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2022 (7) TMI 122 - AT - Income TaxExemption u/s. 54EC - delay on part of the appellant in depositing the sale consideration of the property sold u/s 54EC - scope of permissible limit of six months from the date of sale of the land - AO disallowed the exemption claimed u/s. 54EC by holding that a perusal of section 54EC shows that the investment in bonds should be made at any time within a period of six months after the date of such transfer and a period of six months from the date of transfer is afforded to the Assessee to purchase the bonds which in the instant case commences from 16.10.2013 and ends on 14.04.2014 - HELD THAT - The provisions itself reflects that investment can be made as a whole or in part of the capital gains.We are in concurrence with the determination made by the ld. Commissioner that as per section 54EC of the Act, the time period of investment starts from the date of transfer and not from the date of receipt of consideration. Coming to the period of six months calculation, Hon ble Coordinate Benches of the Mumbai Tribunal in the case of Neela S. Karyakarte vs. ITO ( 2015 (12) TMI 618 - ITAT MUMBAI , Aquatech Engineers 2013 (6) TMI 726 - ITAT MUMBAI and Niamat Mahroof Virji 2016 (12) TMI 1081 - ITAT MUMBAI dealt with the definition of six months as prescribed u/s. 54EC of the Act and clearly held that six months have to be interpreted as six calendar months and not 180 days. Admittedly the provisions of section 54EC of the Act are beneficial provisions to encourage investments in Govt. bonds and for the benefits of the claimants therefore the purpose of introduction of the provisions in the section has to be kept in mind while granting incentive and/or exemption and thus the Hon ble Courts have interpreted the provisions in its right perspective. In the instant case, the sale deed was made in the month of October, 2013 therefore, the Assessee was supposed to invest u/s. 54EC of the Act within six calendar months starting from November onwards and upto the month of April, 2014, which in the instant case has been done by the Assesseeon dated 30.04.2014, accordingly the Assesseeis entitled to get the benefit of exemption u/s. 54EC of the Act. Consequently, the addition of Rs.50 lacs made by the Assessing Officer and affirmed by the ld. Commissioner is deleted. Appeal of assessee allowed.
Issues:
1. Denial of exemption u/s. 54EC of the Income-tax Act, 1961. 2. Interpretation of the term "six months" for investment in bonds. 3. Calculation of the time period for investment under section 54EC. 4. Application of the provisions of section 54EC in the case. Analysis: Issue 1: Denial of exemption u/s. 54EC of the Income-tax Act, 1961 The Assessee appealed against the order of the Commissioner of Income-tax (Appeals) denying exemption u/s. 54EC for the assessment year 2014-15. The Assessee sold a piece of land and claimed exemption by investing in NHAI bonds. The Assessing Officer disallowed the exemption, leading to the appeal. Issue 2: Interpretation of the term "six months" for investment in bonds The disagreement centered around the interpretation of "six months" for investing in bonds as per section 54EC. The Assessing Officer calculated the period strictly from the date of transfer, while the Assessee argued for a broader interpretation based on the General Clauses Act, emphasizing the use of "month" as per the British Calendar. Issue 3: Calculation of the time period for investment under section 54EC The Commissioner upheld the Assessing Officer's decision, emphasizing the clarity of the provision that the time period for investment starts from the date of transfer, not the receipt of consideration. The Commissioner rejected the Assessee's argument based on ITAT judgments from Mumbai, stating that the legislative intent was clear in the provision. Issue 4: Application of the provisions of section 54EC in the case The Tribunal analyzed previous judgments from Mumbai Tribunal regarding the interpretation of "six months" as "six calendar months" and not 180 days. Considering the beneficial nature of section 54EC to encourage investments in government bonds, the Tribunal allowed the Assessee's appeal, holding that the investment within 'six calendar months' from the date of transfer entitled the Assessee to exemption under section 54EC. In conclusion, the Tribunal allowed the Assessee's appeal, overturning the denial of exemption u/s. 54EC, emphasizing the interpretation of "six months" as "six calendar months" and the importance of adhering to the legislative intent behind the provision.
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