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TMI Blog2012 (3) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... dated. 29 June, 206 or 964E dated 29th June - Investment within 06 months is the investment for that financial year in which transfer has taken place. Hence, subsequent investment is to be considered as part of the investment of financial year in which transfer has taken place - appeal in the favour of revenue was allowed. - IT APPEAL NO. 648 (JP.) OF 2011 - - - Dated:- 31-1-2012 - R. K. Gupta And N. L. Kalra , JJ. Vinod Johri for the Appellant. Mahendra Gargieya for the Respondent. ORDER N. L. Kalra, Accountant Member The revenue has filed an appeal against the order of the ld. CIT(A), Ajmer dated 20-04-2011 for the assessment year 2008-09. 2.1 The ground of appeal raised by the revenue is as under:- In view of the facts and circumstances of the case, the ld. CIT(A) Ajmer has erred in Directing the AO to allow the claim of deduction u/s 54EC from ₹ 50,00,000/- to ₹ 1,00,00,000/- as the Ld. CIT(A) has not appreciated the facts that the deemed date of allotment of Bond is 30.6.2008 which is beyond the time limit of 6 months as per section 54EC from the date of transfer i.e., 13.12.2007. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order. The deduction u/s 54EC should not exceed ₹ 50.00 lacs. The word 'any financial year' mentioned in proviso to Section 54EC refers to the investment to be made for the purpose of claiming deduction from capital gain. The ld. DR further submitted that proviso cannot give undue benefit to one section of the tax payers. If an assessee transfers certain property in the month of April of the financial year then he has to make investment within 06 months i.e. within the same financial year. The exemption from capital gain will be only to the extent of ₹ 50.00 lacs. In the case of another tax payer who transfers his assets in the month of Oct. then he cannot claim exemption u/s 54EC by purchasing ₹ 50.00 lacs bonds in the financial year in which the transfer has taken place and another ₹ 50.00 lacs in the subsequent financial year because the period of six months will include some part of the subsequent financial year. Thus two assessee's who have earned the capital gain for the same assessment year cannot be treated differently. It was therefore, submitted that interpretation of proviso should not lead to discrimination against various ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45 : [Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.] 2. The only dispute between the parties was the case made out by the AO originally with regard to the invoking of the Proviso to Sec. 54EC and the AO denied the claim by saying that the assessee exceeded the limit of ₹ 50 Lacs in the given financial year. The ld. CIT(A) however, negated such contention holding that in two different financial years, the assessee, having made ₹ 50 Lacs each, never exceeded the limit as prescribed in the Proviso. In his view, the prescribed limit was to be reckoned for each financial year separately. Revenue not taken any ground, here, is no dispute any more. So far as this aspect is concerned, the admitted facts are that the assessee did make investment i.e. ₹ 50 Lacs on 10.06.2008 which falls within 6 months (12.06.2008) from the date of trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpensatory support as taxable as the assessee has already paid the salary before the amendment. approved in CIT v. Hindustan Electro Graphites Ltd. 243 ITR 48. The maxim of law lex non cogit ad imposibilia means that a man cannot be compelled by law to do what he cannot possibly perform. Reliance is placed on the following decisions:- 1. ACIT v. Jindal Irrigation Systems Ltd. 56 ITD 164 (Hyd.). 2. Canara Bank v. ITO 121 ITD 1 (Nag) 3. Inder Prasad Mathura Lal in ITA No.1068/JP/2010 for A.Y.2005-06 vide order dated 27.05.2011 (2011) 43-A BCAJ 709 (JP) (DPB 1-7). 5. Supporting Case Laws: Kindly refer Hindustan Unilever Ltd. v. DCIT [2010] 325 ITR 102 (Bom.) (DPB 8-15) held at page 104 that ( iii ) That in order to avail of the benefit of section 54EC, the capital gains have to be invested in a long-term specified asset within a period of six months from the date of transfer. In the present case, the period of six months was due to expire on March 28, 2004. The assessee invested on amount of ₹ 3.07 Crores on March 19, 2004. A receipt was issued on that date by the National Housing Bank. A debit was reflected in the bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C), CIT v. Krishna Copper and Steel Rolling Mills 193 ITR 281 (SC), which has held for