LEGISLATION WAS CLEAR THAT INVESTM ENT MADE ON OR AFTER THE 1 ST DAY OF APRIL 2017 IN THE LONG TERM SPECIFIED ASSE TS BY AN ASSESSEE DURING THE FINANCIAL YEAR DOES NOT EXCE ED RS. 50 LAKHS. IT WAS FURTHER OBSERVED BY THE ASSESSING OF FICER THAT THE CONTENTION OF THE ASSESSEE CANNOT BE HELD TO BE ACC EPTABLE SINCE THE PROVISIONS DOES NOT PROVIDE TWO DIFFERENT TREAT MENTS TO TWO 3 ITA NO.724/DEL/2017 DIFFERENT ASSESSEES AND ONE WHO SELLS THE PROPERTY BETWEEN APRIL TO SEPTEMBER OF THE FINANCIAL YEAR AND CLAIMS EXEMP TION U/S 54EC IS PUT AT A DISADVANTAGE SINCE THE EXEMPTION AVAILABLE TO HIM WOULD BE ONLY RS.50 00 000/- AND SECONDLY THE ASSESSEE WHO SELLS THE PROPERTY BETWEEN OCTOBER AND MARCH AN D CLAIMS EXEMPTION U/S 54EC THE INVESTMENT CAN BE MADE OF R S.50 LAKHS IN THE CURRENT FINANCIAL YEAR AND RS. 50 LAKHS IN T HE SUBSEQUENT FINANCIAL YEAR. WITH THE ABOVE DISCUSSION THE ASSE SSING OFFICER HELD THAT THE GRANT OF EXEMPTION UNDER SECTION 54EC TO THE EXTENT OF RS. 1 CRORE WILL VITIATE THE ORIGINAL INT ENTION OF THE LEGISLATURE LEADING TO DISCRIMINATION AMONGST TAX P AYERS ON THE SAME ISSUE. THE ASSESSING OFFICER ALSO RELIED ON TH E PROVISO TO SUB-SECTION (1) OF SECTION 54EC AND OBSERVED THAT I NTENTION OF THE LEGISLATURE IN INSERTING THE SAID PROVISO TO RESTRI CT THE EXEMPTION TO RS.50 LAKHS IN THE FINANCIAL YEAR SO THAT THE BE NEFIT CAN BE GIVEN TO MANY SMALL INVESTORS. THE ASSESSING OFFICE R ALSO RELIED ON THE VARIOUS JUDICIAL PRONOUNCEMENTS ON ISSUE OF I NTERPRETATION OF STATUTE. FURTHER RELYING ON THE DECISION OF THE TRIBUNAL JAIPUR BENCH IN THE CASE OF ACIT VS. SHRI RAJ KUMAR JAIN & SONS (HUF) HE RESTRICTED THE DEDUCTION TO THE AMOUNT OF RS.50 LAKHS ONLY. ON FURTHER APPEAL THE LEARNED CIT(A) ALSO UP HELD THE FINDING OF THE ASSESSING OFFICER OBSERVING AS UNDER : 4.1 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMIS SIONS OF LD. AR AND ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R THE ONLY ISSUE INVOLVED IS ALLOWANCE OF CLAIM OF EXEMPTION U /S. 54EC WHICH HAS BEEN RESTRICTED BY THE ASSESSING OFFICER TO THE EXTENT OF RS.50 LACS AS PER PROVISO TO ABOVE SECTION WHICH PROVIDE S THAT THE INVESTMENT MADE ON OR AFTER THE FIRST DAY OF APRIL 2007 IN THE LONG TERM SPECIFIED ASSETS BY AN ASSESSEE DURING ANY FIN ANCIAL YEAR DOES NOT EXCEED RS.50 LACS ON THE OTHER HAND APPELLANT IS CLAIMING 4 ITA NO.724/DEL/2017 DEDUCTION U/S 54EC TO THE EXTENT OF RS 1 CRORE REL YING ON THE JUDICIAL PRONOUNCEMENT OF THE HON'BLE MADRAS HIGH C CJH IN THE CASE OF CIT CHENNAI (2015) 53 TAXMANN.COM 466 (MAD.) VS . C. JAI CANDER AND RELIANCE HAS ALSO BEEN PLACED ON THE DEC ISION OF PUNE BENCH OF TAT IN THE CASE ITO WARD - 2(4) NASIK VS . BALA R VENKITACHALAM AND CLAIMED THAT SINCE INVESTMENT OF RS.50 LACS EACH HAS BEEN MADE IN TWO DIFFERENT FINANCIAL .EARS THE QUANTUM OF ELIGIBLE EXEMPTION IS RS.1 CRORE. 