2015 (12) TMI 893 - AT - Income Tax

Deduction under section 54EC denied - assessee submitted that the period of six months should have been counted from the end of the month and if the same is counted from the end of the month, then investment made by the assessee was within a period of six months and assessee is entitled to get the impugned exemption - CIT(A) has accepted such contention of the assessee and granted the relief to the assessee - Held that - In the decision of Special Bench in the case of Alkaben B. Patel vs. ITO 2014 (3) TMI 842 - ITAT AHMEDABAD 6 months have been interpreted and it is held that the same would mean 6 calendar months and not 180 days. Thus we find no infirmity in the relief granted by Ld. CIT(A). - Decided against revenue

Summary

Issues:
1. Allowance of exemption under section 54EC of IT Act on investment made by the assessee.
2. Interpretation of the term "6 months" in the context of investment timeline for exemption under section 54EC.
3. Reliance on judicial decisions by the CIT(A) in granting relief to the assessee.

Analysis:

Issue 1:
The appeal was filed by the Revenue against the order passed by the Ld. CIT(A) for allowing exemption under section 54EC of the IT Act on the investment made by the assessee in NHAI Ltd. bonds. The Revenue contended that the investment was made beyond the six-month period from the date of transfer of shares, thus, the exemption should not have been granted. The CIT(A) accepted the assessee's contention that the period of six months should be counted from the end of the month, making the investment within the permissible timeline. The assessee relied on various judicial pronouncements, including the decision of ITAT Mumbai in a specific case. The Revenue challenged this decision, leading to the appeal.

Issue 2:
The core issue revolved around the interpretation of the term "6 months" concerning the investment timeline for claiming exemption under section 54EC. The AO denied the deduction based on the investment being made after six months from the date of the original asset transfer. However, the CIT(A) accepted the assessee's argument that the investment timeline should be calculated from the end of the month, not strictly as 180 days. This interpretation was supported by a Special Bench decision and various High Court rulings, establishing that a month is to be reckoned according to the British calendar. The CIT(A) upheld the relief granted to the assessee based on this interpretation.

Issue 3:
During the proceedings, the Ld. DR relied on the assessment order, arguing that the CIT(A) erred in granting relief to the assessee. On the contrary, the Ld. Sr. Counsel for the assessee supported the CIT(A)'s decision, citing the alignment with a Special Bench decision and a Mumbai Tribunal case. The Tribunal carefully considered the contentions of both parties and found no infirmity in the relief granted by the CIT(A), ultimately upholding the order passed in favor of the assessee.

In conclusion, the ITAT Mumbai dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the exemption under section 54EC to the assessee. The judgment highlighted the importance of interpreting the statutory timeline provisions accurately and aligning them with established legal principles and precedents.