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TMI Blog2011 (11) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... months period should be reckoned from the end of the month in which the transfer takes place – Decided in favor of assessee. - IT APPEAL NO. 5501 (MUM.) OF 2009 - - - Dated:- 25-11-2011 - J. SUDHAKAR REDDY, V. DURGA RAO, JJ. K. Gopal for the Appellant. A.K. Nayak for the Respondent. ORDER J. Sudhakar Reddy, Accountant Member This appeal filed by the assessee, is directed against the impugned order dated 127th July 2009, passed by the Commissioner (Appeals)-XV, Mumbai, for assessment year 2005-06. 2. Brief facts of the case are that the assessee is an individual carrying on business of a scrap dealer. During the relevant assessment year, the assessee sold equity shares of two private limited companies namely M/s. Supreme Nonwovens Pvt. Ltd. and M/s. Bhilad Textile Industries Pvt. Ltd., for the consideration of Rs. 1,35,00,000 and Rs. 86,25,000 respectively. The assessee chose to invest the entire sale consideration in the bonds specified under section 54EC of the Income Tax Act, 1961 (for short "the Act"). The assessee invested Rs. 12,50,000 in SIDBI bonds and Rs. 1,97,50,000 in REC bonds. Out of Rs. 1,97,50,000 invested in REC bonds, Rs. 45,00,000 was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Tribunal on the following ground:- "1. The Ld. Commissioner of Income Tax(Appeals) [hereinafter referred to as "CIT(A)"] has erred in passing the order dated 27.07.2009 upholding the action of the Ld. Assessing Officer in disallowing the claim made under section 54EC of the Act by holding that the shares were transferred by the Appellant on 24.02.2005 and thereby the investment made on 30.08.2005 is beyond the prescribed period of six month, without appreciating the facts and circumstance of the case. 2. The Ld. CIT(A) failed to appreciate that the Appellant had transferred the shares alongwith other Dhariwala group members on 28.02.2005 and the same is also reflected in the companies record submitted to the Registrar of Companies. Therefore, the investment made on 30.08.2005 is within the period of six months as prescribed under the provisions of section 54EC of the Act. 3. The Ld. CIT(A) failed to appreciate that the shares in question are the shares of a Pvt. Ltd. Company and the shares of a Pvt. Ltd. Company can be transferred only after the approval of the Board of Directors in the Board of Directors meeting. In the case of the Appellant the Board of Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case and on a perusal of the papers on record, as well as the case laws cited before us, we hold as follows:- 9. The shares that were transferred were of a private limited company. Under the Companies Act, 1956, according to the provisions as contained in section 3(1)(iii), a private limited company is a company which restricts the right to transfer its shares. Once the board of directors approve the transfer, then only the process of transfer of shares can be said to be completed in case of a private limited company. The assessee's Annual Return filed before the Registrar of Companies disclosed that the date of registration of transfer was 28th February 2005. The purchaser confirms that the date of transfer is 28th February 2005. Board resolution approving transfer of shares was passed on 25th February 2005. Just because stamping was done on 24th February 2005 of blank forms, it cannot be concluded that there is transfer on 24th February 2005. Thus, we conclude that the date of transfer is 28th February 2005. Hence, the investment made on 30th August 2005, was within a period of six months as contemplated under the Act. 10. Even if the date of transfer is to be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (e) of, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and [eighty-two] days" had been substituted. 2. Section 10: Incomes not included in total income Section 10(6)(vi)was the words "--- period of ninety days in such provisions year" while laying the conditions (vi)(b) his stay in India does not exceed in the aggregate a period of ninety days in; such previous year (viii) any income chargeable under the head "Salaries" received by or due to any such individual being a non-resident as remuneration for services rendered in connection with his employment on a foreign ship where his total stay in India does not exceed in the aggregate a period of ninety days in the previous year 3. Section 54(E) : Capital gain on transfer of capital assets not to be charged in certain cases. (1B) Where on the fulfillment of the conditions specified in sub-section (1A), the cost of the new asset referred to in that subsection is taken into account for the purposes of sub-section (1), the assessee shall, within a per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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