4.1.1 IN THE ABOVE FACTUAL MATRIX OF THE CASE IT IS PERTINENT TO REPRODUCE THE PROVISIONS OF SECTION 54EC AND PROVIS O APPENDED TO THE ABOVE SECTION: (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFE R OF A LONG- TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRE D BEING HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGIN AL ASSET) AND THE ASSESSEE HAS AT ANY TIME WITHIN A PERIOD OF SI X MONTHS AFTER THE DATE OF SUCH TRANSFER INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWIN G PROVISIONS OF THIS SECTION THAT IS TO SAY - (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UND ER SECTION 4A: (B) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGI NAL ASSET SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF T HE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE LONG- TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPI TAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45: PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1 ST DAY OF APRIL 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAK H RUPEES: [PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN AS SESSEE IN THE LONG TERM SPECIFIED ASSET FROM CAPITAL GAINS A RISING FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERR ED AND IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAK H RUPEES.] 4.1.2 FROM THE PROVISO TO SECTION 54EC(1) IT IS EV IDENT THAT FOR CLAIMING EXEMPTION UNDER THIS SECTION THE INVESTME NT MADE IN ANY FINANCIAL YEAR CANNOT EXCEED RS.50 LACS. THE ASSESS MENT ORDER ON THE ISSUE PASSED BY THE AO IS CRYSTAL CLEAR WHEREIN IT HAS CLEARLY 5 ITA NO.724/DEL/2017 BEEN ESTABLISHED THAT THE PROVISIONS OF THE ACT CAN NOT BE INTERPRETED TO SUIT ONES OWN PURPOSE AND IT IS WELL SETTLED PR INCIPLE OF INTERPRETATION THAT EXPRESSION USED IN A STATUE SHO ULD BE CONSTRUED ACCORDING TO THE PLAIN NATURAL MEANING OF ITS LANGU AGE UNLESS IT IS OTHERWISE DEFINED IN THE STATUTE. CONSIDERING THE F ACTS OF THE CASE IT IS EVIDENT THAT BY INTERPRETING THE PROVISIONS OF A BOVE SECTION IN A DIFFERENT WAY SUITABLE TO APPELLANTS PURPOSE APPE LLANT CLAIMED THE DEDUCTION BY SPREADING OVER THE INVESTMENT IN THE R EC BONDS IN TWO DIFFERENT FINANCIAL YEARS AND EXEMPTIONS UNDER THIS SECTION HAVE BEEN CLAIMED AT RS.1 CRORE ON THE GROUND THAT TWO F INANCIAL YEARS ARE INVOLVED FOR THE PURPOSE OF INVESTMENT. HOWEVER THE FACT CANNOT BE DENIED THAT IN THE PRESENT CASE APPELLANT ACCRU ED LONG TERM CAPITAL GAIN OF RS.1 93 16 309/- OUT OF WHICH RS.1 CRORE HAS BEEN CLAIMED EXEMPT U/S 54EC OF THE ACT. THE CAPITAL GAI N HAS BEEN ACCRUED TO THE APPELLANT ON SALE OF PROPERTY NAMED M/S JMD REGENT SQUARE SITUATED IN VILLAGE SARHAUL ON MEHRAULI-GURG AON ROAD DIST. GURGAON HARYANA FOR AN AMOUNT OF RS.4 10 00 000/- ON 10.01.2013. FROM THIS FACT IT IS CLEAR THAT THE DA TE OF TRANSFER OF ORIGINAL ASSET IS 10.01.2013 AND AS PER PROVISIONS OF SECTION 54EC ASSESSEE WAS ELIGIBLE TO INVEST THE CAPITAL GAIN AR ISES ON THE ABOVE LONG TERM CAPITAL ASSET WITHIN A PERIOD OF SIX MONT HS AFTER THE DATE OF SUCH TRANSFER. BUT MISINTERPRETING THE ABOVE PROVIS IONS OF THE ACT ASSESSEE CLAIMED DEDUCTION BY SPREADING THE CLAIM I N TWO PERIODS I.E. IN THE MONTH OF JANUARY 2013 AND IN THE MONTH OF APRIL 2013. 