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TMI Blog2018 (2) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... ndates that investment in specified bonds to be made within prescribed time by the assessee either out of sale proceeds of capital asset or out of any other means. In the present case, admittedly the assessee had not made any investments in the specified bonds as per provisions of section 54EC of the Act, which has rightly been denied by the AO and confirmed by the CIT-A. In view of aforesaid discussion, we hold that since no amount was invested in the specified bonds mandated u/s. 54EC of the Act, the lower authorities have rightly rejected the claim of assessee in this regard. - Decided against assessee. - IT (SS) No. 159/Kol/2014 - - - Dated:- 9-2-2018 - Shri M. Balaganesh,Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member Appellant by : Shri Ankit Jalan, ld.AR Respondent by : Shri Anand R. Baiwar, CIT, ld.DR ORDER Shri S.S.Viswanethra Ravi: This appeal by the Assessee is against the order dt: 21-10- 2014 of the CIT-A, VI, Kolkata for the A.Y 2011-12. 2. Brief facts of the case are that the assessee is an individual and a citizen of United Kingdom. A search seizure operation was conducted u/s. 132 of the Act on the assessee at the Neta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 lakhs per Marlas and the said amount was received by the assessee in cash from sale of said property through through property dealer, Shri Avtar Singh. A statement of Shri Avtar Singh was recorded u/s. 131 of the Act, wherein he stated that the assessee sold an ancestral land measuring 18 Marlas to Shri Mukesh Kumar @ ₹ 4.25 lakhs per Marlas. The assessee received ₹ 1,00,000/- as token money and ₹ 10,00,000/- as advance money and remaining balance of ₹ 66,00,000/- in cash on 24-01-2011, but the land was registered at ₹ 20,00,000/- instead of actual value received. The AO requested the assessee to furnish the evidences of payment of brokerage and other expenses. In response to which, the assessee stated that the brokerage of ₹ 1,50,000/- was paid to Shri Avtar Singh and remaining ₹ 3,00,000/- lakhs were incurred for assessee towards travelling, lodging food expenses in connection with said transaction. For non production of any supporting evidences, the AO disallowed the sum of ₹ 4,50,000/- under the head brokerage other expenses and added the same by stating as under:- 13. The submission of the AR is considered but found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary,2011 and conveyance of the sold out property was given to the purchaser on 24th January 2011 after receipt of the entire sale consideration of ₹ 76,50,000/- in the forenoon of 24th January itself, all these happened within a period of 7 days only. So the period commencing from 25th January, 2011 to 2nd February, 2011 for the assessee s stay in India is not even remotely connected with the sale of the property in question. Third, the assessee s claim of board and lodging in a hotel is also not supported by any evidence. In the light of above facts and circumstances of the case, it is held that the assessee s claim for deduction of aforesaid expenses is not tenable, which was ostensibly made to reduce his tax liability. The claim is, accordingly, rejected. In view of above, the AO disallowed the sum of ₹ 4,50,000/- under the heads Brokerage Other expenses and added the same to the total income of the assessee. 6. Aggrieved, the assessee filed appeal before the CIT-A. Before him the assessee contended that the said expenditure were incurred during the course of sale of said ancestral property (land) and they were directly related to the source of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduce documentary evidence for brokerage. However, it is quite common that for such transaction no proper bills or other documentary evidence is maintained by the parties. The land sold was for ₹ 76.5 lakhs and brokerage of ₹ 1.5 lakhs which comes to around 2%. It is common knowledge that brokers normally charge brokerage in that range for land transaction. Considering these facts, I am of the view that the claim for brokerage of ₹ 1.5 lakhs made by the appellant is reasonable. The disallowance of brokerage is therefore, deleted. 3.3. Coming now to the balance claim of deduction of ₹ 3 lakhs, the appellant has stated that he had travelled from UK only for the purpose of land deal and has spent an amount of ₹ 3 lakhs approximately on ticket, food and lodging etc., although no documents were maintained in respect of the expenses. The assessing officer has disallowed the entire amount claimed stating that the appellant could not produce evidence in respect of the expenses incurred and to establish that they were incurred only for purpose of sale of land. However, it is undisputed that the appellant was based at UK and had made trip to Phagwara, Punj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d perused the material on record. We find that the facts relating to the issue in hand are that the assessee came to India to complete the sale transaction of the said ancestral property. During the sale transaction, the assessee stayed in India and incurred other expenses of ₹ 3 lakhs towards airfare, fooding lodging expenses. We find that the assessee did not produce any documentary evidence either before the AO or the CIT-A in support of the claim of towards lodging, fooding and travelling expenditure incurred by the assessee during the said transaction. However, the CIT-A considering the submissions of assessee has restricted the same to ₹ 1.50 lakhs i.e. 50% of ₹ 3 lakhs under the head other expenses . In our opinion, it is quite, reasonable and justified in the facts and circumstances of the case. Therefore, our interference is uncalled for on this issue. We uphold the order of the CIT-A in restricting the same on this issue. Therefore, the ground no. 1 relating to other expenses is dismissed. 