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TMI Blog2020 (9) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... that for ₹ 50 lakhs, NHAI bonds invested were made in time, then why the assessee could not comply the law for other ₹ 17 lakhs which were invested also in NHAI bonds. Assessee could not explain anything in front of us at the time of hearing. We further find that the AO in his entire order has not discussed anything on this issue of investment of ₹ 17 lakhs in NHAI bonds by the assessee and whether they were according to the prescribed time limits as per section 54EC. AO has not given any reasoning or view in this matter. He has simply accepted the claim of the assessee granting exemption under the said provision. Assessee fairly conceded that there was a delay with regard to time limits prescribed in the statute for the said investment. When this issue has not been verified by the AO nor any independent enquiry conducted, nor any questions raised and when these facts are clear that in this issue the provisions of section 54EC has not been complied with by the assessee, the action of AO therefore, is erroneous and prejudicial to the interest of Revenue. CIT in his order passed u/s 263 is correct in holding that the assessee is not entitled for the claim of exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 2. The basic contentions of the Ld. CIT are twofold: (i) that the assessee has transferred only the development rights and not the entire house property and therefore, exemption u/s 54 of the Act cannot be claimed by the assessee, whereas only exemption u/s 54F of the Act can be claimed by the assessee on proportionate basis by taking the denominator as sale consideration and not capital gain. The other contention of the Ld. CIT was that NHAI bonds of ₹ 17 lakhs were purchased by the assessee after a period of six months from the date of sale of land i.e. 07.11.2012 and the claim of exemption is not admissible u/s 54EC of the Act. 3. In respect of first issue of exemption u/s 54 of the Act, the assessee has claimed the exemption which is available on sale of residential house. In the order passed u/s 263 of the Act, the Ld. CIT observes that on perusal of Development Agreement dated 07.11.2012 shows that the property sold is development rights in 533.17 sq.mtrs. of land / building being ancestral property situated at Prabhat Road, Shivaji Nagar, Pune. The Ld. CIT held that sale of development rights is not capital asset mentioned in section 54 of the Act. However, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book, wherein the entire documents have been annexed regarding the proceedings u/s 143(3) of the Act before the Assessing Officer. There is also a detailed notice u/s 142(1) of the Act along with questionnaire specifically asking from the assessee to furnish details of the sale of immovable property during the year. The assessee vide reply dated 29.02.2016 stated that during assessment year 2013-14, the assessee claimed deduction amounting to ₹ 40 lakhs u/s 54 of the Act for construction of house property. As per the terms of Development Agreement, the developer i.e. M/s. Pandit Javdekar Constructions is to construct a residential house for the assessee for consideration of ₹ 40 lakhs. The said consideration is to be discharged by the assessee against consideration of ₹ 5,40,00,000/- receivable from M/s. Pandit Javdekar Constructions. 5. We have perused the Development Agreement and all the relevant details and documents placed on record before us. We find that the spirit of Development Agreement is very clear that it is the house property along with land that has been transferred to the developer. It is not the case of transferring the development rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect also, the Ld. CIT opined that the order of Assessing Officer was erroneous and since the error was reducing the taxable income of the assessee, the same was also prejudicial to the interest of Revenue. The assessee on this issue has replied attributing various reasons for not making investment within prescribed time such as the assessee being in USA switching jobs, delay due to circumstances and the assessee always acted bonafidely with the proceedings of law. The assessee relied on the decisions in the cases of Dr. (Smt.) Sujatha Ramesh Vs. CBDT 299 CTR 261 (Kar), K. Parthasarathy Vs. ITO 49 taxmann.com 50 (Chennai-Trib.) and Mahesh Nemichandra Ganeshwade Vs. ITO (2012) 147 TTJ 488 (Pune-Trib). Placing reliance on these decisions, the assessee claimed that it is true that there was a delay but that delay was unintentional and caused by circumstances but it is also true that investments were made by the assessee in NHAI bonds, therefore, based on these judicial pronouncements, the delay should be condoned and the exemption u/s 54EC of the Act should be allowed. 7. We find that the Ld. CIT in his order has categorically observed at para 12 that the assessee though has made in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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