2014 (3) TMI 842 - AT - Income Tax

Exemption u/s 54EC of the Act Investment in NHAI bonds - Whether the investment of ₹ 45 lacs was made within six months from the date of the transfer of the Long Term Capital Asset so as to qualify for the exemption u/s.54EC of the Act and whether the word month refers in this section a period of 30 days or it refers to the months only Held that - The decision in Munnalal Shri Kishan Mainpuri 1987 (3) TMI 81 - ALLAHABAD High Court followed - there is nothing in the context of section 256(2) to warrant the conclusion that the word 'month' in it refers to a period of 30 days, therefore, refers to six months in Section 256(2) is to six calendar months and not 180 days - in the absence of any definition of the word ' month' in The Act, the definition of General Clauses Act 1897 shall be applicable and by doing so there is no attempt on our part to interpret the language of Sec. 54EC - what to say a liberal or literal interpretation - the Legislature has in its wisdom has chosen to use the word ' month' - the word 'month' to be read within the recognized ways of interpretation. There is no dispute about the investment which had actually been made by the assessee - The investment had been made in the month of December, 2008 - alleged to be few days late from the date of transfer in the month of June, 2008 - Once the purpose of the introduction of the section was served by making the investment in the specified assets then that purpose has to be kept in mind while granting incentive - the investment in question qualifies for the deduction U/s 54EC Decided in favour of Assessee.

Issues Involved:
1. Interpretation of the period of investment under Section 54EC of the Income Tax Act, 1961.
2. Determination of the due date for making an investment to claim exemption under Section 54EC.
3. Application of the General Clauses Act for defining the term "month."

Detailed Analysis:

1. Interpretation of the period of investment under Section 54EC of the Income Tax Act, 1961:
The core issue revolves around whether the period of six months for investment under Section 54EC should be reckoned from the date of transfer or from the end of the month in which the transfer took place. The appellant argued that the term "month" should be interpreted according to the British calendar, as per the General Clauses Act, 1897, which would mean the period should be calculated from the end of the month in which the transfer occurred. The Revenue contended that the period should be counted from the date of the transfer itself, making the investment period six calendar months.

2. Determination of the due date for making an investment to claim exemption under Section 54EC:
The appellant sold a flat on 10th June 2008 and claimed a deduction under Section 54EC by investing in NHAI bonds. The investment was made on 17th December 2008. The Assessing Officer (AO) disallowed the claim, arguing that the investment was made beyond the six-month period, which ended on 10th December 2008. The appellant contended that the cheque for the investment was tendered on 8th December 2008, and thus, the investment should be considered within the permissible period. The CIT(A) upheld the AO's decision, stating that the investment date was 17th December 2008, as that was when the cheque was cleared.

3. Application of the General Clauses Act for defining the term "month":
The appellant's argument was supported by the General Clauses Act, which defines a "month" as a calendar month. The appellant also cited various CBDT circulars and judicial precedents advocating for a liberal interpretation of beneficial provisions. The Revenue, however, argued that the term "month" should be interpreted in its ordinary sense, meaning a period from a specified date in one month to the corresponding date in the following month, less one.

Judgment:
The Tribunal examined the legal definitions and precedents, including the General Clauses Act and relevant CBDT circulars. It was noted that the term "month" is not explicitly defined in the Income Tax Act, and thus, the definition from the General Clauses Act, which refers to a calendar month, should be applied. The Tribunal also considered the purpose and intent behind Section 54EC, which is to incentivize investments in specified assets.

The Tribunal concluded that the period of six months should be interpreted as six calendar months, starting from the end of the month in which the transfer took place. Therefore, the investment made by the appellant on 17th December 2008 was within the permissible period, as the six-month period ended on 31st December 2008.

Conclusion:
The Tribunal held that the investment in NHAI bonds qualified for the deduction under Section 54EC. The appellant's grounds were allowed, and the question was answered in favor of the appellant. The investment period under Section 54EC should be reckoned as six calendar months from the end of the month in which the transfer of the capital asset took place.

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