a liberal and broader interpretation of an incentive provision u/s 80I and CIT v. Baby Marine Exports 160 Taxman 160 (SC), the court strongly advocated for a liberal interpretation at pg 168 169 vide paras 26 27. It was held that 26 S. 80HHC was incorporated with the object of granting incentive to earners of foreign exchange. This court is Sea Pearl Industries v. CIT [2001] 2 SCC 33 also observed that the object of selection 80HHC is to grant incentive to earners of foreign exchange. In IPCA Laboratory Ltd . v. Dy. CIT [2004] 12 SCC 742 this court has taken the same view. This court in the said judgment observed that S. 80HHC has been incorporated with a view to provide incentive to export house and this section must receive liberal interpretation. 8. Issue Debatable: Alternatively an without prejudice to above submissions and case laws, still if there are certain doubts, the view favourable to the assessee has to be adopted, as held in the case of CIT v. Vegetables Product Ltd. 88 ITR 192 (SC) followed in CIT v. Multi Metals Ltd. 188 ITR 151 (Raj.), CIT, Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f addition to the main provision which is foreign to the main provision itself. Indeed, in some cases, a proviso may be an exception to the main provision though it cannot be inconsistent with what is expressed in the main provision and, if it is, it would be ultra vires the main provision and liable to be struck down. As a general rule, in construing an enactment containing a proviso, it is proper to construe the provision together without making either of them redundant or otiose. 3.3 Kindly refer CIT v. South India Corporation Ltd. [1999] 157 CTR 422 (Ker.) held at page 423 that It is true, proviso cannot provide anything repugnant to the main provision. It is in the nature of an exception to what has been provided in the main provision. The normal function of a proviso is to except something enacted or to qualify something enacted therein but for the proviso would be within the purview of the enactment. As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not interpreted as stating a general rule - Mullins v. Treasure of Survey [1880] 5 QBD 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 54EC of the Income Tax Act, 1961, the Central Govt. notifies the bonds for an amount of rupees three thousand five hundred crores to be issued by the Rural Electrification Corporation Ltd., a company formed and registered under the Companies Act, 1956, during the period from 26th Dec. 2006 to 31st March 2007 as 'long term specified asset' for the purpose of the said Section subject to the following conditions namely:- ( i ) a person who has made an investment of an amount aggregating more than fifty lakh rupees in the bonds notified as 'long term specified asset by the Central Govt. for the purpose of Section 54EC of the I.T. Act, 1961 in the Official Gazette vide Notification No. SO No. 963(E) dated 26th June, 2006 or Notification No. SO No. 564(E) dated 29th June, 2006 shall not be allotted any bonds notified as 'long term specified asset' by this notification. ( ii ) A person who has not covered by cl. (i) shall not be allotted the bonds notified as 'long term specified asset' by this Notification, for any amount which exceeds the amount of fifty lakhs rupees as reduced by the aggregate of the investment, if any, made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year in which the transfer took place save as otherwise provided in Section 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H. Hence, Section 54EC is not mentioned in Section 45 of the Act. As per Section 54EC, the profits or gains arising from the transfer of a capital asset is to be dealt with as per Section 54EC, in case the assessee has invested the whole or any part of the capital gain in the long term capital specified asset. Thus deduction is eligible to the investment. The proviso to Section 54EC provides that an investment made on or after the first date of April, 2007 in the long term specified asset by an assessee during any financial year does not exceed ₹ 50.00 lacs. Hence, the investment should not exceed ₹ 50.00 lacs. The proviso was introduced by the Finance Bill, 2007. In the memo explaining the provision of finance bill, 2007, it has been mentioned as under:- ''This amendment will take effect from 1st April, 2007 It is also proposed to amend the said Section so as to provide for a ceiling on investment by an assessee in such long term specified assets. Investments in such specified assets to avail exemption u/s 54EC on or a ..... 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