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TMI Blog2016 (12) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... ied assets being REC Bonds on 24-04-2009 which is within six months from the end of the month in which transfer took place i.e. October 2008 , the original asset having being sold on 13-10-2008 . - Decided in favour of assessee. - I .T.A. No.1964/Mum/2014 - - - Dated:- 19-12-2016 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : None For The Revenue : Shri Neil Philip ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 1964/Mum/2014, is directed against the appellate order dated 27th December, 2013 passed by learned Commissioner of Income Tax (Appeals)- 29, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2009-10, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 26th December, 2011 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called the Act ). 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- A) Additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal raised by the assessee before the tribunal. Section 50C of the Act is a deeming provisions and is reproduced hereunder: [Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed by the stamp valuation authority under sub-section (1) has not been disputed in any appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the assessee was required to invest the capital gains earned on sale of property within six months of the sale of property on 13-10-2008 and in assessee s case the period envisaged in the provisions of section 54EC of the Act for making investment in bonds as stipulated u/s 54EC of the Act has expired on 12th April, 2009. The AO observed that the assessee has made investment on 24th April, 2009 and the bonds were issued on 30-04-2009, which is beyond the prescribed limit i.e. within six months from the transfer of the property which in the opinion of authorities below had expired on 12th April, 2009 while the assessee made investment beyond the period stipulated u/s 54EC of the Act and hence not eligible for deduction u/s 54EC of the Act. The assessee submitted that the assessee had made investment of ₹ 9 lacs in REC Bonds and ₹ 8.50 lacs in NHAI Bonds on 31st March, 2009 through broker India Infoline Limited , but the said investment could not go through as the books of the said companies were closed on 28th March, 2009 . Hence, application was submitted in HDFC bank on 24th April, 2009 and the REC bonds were issued on 30th April, 2009. The contentions of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking the investments was on or before 12th April, 2009 whereas the assessee has made investment on 24th April, 2009 which is much beyond the period of six months, hence, assessee is not eligible for exemption of the capital gains u/s 54EC of the Act and accordingly the learned CIT(A) upheld the assessment order of the A.O. , vide appellate orders dated 27-12-2013 passed by learned CIT(A). 8. Aggrieved by the appellate order dated 27-12-2013 passed by the ld. CIT(A), the assessee is in appeal before the Tribunal. 9. At the time of hearing before the Tribunal, none appeared on behalf of the assessee, hence, we proceed to dispose of the appeal after hearing the ld. D.R. 10. The ld. D.R. submitted that the assessee has made investment in REC bonds only on 24th April, 2009 which is much beyond the expiry of period of six months which expired on 12-04-2009 as per the provisions of section 54EC of the Act hence the assessee is not entitled for the exemption of long term capital gains u/s 54EC of the Act . The ld. D.R. further relied on the order of the ld. CIT(A). 11. We have heard ld. D.R. and also perused the material available on record. We have observed that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of its acquisition, the amount of capital gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such long-term specified asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1) shall be deemed to be the income chargeable under the head Capital gains relating to long-term capital asset of the previous year in which the longterm specified asset is transferred or converted (otherwise than by transfer) into money. Explanation.-In a case where the original asset is transferred and the assessee invests the whole or any part of the capital gain received or accrued as a result of transfer of the original asset in any long-term specified asset and such assessee takes any loan or advance on the security of such specified asset, he shall be deemed to have converted (otherwise than by transfer) such specified asset into money on the date on which such loan or advance is taken. [(3) Where the cost of the long-term specified asset has been taken into account for the purposes of clause (a) or clause (b) of sub-section (1),- (a) a deduction from the amount of income-tax with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within a period of six months after the date of transfer of the original asset. The word month is not defined under the Act. The word month is defined under Section 3(35) of The General Clauses Act, 1897 which is reproduced as hereunder: 3. Definitions.