2013 (6) TMI 726 - AT - Income Tax

Validity of claim of Long Term Capital Gains (LTCG) u/s.54EC - Revenue has denied the said claim on the ground that the investment in the National Highway Authority of India (NHAI) bonds stood made beyond six months of the date of transfer, i.e., the period specified under the relevant provision, so that the assessee s claim is not maintainable in law - Held that - As the Revenue considers the actual outflow of funds as the relevant date of investment (in specified asset u/s.54EC), it must, on the principle of parity, also take the date of receipt of consideration, allowing a time lag of two to three working days, i.e., as in the normal course of banking business, for the same (receipt). As such, the relevant date would be upon allowing the normative time required for the realization of funds through the banking channel. We draw support or this proposition from s.27 of the General Clauses Act, 1897. The date of the agreement being 29.02.2008, i.e., the last date of the month of February, the date of receipt would - in the ordinary and regular course - fall some time in the first week of March, 2008, i.e., even if we do not consider the date of the actual receipt as being date of receipt in the normal course, being sans any details in the matter by the assessee and, thus, not relevant. The second component of the controversy stands determined by the co-ordinate Bench of the tribunal in the case of Yahya E. Dhariwala (2011 (11) TMI 381 - ITAT MUMBAI) wherein, being guided by the fact that the provision of section 54EC is a beneficial provision, it sought to grant the benefit of doubt with regard to the word month occurring in the provision, by construing it as a calendar month; the word being undefined. A period of six clear months from the first week of March, 2008, would, therefore, end only 30.09.2008, i.e., the date of allotment of the NHAI bonds. - Decided in favour of assessee

Summary

Issues: Validity of claim for Long Term Capital Gains (LTCG) u/s.54EC of the Income Tax Act, 1961.

Analysis:
1. The appeal challenged the Commissioner of Income Tax (Appeals)'s order partially allowing the assessee's appeal regarding assessment u/s.143(3) for the assessment year 2008-09.
2. The main issue was the validity of the assessee's claim for Long Term Capital Gains (LTCG) u/s.54EC, which the Revenue denied due to the investment in NHAI bonds being made beyond six months of the date of transfer.
3. The dispute centered around the dates of transfer, receipt of consideration, application for NHAI bonds, and allotment date, with conflicting interpretations between the assessee and the Revenue.
4. The assessee argued that the six-month period should be reckoned from the date of receipt of consideration, relying on tribunal decisions in similar cases.
5. The Revenue contended that the period should start from the date of the agreement and expire on August 31, 2008, not considering the date of allotment of bonds.
6. The Tribunal analyzed the facts, noting that the consideration was received within ten days, and determined the relevant dates based on the General Clauses Act, 1897.
7. Referring to previous tribunal decisions, the Tribunal interpreted the word 'month' in the provision as a calendar month, leading to the conclusion that the six-month period ended on the date of allotment of NHAI bonds, i.e., 30.09.2008.
8. Ultimately, the Tribunal ruled in favor of the assessee, allowing the appeal based on the interpretations and decisions presented in the case.
9. The judgment was pronounced on June 19, 2013, in favor of the assessee.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by both parties, the Tribunal's interpretation of relevant dates and provisions, and the final decision in favor of the assessee regarding the claim for Long Term Capital Gains under section 54EC of the Income Tax Act, 1961.