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TMI Blog2014 (1) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... advance relatable to the capital asset it was not taken as income - This advance shall be adjusted when the property would be transferred and the capital gain computed - The advance could be adjusted against the purchase price when the transfer of the property is taken place, i.e. in the year under consideration. Section 54EC provides for exemption in respect of capital gain arising from transfer of a long term capital asset if the same was invested at any time within a period of six months after the date of transfer of the capital asset - The investment of Rs.20 lakhs was made in the financial year 2006-07, i.e. before the date of transfer - The lower authorities have rightly found that the assessee is not entitled for exemption u/s 54E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . According to the ld.representative, the assessee claimed exemption u/s 54EC of the Act for the assessment year 2006-07 and the assessing officer accepted the claim of the assessee. During the assessment year under consideration, the assessee has received another sum of Rs.50 lakhs and the same was deposited in the REC capital gain bond. However, the assessing officer disallowed the claim of the assessee for exemption with regard to Rs.20 lakhs on the ground that the deposit was made before the date of transfer. The ld.representative further submitted that section 2(47) of the Income-tax Act defines "transfer". Under sub clause (v), if the purchaser was allowed to retain the possession of the property as part performance of the contract, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the ld.DR, there cannot be any justification in claiming now that the property was transferred on 01- 02-206. 5. We have considered the rival submissions on either side and also perused the material available on record. Though the transfer of property exceeding more than hundred rupees requires registered sale deed under the common law, the Income-tax Act being a special enactment provides a different definition for transfer of property. Under section 2(47)(v), if the possession was handed over as part performance of the agreement, then, there is a "transfer" within the meaning of section 2(47) of the Income-tax Act, even though there may not be a "transfer" under the common law. Therefore, for the purpose of "transfer" unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t taken as income. This advance shall be adjusted when the property would be transferred and the capital gain computed. Thus, the advance could be adjusted against the purchase price when the transfer of the property is taken place, i.e. in the year under consideration. 8. We have carefully gone through the provisions of section 54EC of the Act. Section 54EC provides for exemption in respect of capital gain arising from transfer of a long term capital asset if the same was invested at any time within a period of six months after the date of transfer of the capital asset. In this case, admittedly, the investment of Rs.20 lakhs was made in the financial year 2006-07, i.e. before the date of transfer. Therefore, the lower authorities have ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be exercised by the CIT(A). However, when the income of the assessee is increased, he has to give a notice of enhancement and seek the comments / response from the assessee as required u/s 251(2) of the Income-tax Act. In this case, the CIT(A) restricted the cost of improvement to Rs.5 lakhs instead of Rs.10 lakhs allowed by the assessing officer. This Tribunal is of the considered opinion that the CIT(A) is not justified in increasing the income by restricting the cost of improvement without issuing a notice of enhancement. However, this is a rectifiable defect. Therefore, the order of CIT(A) is set aside and the issue of cost of improvement is remanded back to the file of the CIT(A). The CIT(A) shall issue notice of enhancement to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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