4 1.3 AS PER PLAIN READING OF PROVISIONS OF SECTION 54EC IT IS EVIDENT THAT CAPITAL GAIN SHALL BE EXEMPT U/S 54EC ONLY TO THE EXTENT IT IS INVESTED IN THE LONG TERM SPECIFIED ASSET WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF SUCH TRANSFER. AS PER THE A BOVE PROVISIONS OF THE ACT APPELLANT CANNOT BE ALLOWED THE BENEFIT OF EXEMPTION UNDER THIS SECTION IN RESPECT OF INVESTMENT MADE OF RS.50 LAKH EACH ON THE GROUND THAT SUCH INVESTMENT FALLS IN TWO DIFFERENT FINANCIAL YEARS. SIMPLE READING OF PROVISIONS OF ABOVE SECTION MAKES IT CLEAR THAT THERE IS NO PROVISION FOR MAKING INVESTMENT IN TWO DIFFERENT FINANCIAL YEARS. FROM THE PROVISIONS OF ABOVE SECTION IT CAN EASILY BE HELD THAT THE TOTAL LIMIT OF INVESTMENT U/S 54EC FOR EXE MPTION OF CAPITAL GAIN IN RESPECT OF TRANSFER OF CAPITAL ASSET CANNOT EXCEED RS.50 LAKH. 4.1.4 I AM ALSO INCLINED TO AGREE WITH THE OBSERVAT ION OF THE AO THAT- LAW CANNOT DIFFERENTLY TREAT TWO PERSONS FOR THE SA ME CAUSE. IT IS A FACT THAT IF THE APPELLANTS CLAIM IS ACCEPTED TO T REAT THE INVESTMENT IN TWO DIFFERENT FINANCIAL YEARS FOR THE PURPOSE OF ALLOWANCE OF EXEMPTION U/S 54EC IT WILL VITIATE THE ORIGINAL IN TENT OF LEGISLATURE PROVISIONS OF SECTION 54EC CANNOT BE INTERPRETED IN SUCH A MANNER BY SPREADING THE CLAIM OF CAPITAL GAIN IN TWO DIFFE RENT FINANCIAL YEARS AS THIS INTERPRETATION WILL PUT AN ASSESSEE AT DISA DVANTAGE WHO SELLS HIS PROPERTY BETWEEN APRIL TO SEPTEMBER TO WHOM DED UCTION U/S 54EC IS AVAILABLE AT RS.50 00 000/- AND AN ASSESSEE WHO SELLS HIS 6 ITA NO.724/DEL/2017 PROPERTY BETWEEN OCTOBER TO MARCH CAN CLAIM EXEMPTI ON OF RS.50 LAKH EACH IN THE CURRENT FINANCIAL YEAR AND IN THE SUBSEQUENT FINANCIAL YEAR. 4.1.5 FURTHER I AM ALSO IN AGREEMENT WITH THE OBSE RVATION OF THE AO THAT AS PER EXPLANATORY NOTES ON THE PROVISIONS OF THE FINANCE ACT 2007 GOVERNMENT HAD DECIDED TO IMPOSE A CEILING ON THE QUANTUM OF INVESTMENT THAT COULD BE MADE IN SUCH BONDS TO E NSURE EQUITABLE DISTRIBUTION OF BENEFITS AMONGST PROSPECTIVE INVEST ORS. HENCE AO HAS RIGHTLY HELD THAT THE PROVISION OF LIMITING THE EXEMPTION U/S 54EC BY THE FINANCE ACT 2007 IS INCONSONANCE WITH T HE INTENTION OF THE LAW. 4.1.6 APART FROM THE ABOVE THE INTENTION OF THE LA W IN RESTRICTING THE CLAIM OF EXEMPTION U/S 54EC TO THE EXTENT OF RS .50 LAKH ALSO ESTABLISHED FROM THE FACT THAT SECOND PROVISO HAS B EEN APPENDED TO ABOVE SECTION W.E.F. 01.04.2015 WHEREIN IT IS PROVI DED AS UNDER: PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN A SSESSEE IN THE LONG TERM SPECIFIED ASSET FROM CAPITAL GAINS A RISING FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERR ED AND IN THE SUBSEQUENT FINANCIAL YEAR DOES NOT EXCEED FIFTY LAK H RUPEES. 4 1.7 HENCE IT IS CLEARLY ESTABLISHED THAT IT WAS NEVER THE INTENTION OF THE LAW TO ALLOW EXEMPTION U/S 54EC IN EXCESS OF RS.50 LAKH. THEREFORE .! AM OF THE CONSIDERED VIEW THAT AO RELY ING ON THE DECISION IN THE CASE ACIT CIRCLE- 2 AJMER VS. SH. RAJKUMAR JAIN & SONS(HUF) (2012) 19TAXMANN.COM 27 HAS RIGHTLY HELD THAT AS PER SECTION 54EC INVESTMENT WITHIN SIX MONTHS IS INVEST MENT FOR THAT PARTICULAR FINANCIAL YEAR IN WHICH TRANSFER HAS TAK EN PLACE AND SAID PERIOD OF SIX MONTHS WOULD NOT INCLUDE SOME PART OF SUBSEQUENT FINANCIAL YEAR. 4 1.8 THUS KEEPING IN VIEW THE FACTS AND CIRCUMSTA NCES OF THE CASE AS NARRATED BY THE AO DULY SUPPORTED WITH VARIOUS J UDICIAL PRONOUNCEMENTS OF THE HONBLE APEX COURT ON THE INT ERPRETATION OF LAW I AM OF THE CONSIDERED VIEW THAT ASSESSEE IS E LIGIBLE FOR CLAIM OF EXEMPTION AS PER PROVISIONS OF SECTION 54EC(1) ONLY TO THE EXTENT OF RS.50 LAKH AND INVESTMENT OF RS.50 LAKH CLAIMED IN SUBSEQUENT FINANCIAL YEAR DOES NOT QUALIFY FOR THE ABOVE EXEMP TION. HENCE THE ADDITION OF RS.50 LAKH MADE BY THE AO IS UPHELD AND GROUND OF APPEAL TAKEN BY THE APPELLANT IS DISMISSED. 3. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE FI LED A PAPER- BOOK CONTAINING PAGES 1 TO 93 AND SUBMITTED THAT ID ENTICAL 7 ITA NO.724/DEL/2017 ISSUED OF INVESTMENT IN SPECIFIED BONDS OF RS.50 LA KHS IN THE MONTH OF MARCH OF THE FINANCIAL YEAR AND RS. 50 LA KHS IN THE MONTH OF APRIL OF THE NEXT FINANCIAL YEAR HAS BEEN ALLOWED AS DEDUCTION IN FOLLOWING CASES BY THE TRIBUNAL: 1. ACIT VS. AKSHAY SOBTI (2019) 106 TAXMANN.COM 60 (DEL-TRIB.) 2. TULIKA DEVI DAYAL VS. JCIT (2018) 89 TAXMANN.COM 442 (MUM. TRIB) 3. ACIT VS. SHRI AJAY KAILA (ITA NO. 6907/DEL/2015 DATED SEPTEMBER 2017) 4. ON THE OTHER HAND THE LEARNED DR RLIED ON THE ORDE R OF THE LOWER AUTHORITIES. 5. IN THE INSTANT CASE THE ISSUE IS WHETHER THE ASSE SSEE IS ENTITLED FOR DEDUCTION OF RS. 1 CRORE AS INVESTED B Y THE ASSESSEE IN THE MONTH OF JANUARY 2013 AND RS. 50 LAKHS IN THE MONTH OF APRIL 2013 AS AGAINST THE DEDUCTION OF RS.50 LAKHS RESTRICTED BY THE ASSESSING OFFICER. FOR READY REFERENCE THE REL EVANT PROVISIONS OF SECTION 54EC OF THE ACT IS REPRODUCED AS UNDER: CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN C ERTAIN BONDS. 54EC. (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET 61 [ BEING LAND OR BUILDING OR BOTH ] (THE CAPITAL AS SET SO TRANSFERRED BEING HEREAFTER IN THIS SECTION REFERRE D TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS AT ANY TIME WITHIN A PERIOD O F SIX MONTHS AFTER THE DATE OF SUCH TRANSFER INVESTED THE WHOLE OR ANY PA RT OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET THE CAPITAL GAIN SHA LL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION THAT IS TO SAY (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET I S NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSE T THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; (B) IF THE COST OF THE LONG-TERM SPECIFIED ASSET I S LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSE T SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL G AIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE LONG-T ERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN SHALL NOT B E CHARGED UNDER SECTION 45 : 8 ITA NO.724/DEL/2017 PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1ST DAY O F APRIL 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSEE DUR ING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES : PROVIDED FURTHER THAT THE INVESTMENT MADE BY AN ASSESSEE IN THE LON G- TERM SPECIFIED ASSET FROM CAPITAL GAINS ARISING FR OM TRANSFER OF ONE OR MORE ORIGINAL ASSETS DURING THE FINANCIAL YEAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AND IN THE SUBSEQUENT FIN ANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. 6. THUS IN TERMS OF SECTION 54EC INVESTMENT MADE IN SPECIFIED ASSETS AT ANY TIME WITHIN SIX MONTHS FROM THE TRANSFER OF THE ORIGINAL ASSET IS ENTITLED FOR DEDUCTION BUT THE PROVISO TO THE SECTION HAS RESTRICTED THE INVESTMENT DURING AN Y FINANCIAL YEAR UP TO RS. 50 LAKHS ONLY. IDENTICAL ISSUE IN DI SPUTE HAS BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF ACIT VS. AKS HAY SOBTI (SUPRA). THE RELEVANT PORTION IS REPRODUCED AS UNDE R: 6.1 AS REGARDS GROUND NO. 2 WHICH RELATES TO DISAL LOWANCE OF DEDUCTION U/S.54EC TO THE EXTENT OF RS.50 00 000/- IS CONCERNED WE FIND THAT THE AO HAD RESTRICTED THE DEDUCTION CL AIMED U/S.54EC TO RS. 50 00 000/- AS AGAINST THE DEDUCTION CLAIMED BY THE APPELLANT AMOUNTING TO RS. 1 00 00 000/- FOLLOWING THE DECISION OF THE HONORABLE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH IN THE CASE OF SHRI RAJ KUMAR JAIN & SONS IIUF {SUPRA). HO WEVER THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS S TRANGELY AND OBLIQUELY STOPPED SHORT OF MAKING OBSERVATION/MENTI ON OF THE VERY RECENT JUDGMENT OF HONORABLE HIGH COURT OF MADRAS D ATED DECEMBER 16 2014 IN CASE OF CIT V. COROMANDAL INDU STRIES LTD. [2015] 56 TAXMANN.COM 209/230 TAXMAN 548/370 ITR 58 6 (MAG.) PLACED BEFORE HIM FOR THE REASON BEST KNOWN TO HIM ONLY. THIS IS TO BE UNDERSTOOD THAT THE RESTRICTION OF RS. 50 00 000 /- IN A FINANCIAL YEAR WAS PLACED FOR EVENLY DISTRIBUTING THE INVEST INTO THE CAPITAL GAINS BONDS ON CONTINUED BASIS THROUGHOUT THE YEAR. THEREFORE THE ALTERNATIVE WAS PUT INTO OPERATION WERE IN THE CAPI TAL GAIN BONDS ARE AVAILABLE ON TAP THROUGHOUT THE YEAR WITHOUT STOPPI NG BUT THE LIMIT OF INVESTMENT HAS BEEN CAPPED TO RS. 50 00 000/- PER A SSESSEE PER FINANCIAL YEAR. THIS HAS RESULTED IN EVEN DISTRIBUT ION OF BENEFIT TO PUBLIC AT LARGE. HAD THE INTENTION OF THE LEGISLATI ON WAS CAP THE TOTAL INVESTMENT TO RS. 50 00 000/- THE AMENDMENT IN STA TUTE WOULD HAVE PRESCRIBED THE LIMIT ON DEDUCTION ALLOWED UNDE R THE SECTION 54EC AND NOT ON INVESTMENT ALLOWED UNDER SECTION 54 EC. THEREFORE 9 ITA NO.724/DEL/2017 THE INTERPRETATION OF ITAT JAIPUR BENCH IN SHRI RA J KUMAR JAIN & SONS IIUF {SUPRA) IS MISPLACED IN