- In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,- *** *** 35. Month shall mean a month reckoned according to the British calendar. Section 54EC of the Act clearly stipulates that investment should be made in a specified assets at any time within a period of six months after the date of transfer of the asset. In the instant case, the assessee complied with this condition as the word month has to be reckoned as per the British Calendar. The REC bonds were subscribed by the assessee on 24-04-2009 and were allotted to the assessee by REC on 30th April, 2009 which is within six months after the date of transfer of asset as per British Calendar month, hence, the assessee fulfilled the conditions laid down under section 54EC of the Act and as such assessee is eligible for deduction u/s 54EC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred 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 capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section. 5.1 After hearing the submissions of both the side we are of the view that to resolve the controversy exactly, it is required to know that for the purpose of Sec 54 EC of the IT Act 1961, the period of investment should be calculated as six months after the date of transfer or to be reckoned 180 days from the date of transfer. This is the crux of the issue. 5.2 We shall first deal with the arguments of learned DR because this controversy was referred to us at the behest of the Revenue Department. The argument of learned DR is that the term month is to reckon from the date when an event takes place upto the date of the following month. In other words learned DR has pleaded that in ordinary sense a month is a period form a specified date in a month, to the date numerically corresponding to that date in the following month, less one. The argument is that since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar v. ITO, [2012] 50 SOT 289/18 taxmann.com 304 (Kol.). We are in agreement with this legal proposition being laid down by the Hon'ble courts but to resolve this controversy we feel that a little more deliberation is required instead of deciding only on the basis of this thumb-rule. 5.5 While dealing with this type of incentive provisions we may like to mention that it is neither a question of liberal interpretation of statute or a 'literal interpretation of statute', but it is a matter of purposive construction of statute or constructive interpretation of statute . A true intention of the enactment is required to be considered by a court of law. In the present case, the intention is to attract investment to be used for the development of infrastructure etc. The question as to whether a statute is mandatory or directory, depends upon the intent of the legislator and not upon the language in which it is clothed. The meaning and intention of the legislator is to judged by the language, but these are to be considered not only from phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Hon'ble Court was that IT Act, 1961 itself does not define the word month however Section 3 of General Clauses Act, 1987 define the word month means a month reckoned according to British calendar. In this context a decision of Hon'ble Calcutta High pronounced in the case of CIT v. Brijlal Lohia Mahabir Prasad Khemka [1980] 124 ITR 485/[1981] 5 Taxman 93 has also been generally cited wherein it was held that the words however considering month during which the default continued as appeared in Section 271(1)(a) refer only to a month during the whole of which the default continued and not to a month during which only part of which default continued. Likewise in the case of Harnand Rai Ramanand v. CIT [1986] 159 ITR 988/24 Taxman 571 (Raj.), and B.V.Aswathaiah Bros. v. ITO [1985] 155 ITR 422/[1986] 27 Taxman 560 (Kar.) it was held that a month is a British calendar month . 6. The subtle question is that whether the word month refers in this section a period of 30 days or it refers to the months only. Section 54EC, if we read again prescribes that an investment is required to be made within a period of six months. Whether the intention of the legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s-omissus but replicated as per the language used. 7.1 In the present case there is no dispute about the investment which had actually been made by the assessee. The said investment had been made in the month of December, 2008. However, alleged to be few days late from the date of transfer in the month of June, 2008. It is not the case of the Revenue that the appellant had altogether fudged the dates. Once the purpose of the introduction of the section was served by making the investment in the specified assets then that purpose has to be kept in mind while granting incentive. 7.2 We hereby hold that the investment in question qualifies for the deduction U/s 54EC. Resultantly assessee's grounds are hereby allowed. The question referred is answered in favour of the assessee. Thus based on our above reasoning and detailed discussions, the assessee succeeds on these grounds and we hold that the word month as stipulated in Section 54EC of the Act clearly postulate that the investment in long term specified assets is to be made within six months from the date of transfer of original asset , as the word month has not been defined under the Act , the reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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