OM ELECTRONICS, MUMBAI v. DCIT 16(3), MUMBAI

ITA 7680/MUM/2011 | 2008-2009
Pronouncement Date: 31-07-2013 | Result: Allowed

Appeal Details

RSA Number 768019914 RSA 2011
Assessee PAN AAAFO0163A
Bench Mumbai
Appeal Number ITA 7680/MUM/2011
Duration Of Justice 1 year(s) 8 month(s) 16 day(s)
Appellant OM ELECTRONICS, MUMBAI
Respondent DCIT 16(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 31-07-2013
Date Of Final Hearing 22-01-2013
Next Hearing Date 22-01-2013
Assessment Year 2008-2009
Appeal Filed On 14-11-2011
Judgment Text
OM ELECTRONICS PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDICIAL MEMBER ITA NO. 7680/MUM/2011 ASSESSMENT YEAR 2008-09 DATE OF HEARING: 25/7/2013 DATE OF PRONOUNCEMENT: 31/7/2013 O R D E R PER RAJENDRA SINGH AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12-9- 2011 OF CIT (A) FOR THE ASSESSMENT YEAR 2008-09. TH E ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING DISALLOWANCE O F CLAIM OF DEDUCTION U/S 54EC OF THE INCOME TAX ACT. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE DURING THE YEAR HAD SURRENDERED THE TENANCY RIGHT IN LIEU OF WHICH THE ASSESSEE HAD RECEIVED A SUM OF RS. 1.50 OM ELECTRONICS C/O BHARTI P. SAHJWANI 33. HANUMAN SHARAR BOMANJI PETIT ROAD MUMBAI 400 036. PAN:- AAAFO0163A THE DCIT 16(3) MUMBAI. APPELLANT RESPONDENT DEPARTMENT BY. SHRI ABHIJIT PATANKAR ASSESSEE BY: SHRI HARI S. RAHEJA OM ELECTRONICS PAGE 2 OF 4 CRORE WHICH WAS TAXABLE AS CAPITAL GAIN. HOWEVER SE CTION 54EC PROVIDED EXEMPTION IN RESPECT OF CAPITAL GAIN IF THE CAPITAL GAIN WAS INVESTED IN RURAL ELECTRIFICATION CORPORATION BOND OR NATIONAL HIGHWA Y AUTHORITY BOND. THE CAPITAL GAIN HAD ARISEN ON 29.10.2010 ON WHICH DATE THE ASSESSEE HAD SURRENDERED THE TENANCY RIGHTS. THE ASSESSEE HAD IN VESTED IN REC BOND ON 31.3.2008 FOR RS. 50 LAKH AND THE BALANCE AMOUNT OF RS. 50 LAKH HAD BEEN INVESTED IN NHA BONDS ON 30 TH JUNE 2008. THE AO NOTED THAT IN VIEW OF THE PROVISO TO SECTION 54EC THE ASSESSEE COULD MAKE INV ESTMENT OF ONLY RS. 50 LAKH IN THE BONDS ON OR AFTER 1.4.2007. AO THEREFO RE ALLOWED DEDUCTION ONLY TO THE EXTENT OF RS. 50 LAKH. ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED BEFORE CIT(A) THAT UNDER THE PROVISO TO S ECTION 54EC THE LIMIT OF RS. 50 LAKH WAS PROVIDED PER YEAR WHICH HAD NOT BEEN VI OLATED IN THIS CASE AS THE INVESTMENT IN NHA BOND HAD BEEN MADE BY THE ASSESSE E IN THE NEXT FINANCIAL YEAR. CIT(A) HOWEVER NOTED THAT THE INVESTMENT IN N HA BOND HAD BEEN MADE BEYOND THE PERIOD OF SIX MONTHS FROM THE DATE OF TR ANSFER AND THEREFORE THE SAME WAS NOT ELIGIBLE FOR DEDUCTION. HE THEREFORE CONFIRMED THE ADDITION MADE BY AO AGGRIEVED BY WHICH THE ASSESSEE IS IN A PPEAL BEFORE TRIBUNAL. 3. BEFORE US THE LEARNED AR FOR THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES. IT WAS ALSO SUBMITTE D THAT THE DELAY IN INVESTMENT IN NHA BONDS WAS DUE TO CIRCUMSTANCES BE YOND CONTROL OF THE ASSESSEE AS THE BONDS WERE NOT AVAILABLE FOR SUBSCR IPTION. THE NHA BONDS WERE OPEN FOR SUBSCRIPTION ONLY ON 26 TH MAY 2008 AND THE ASSESSEE HAD APPLIED FOR INVESTMENT ON 3.6.2008 AND THE BONDS WERE ALLOTTED ON 30 TH JUNE 2008. THEREFORE THE CLAIM OF THE ASSESSEE WAS ALLOWABLE. THE LEARNED AR PLACED RELIANCE ON THE JUDGMENT OF HONBLE HIGH COURT OF B OMBAY DATED 27.7.2012 IN ITA NO. 3731 OF 2010 IN CASE OF CIT VS. M/S CELLO P LAST IN WHICH