TOTAL DISREGARD TO JUAGMENT OF THE HIGHER AUTHORITY (I.E. HONORABLE MADRAS HIGH COURT) WHICH HAS ELABORATELY DISCUSSED THE ISSUE INVOLVED AMBIGUITY OF LAW AND THE PROVISIONS OF LATEST AMENDMENTS MADE TO SECTION 54E C BY THE FINANCE ACT 2014 INCLUDING THE NOTES ON CLAUSES - F INANCE BILL 2014 AND MEMORANDUM : EXPLAINING THE PROVISIONS IN THE F INANCE (NO. 2) BILL 2014; PLACING RESTRICTION ON 'LENT TO RS. 50 LAKHS WITH EFFECT FROM 01.04.2015 BY INSERTING A SECOND PROVISO ASSESSING OFFICER HAS TOTALLY IGNORED HIS REPLY IN AS MUCH AS RELIANCE PL ACED ON THE JUDGMENT OF THE HONORABLE MADRAS HIGH COURT. THE HO NORABLE HIGH OF MADRAS HAS HELD AS UNDER:- 'THE LEGISLATURE HAS CHOSEN TO REMOVE THE AMBIGUITY IN THE PROVISO TO SECTION 54EC(1) OF ACT BY INSERTING A SE COND PROVISO WITH EFFECT FROM 1.4.2015. THE MEMORANDUM EXPLAININ G THE PROVISIONS IN THE FINANCE (NO.2) BILL 2014 ALSO ST ATES THAT THE SAME WILL APPLICABLE FROM 1.4.2015 IN RELATION TO A SSESSMENT YEAR 2015-16 AND THE SUBSEQUENT YEARS. THE INTENTIO N OF THE LEGISLATURE PROBABLY APPEARS TO BE THAT THIS AMENDM ENT SHOULD BE FOR THE ASSESSMENT YEAR 2015-2016 TO AVOID UNWAN TED LITIGATIONS OF THE PREVIOUS YEARS. EVEN OTHERWISE WE DO NOT WISH TO READ ANYTHING MORE INTO THE FIRST PROVISO T O SECTION 54EC (1) OF THE ACT AS IT STOOD IN RELATION TO THE ASSESSEES. THE HONORABLE HIGH COURT HAS FURTHER OBSERVED AND U NDERLINED AS UNDER; 'IN ANY EVENT FROM A READING OF SECTION 54EC(1) AN D THE FIRST PROVISO IT IS CLEAR THAT THE TIME LIMIT FOR INVEST MENT IS SIX MONTHS FROM THE DATE OF TRANSFER AND EVEN IF SUCH I NVESTMENT FALLS UNDER TWO FINANCIAL YEARS THE BENEFIT CLAIME D BY THE APPELLANT CANNOT BE DENIED. IT WOULD HAVE MADE A DI FFERENCE IF THE RESTRICTION ON THE INVESTMENT IN BONDS TO RS.50 00 000/- IS INCORPORATED IN SECTION 54EC(1) OF THE ACT ITSELF. HOWEVER THE AMBIGUITY HAS BEEN REMOVED BY THE LEGISLATURE WITH EFFECT FROM 1.4.2015 IN RELATION TO THE ASSESSMENT YEAR 2015-16 AND THE SUBSEQUENT YEARS. FOR THE FOREGOING REASONS WE FIND NO INFIRMITY IN THE ORDERS PASSED BY THE TRIBUNAL WARRANTING INTERFERENCE BY THIS COU RT. THE SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED AGAINST T HE REVENUE AND THESE APPEALS ARE DISMISSED. 7. SIMILARLY IN THE CASE OF TULIKA DEVI DAYAL (SUPRA ) AND SHRI AJAY KAILA (SUPRA) THE TRIBUNAL HAS ALLOWED THE DED UCTION UP TO 10 ITA NO.724/DEL/2017 RS. 50 LAKHS IN TWO FINANCIAL YEARS. RESPECTIVELY F OLLOWING THE FINDING OF THE TRIBUNAL WE SET ASIDE THE FINDING O F THE LEARNED CIT(A) ON THE ISSUE IN DISPUTE AND DIRECT THE ASSES SING OFFICER TO ALLOW THE DEDUCTION UNDER SECTION 54EC OF THE ACT F OR RS. 1 CRORES AS CLAIMED BY THE ASSESSEE. THE GROUNDS OF A PPEAL OF THE ASSESSEE ARE ACCORDING ALLOWED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER 2019. SD/- SD/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29 TH NOVEMBER 2019. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR ITAT NEW DELHI