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2017 (6) TMI 649 - AT - Income TaxDenial of exemption u/s. 54EC - whether 54EC bonds were availed during the month of December 2006? - Held that - We are of the opinion if 54EC bonds were not available in the market from 01/12/2006 to 22/01/2007 the assessee should be given a grace period of five days since the assessee had invested in 54EC bonds on 27/01/2007 (whereas in the case considered by the Hon ble Bombay High Court (supra) the investment was made only on 31/01/2007). For examination of these aspects the matter is restored to the Assessing Officer. The Assessing Officer shall verify whether the bonds eligible for exemption u/s. 54EC were not available in the month of December 2006 upto 21/01/2007. If the Assessing Officer finds that the 54EC bonds were not available for the above mentioned period the benefit of deduction under section 54Ec should be granted to the assessee since the assessee had invested in 54EC bonds within the reasonable period of its availability in the market. In taking the above view we rely on the judgment of the Hon ble Bombay High Court in the case of CIT vs. Cello Plast (2012 (8) TMI 527 - BOMBAY HIGH COURT ) which is identical to facts of this case. Claim of exemption u/s. 54F - CIT-A power to consider claim - Held that - CIT(A) has power to consider the claim of deduction u/s. 54F of the Act. Since on merits whether the assessee is entitled to the benefit of the claim u/s. 54F has not been examined by the CIT(A) we deem it appropriate to restore the issue to the file of the Assessing Officer for de novo consideration. It is ordered accordingly. Interest u/s. 234B - whether is to be charged as per section 234B(1) or 234B(3) - whether the assessee is liable for interest only from 17/08/2014 to 14/03/2014 as per section 234B(3) as per CIT-A - Held that - When proceedings u/s. 143(1) of the Act has been completed and issued to the assessee interest is to be levied as per section 234B(3) of the Act from the date of proceedings u/s. 143(1) of the Act. Moreover we notice that section 234B(3) was amended by Finance Act 2015 with effect from 1.6.2015 whereby interest u/s. 234B is to be calculated from first day of April to next following such financial year. Therefore in view of the the amendment with effect from 1.6.2015 we are of the view that the order of the Commissioner is correct and no interference is called for. - Decided against revenue
Issues Involved:
1. Denial of exemption under Section 54EC. 2. Eligibility for exemption under Section 54F. 3. Calculation of interest under Section 234B. Issue-wise Detailed Analysis: 1. Denial of Exemption under Section 54EC: The assessee, a doctor running a pathology lab, sold his lab on 01/01/2006 and declared 'nil' capital gains in the return filed on 31/10/2006. The Assessing Officer recalculated the long-term capital gains at ?2,76,11,908 and denied the exemption claimed under Section 54EC, as the assessee invested in 54EC bonds on 27/01/2007, beyond the stipulated period ending on 31/12/2006 as per CBDT Notification. The CIT(A) upheld this view, stating that the investment was made beyond the extended period. Upon appeal, the Tribunal noted that the non-availability of bonds from 29/03/2006 led to the extension of the investment period to 31/12/2006. The Tribunal referred to the Bombay High Court's judgment in CIT vs. Cello Plast, which acknowledged the non-availability of bonds and allowed a reasonable extension period. The Tribunal directed the Assessing Officer to verify the availability of bonds in December 2006 and, if unavailable, to grant the exemption under Section 54EC, as the investment was made within a reasonable period after the bonds became available. 2. Eligibility for Exemption under Section 54F: The assessee claimed exemption under Section 54F during the assessment proceedings, which was denied by the Assessing Officer because the claim was not made in the original return but only during the assessment. The CIT(A) upheld this decision, citing the Supreme Court's judgment in Goetze India Ltd. vs. CIT, which restricted the Assessing Officer from entertaining claims not made in the return without a revised return. The Tribunal clarified that the Supreme Court's judgment did not limit the powers of the appellate authority. Citing the Delhi High Court's judgment in CIT vs. Western India Shipyard Ltd. and the ITAT Mumbai Bench's decision, the Tribunal held that the CIT(A) has the power to consider the claim of exemption under Section 54F. The Tribunal restored the issue to the Assessing Officer for de novo consideration, emphasizing that the assessee should not be denied the benefit of exemption merely for not making the claim in the return. 3. Calculation of Interest under Section 234B: The Assessing Officer levied interest under Section 234B(1) from 1st April 2006 to the date of re-assessment (14/03/2014). The CIT(A) ruled that interest should be charged as per Section 234B(3) from the date of the original assessment (17/08/2007) to the date of re-assessment. The Tribunal, referring to the Kerala High Court's judgment in CIT vs. B. Lakshmikanthan, upheld the CIT(A)'s decision. The High Court held that interest should be calculated as per Section 234B(3) from the date of the original assessment. Additionally, the Tribunal noted the amendment to Section 234B(3) by the Finance Act, 2015, effective from 1/6/2015, which supported the CIT(A)'s view. Consequently, the Tribunal dismissed the Revenue's appeal. Conclusion: The assessee's appeal was allowed for statistical purposes, with directions for further verification and consideration by the Assessing Officer regarding Sections 54EC and 54F exemptions. The Revenue's appeal was dismissed, upholding the CIT(A)'s decision on the calculation of interest under Section 234B.
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