IT HAS BEEN HELD THAT CHOICE FOR INVESTING EITHER IN RAC BOND OR NHA BOND WAS WITH THE ASSESSEE AND IN CASE THE CHOICE OF THE ASSESSEE WAS NOT AVAI LABLE THE TIME TO INVEST IN THE BONDS WOULD GET AUTOMATICALLY EXTENDED TILL THE BONDS ARE AVAILABLE. THE OM ELECTRONICS PAGE 3 OF 4 SAME VIEW HAD BEEN TAKEN BY THE AHMEDABAD BENCH OF TRIBUNAL IN CASE OF SHRI ASPI GINWALA SHREE RAM ENGG & MNFG INDUSTRIES VS. ACIT (52 SOT 16 ) IN WHICH IT HAS BEEN HELD THAT IN CASE THE ASSESSEE WAS PREV ENTED BY SUFFICIENT CAUSE WHICH WAS BEYOND HIS CONTROL IN MAKING INVESTMENTS IN THE BONDS WITHIN THE TIME PRESCRIBED THE INVESTMENT WILL BE ELIGIBLE FO R DEDUCTION U/S 54EC. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF DEDUCTION IN RESPECT OF CAPITAL GAIN U/S 54EC OF THE INCOME TAX ACT. IN THIS CASE THE ASSESS EE HAD RECEIVED CAPITAL GAIN OF RS. 1.50 ON SURRENDER OF TENANCY RIGHTS. THE ASS ESSEE HAD INVESTED A SUM OF RS. 50 LAKH IN RAC BONDS ON 31.3.2008 AND ANOTHER 50 LAKH IN NHA BONDS ON 30 TH JUNE 2008. UNDER THE PROVISIONS OF SECTION 54EC C APITAL GAIN IS EXEMPT FROM TAX IF THE SAME IS INVESTED IN RAC AND NHA BON DS. HOWEVER AS PER PROVISO TO SECTION 54EC A LIMIT OF RS. 50 LAKH HAS BEEN PRE SCRIBED ON INVESTMENT IN ONE YEAR. THEREFORE THE ASSESSEE COULD MAKE INVESTMENT IN ONE YEAR ONLY RS. 50 LAKH IN THIS CASE THERE IS NO VIOLATION OF THE LIM IT AS INVESTMENT OF RS. 50 LAKH EACH HAS BEEN MADE IN TWO DIFFERENT YEARS. HOWEVER CIT(A) HAS NOTED THAT UNDER THE PROVISIONS OF SECTION 54EC THE INVESTMENT HAS TO BE MADE WITHIN THE PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER BUT IN THIS CASE THE INVESTMENT IN NHA BOND HAD BEEN MADE AFTER THE PERIOD OF SIX MONT HS FROM THE DATE OF TRANSFER . HE HAS THEREFORE UPHELD THE ORDER OF A O ALLOWING THE DEDUCTION ONLY TO THE TUNE OF RS. 50 LAKH. HOWEVER THE ASSESSEE HA S SUBMITTED THAT THE ASSESSEE COULD NOT MAKE INVESTMENT IN NHA BONDS AS THE SAME WERE NOT AVAILABLE FOR SUBSCRIPTION. THE BONDS BECAME AVAILA BLE FOR SUBSCRIPTION ONLY ON 29.5.2008 AND THE ASSESSEE HAD MADE APPLICATION ON 3.6.2008 AND THE BONDS WERE ALLOTTED ON 30 TH JUNE 2008. THEREFORE THE VIOLATION OF TIME LIMIT P RESCRIBED WAS DUE TO CIRCUMSTANCES BEYOND CONTROL OF THE ASSE SSEE WE FIND THAT HONBLE HIGH COURT OF BOMBAY IN CASE OF CIT VS. M/S CELLO P LAST (SUPRA) HAVE TAKEN THE OM ELECTRONICS PAGE 4 OF 4 VIEW THAT IN CASE BONDS AS PER CHOICE OF THE ASSESS EE ARE NOT AVAILABLE THE TIME LIMIT ON INVESTMENT WILL GET AUTOMATICALLY EXTENDED TILL THE BONDS ARE AVAILABLE IN THE MARKET. THE AHMEDABAD BENCH OF TRIBUNAL IN C ASE OF SHRI ASPI GINWALA SHREE RAM ENGG & MNFG INDUSTRIES VS. ACIT (SUPRA) H AVE ALSO TAKEN THE SAME VIEW THAT IN CASE THE ASSESSEE WAS PREVENTED BY THE SUFFICIENT CAUSE BEYOND HIS CONTROL IN MAKING INVESTMENT IN THE BONDS WITHIN TH E TIME PRESCRIBED INVESTMENT HAD TO BE ALLOWED AS ELIGIBLE FOR DEDUCT ION. THE ASSESSEES CASE IS COVERED BY THE ABOVE JUDGMENTS. WE THEREFORE RESP ECTIVELY FOLLOWING THE JUDGMENTS MENTIONED ABOVE SET ASIDE THE ORDER OF CI T(A) AND ALLOW THE CLAIM OF THE ASSESSEE. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 31 -7-2013 SD/- SD/- (SANJAY GARG) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SK SR. P.S MUMBAI DATED 31.7.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR C BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI