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2017 (1) TMI 58 - HC - Income TaxEntitlement to deduction u/s 54EC - assessee not fulfilled the mandatory requirement of making the investment within six months from the date of the transfer - Agreement to Sale dated 21st February, 2006 was never produced before the authorities - Held that - We find that the Sale Deed dated 5th April, 2007 is produced. This itself in clause (d) thereof records the fact that the Agreement to Sale had been entered into on 21st February, 2006 in respect of the subject property and the amounts being received by the vendor (respondent assessee) under that Agreement to Sale. Thus, these amounts when received as advance under an Agreement to Sale of a capital asset are invested in specified bonds, the benefit of Section 54EC of the Act is available. In the above view, the Tribunal holds that the facts of the present case are similar to the facts before the Tribunal in Bhikulal Chandak HUF (2009 (6) TMI 605 - ITAT NAGPUR ). The Revenue does not dispute the same before us. Moreover, on almost identical facts, this Court in Ms. Parveen P. Bharucha Vs. DCIT, 2013 (1) TMI 295 - Bombay High Court held that the earnest money received on sale of asset, when invested in specified bonds under Section 54EC of the Act, is entitled to the benefit of Section 54EC of the Act. This was in the context of reopening of an assessment and reliance was placed upon CBDT Circular No. 359 dated 10th May, 1983 in the context of Section 54E of the Act. - Decided in favour of assessee
Issues:
- Appeal challenging order of Income Tax Appellate Tribunal regarding Assessment Year 2008-09 - Entitlement to deduction under Section 54EC of the Income Tax Act - Investment in specified bonds before final sale of property - Production of Agreement to Sale before authorities Analysis: Issue 1: Appeal against Tribunal's Order The appeal under Section 260A of the Income Tax Act, 1961 challenges the order dated 28th June, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal) for Assessment Year 2008-09. Issue 2: Entitlement to Deduction under Section 54EC The main question in this case is whether the assessee is entitled to deduction under Section 54EC of the Act. The Tribunal held that the assessee is entitled to the benefit of Section 54EC even though the investment in specified bonds was made before the final sale of the property. Issue 3: Investment in Specified Bonds The respondent had invested an amount from the advance received under the Agreement to Sale in Rural Electrification Corporation Ltd. bonds before the final sale of the property. The Tribunal relied on a previous decision to support the assessee's entitlement to claim the benefit of Section 54EC in such circumstances. Issue 4: Production of Agreement to Sale The Revenue argued that since the Agreement to Sale was not produced before the authorities, the assessee should not be entitled to the benefit of Section 54EC. However, the Sale Deed produced clearly referenced the Agreement to Sale, confirming the investment of amounts received as advance in specified bonds. Conclusion: The High Court upheld the Tribunal's decision, stating that when amounts received as advance under an Agreement to Sale of a capital asset are invested in specified bonds, the benefit of Section 54EC of the Act is available. The Court also referred to a previous judgment and a CBDT Circular to support this decision. The appeal was dismissed, and no costs were awarded. The Court found that the question raised did not give rise to any substantial question of law, especially considering the previous decision of the Court in a similar case.
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