11. Ground nos. 2 3 relating to confirmation of disallowance of ₹ 40,00,000/- towards claim of exemption u/s. 54EC of the Act by the CIT-A. 12. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. ] [Emphasis added] 16. In light of the above provision, the AR of the assessee vide order sheet noting dt.04.03.20 13 was requested to show cause why in the absence of evidence of investment made u/s. 54EC, the assessee s exemption claim to the extent of ₹ 40,00,000/- should not be disallowed. The AR of the assessee in his reply dt. 06.02.2013 submitted that the assessee intended to purchase the National Highways Authority of India Bonds of ₹ 40,00,000/- but failed to do the same due to seized cash amount of ₹ 49,00,000/-. It is, therefore, evident that no actual investment u/s. 54EC of the Income Tax Act amounting to ₹ 40,00,000/- was made by the assessee. The assessee has claimed the said exemption based on his intention to invest in such bonds however, the Section 54EC(1) of the Act specifically provides that exemption can be allowed provided that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,132A of the Income Tax Act, 1961 on 26th January 2011 and on the same day the whole amount of the sate proceed was seized by the officials and taken away from the appellant. Ultimately the amount received by the appellant from the sale proceeds was taken over and the appellant had nothing in his hands. However the appellant while computing the capital gain had taken exemption of ₹ 40,00,000/- U/s. 54EC Of the Income Tax Act, 1961. Section 54EC of the Income Tax Act, 1961 states that: . 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 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; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anybody to do the impossible which your honour clearly exist in the present case. It is to be noted that a taxing statue or any other statute has to be construed reasonably and every effort should always be made to ascertain the intention of the parliament from the words employed and, as far as possible, an interpretation which lead to absurdity should be avoided. If the consideration is not received or is not in the hands of the assessee the question of investing it does not arise and hence the exemption on provisional basis as computed by the appellant is justified and should be allowed. Moreover to support the same [would like to refer the decision taken by the hon'ble lTAT, Calcutta Bench, in the case of [Chanchal kumar Sircar Vs. lNCOME TAX OFFICER Wd 32(1) (ITA No. 1146/kol/2011)] whereby it was held that - In view of the above consistent principle adopted by Hon'ble High Courts in respect to interpretation of a beneficial provision i.e. exemption provision under capital gains tax, we have to take similar approach in deciding the issue in hand i.e. the claim of assessee for exemption u/s. 54EC of the Act because this is exactly similar to section 54E, 54B or 54E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. Assessing Officer was not justified in not considering the facts of the case and ignored the fact that the appellant was not having the cash with himself and was prevented to make the investment in the specified bonds and vehemently and wrongly disallowed the exemption without considering the merits of the case. 14. The CIT-A considering the submissions of the assessee confirmed the order of the AO by observing that the assessee could have arrange funds from some other sources to make the investment within prescribed time. Relevant portion is reproduced herein below: 4.2 It is undisputed, that the appellant has not made any investment in eligible bonds within the prescribed period. However, the appellant has stated that he intended to make investment but could not do so because of the money being under seizure. The appellant has also referred to the decisions of the tribunal in the cases of Chanchal Sirkar (supra) and Mahesh Nemichandra Ganeshwada (supra). On going through the said decisions, it is seen, that they were delivered on entirely different facts. In both the cases, investments had been made but there was some delay due to late receipt of sale considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,00,000/- was seized by the IT Authority. The facts in respect of sale of land, search seizure operation, issuance of notice u/s. 153A of the Act and filing of return for the A.Y under consideration are undisputed. It is also not disputed that the amount of sale of said land was lying in the custody and in the account of Government. We find that in response to notice issued u/s. 153A of the Act, the assessee filed his return of income on for the A.Y under consideration and claimed exemption of ₹ 40,00,000/- u/s. 54EC of the Act. Both AO CIT-A have denied the claim of exemption of ₹ 40,00,000/- for want of proper evidence showing the capital gains were invested in specified bonds i.e provided by the Government of India, National Highway Authority Bonds (NHAI). The deduction u/s. 54EC of the Act is permissible if the amount representing the long term capital gain is invested in specified bonds within prescribed time. In the present case, the assessee had admitted that he had not made any investments in specified bonds notified u/s. 54EC of the Act. The assessee only claims that since the major portion of the sale proceeds of the property amounting to ₹ 49,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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