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TMI Blog2012 (8) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... llow the claim of depreciation ? c) Whether on the facts and in the circumstances of the case, the Tribunal in law was correct in directing the A.O. to allow the claim of deduction u/s. 54EC ? At the instance and request of the Advocates for both the parties, the appeal is itself taken up for final disposal. Re Question(a) : 3) The respondent assessee had filed its return of income inter alia seeking a deduction of an expenditure of Rs.1.37 lacs on the ground that the same was incurred towards the legal and professional charges. The Assessing Officer, by an order dated 26/9/2008, disallowed the the above expenditure as no details in respect thereof had been furnished. On appeal, the Commissioner of Income Tax (Appeals) by an order dated 5/2/2009 upheld the order of the Assessing officer and disallowed the expenses of Rs.1.37 lacs towards the legal and professional charges. The Tribunal by its order dated 19/1/2010 allowed the respondent's appeal on the ground that the details of legal and professional charges had been submitted before the Commissioner of Income Tax (Appeals). 4) Mr. Suresh Kumar, the learned counsel for the appellant submits that the finding of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs under Section 54EC of the said Act by purchasing bonds of the Rural Electrification Corporation Limited (hereinafter referred to as "REC Bonds"). Section 54EC, insofar as it is relevant, reads as under :- "54EC. (1) Where the capital gain arises from the transfer of a long -term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of the capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time to invest in the Section 54EC bonds upto 31/12/2006 1/7/2006 to 3/8/2006 REC bonds became available during this period as stated in a letter dated 10/4/2008 from REC Ltd. filed with the AO by the respondents. 04/08/06 to 22/1/2007 REC bonds were not available during this period. 21/9/2006 Six months from the date of sale of the property by the respondents. In normal course, therefore, the last date for the respondents to invest in bonds to avail of the benefit under Section 54EC. 30/10/2006 As the REC bonds were still not available, the respondents invested Rs.50,00,000/- in fixed deposits issued by the State Bank of India. The respondents by a letter dated 30/10/2006 instructed the State Bank of India to invest Rs.50,00,000/- in FDs stating that the same will be withdrawn and invested in bonds when available. 31/12/2006 Last date for investing in bonds to avail of the benefit under Section 54EC as per the CBDT Circular dated 30/6/2006. 22/1/2007 to 31/1/2007 REC bonds once again available (as stated in a letter dated 10/4/08 from REC Ltd. to the respondent.) 31/1/2007 Respondents purchased REC bonds. 11) In their return of income the respondents appended a Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited time during this period between 1/7/2006 to 31/8/2008, makes no difference. The respondents had time till 21/9/2006, to invest in these bonds to avail the benefit under section 54EC. Section 54EC entitles a person to avail of the right conferred thereby at any time during the period of six months from the date of sale of the asset. The respondents cannot be deprived of this right conferred by the Act for no fault of theirs. Thus, the availability of the bonds only for a limited time during this period cannot prejudice the assessee's right to exercise the same upto the last date. The bonds were admittedly not available except during the said period. 18) Lex not cogit impossibila (law does not compel a man to do that which he cannot possibly perform) and impossibilum nulla oblignto est (law does not expect a party to do the impossible) are well known maxims in law and would squarely apply to the present case. The statue viz. Section 54EC of the Act provides for exemption from tax to long term capital gain provided the same is invested in bonds of Rural Electrification Corporation Limited or National Highway Authority of India. However, as the bonds were not available, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If that be so, it must follow that the extension ought to be granted at least for the period prior to the expiry of six months when the bonds were not available and upto the date on which they were ultimately made available. In any event, in such a case an assessee would be entitled to a reasonable extension which must then be decided, depending upon the facts of each case. A person cannot be expected to make the investment on the first possible date on which the bonds were made available after the expiry of the six months period or any extended date prescribed by the CBDT. During the period the bonds were unavailable a person is likely to invest the amount elsewhere. To expect or require him not to do so would be unjust for reasons too obvious to state. He cannot then be expected at a day's notice to break the investment and transfer the same to the bonds stipulated in Section 54EC. 22) In the present case, the bonds were not available from 4/8/2006 to 22/1/2007. The last date for investment in the normal course would have been 21/9/2006 which was extended upto 31/12/2006. The respondents ought to be entitled to an extension of the number of days between 4/8/2006 to 21/9/2006 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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