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TMI Blog1983 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... n a prescribed form were sent by the petitioner to the State Bank of India through State Bank of Patiala, Patiala, on January 23, 1981, i.e., well within the statutory period of six months from the date of transfer. The State Bank of India on receipt of this amount made the necessary entries in the receipt register on January 28, 1981, which again was within the prescribed period. On May 22, 1981, the Reserve Bank of India informed the petitioner that he was not entitled to exemption from the capital gains tax as the investment in the scheme had been made by him beyond the period of six months from the receipt of consideration. A copy of this letter is annexed as annex. P-6 to the petition. The petitioner wrote to the Reserve Bank of India and the State Bank of India, Chandigarh, that the application form of the petitioner for investment of Rs. 40,000 with the Bonds duly filled in and signed having been sent on January 23, 1981, along with a bank draft for the said amount, was within the prescribed period of six months from August 1, 1980, and that the objection that the investment had been made beyond six months was wholly untenable. The State Bank of Patiala, Patiala, also add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of the property in the Bonds within six months, i.e., by February 1, 1981. Since in this case, the complete application was received on February 12, 1981, Shri Kesho Ram Passey's investment became ineligible for exemption under s. 54E of the, Act. Despite repeated representations by the petitioner, the Reserve Bank of India did not change their stand. Aggrieved, the petitioner has filed this writ petition. Separate returns have been filed on behalf of the State Bank of India and the Reserve Bank of India. In their return, the State Bank of India have admitted all the pleas raised by the petitioner. They have admitted that they had received the application along with a bank draft of Rs. 40,000. It has been averred that a bank draft is L negotiable instrument and the delivery thereof to the State Bank of India amounts, in law, to payment to the State Bank or deposit with it. It is a statutory agent of the Reserve Bank of India. Payment to an agent is payment to the principal. The payment of Rs. 40,000 was received in law by the State Bank on January 28, 1981. It was denied that the petitioner is not entitled to the exemption from capital gains tax or that the investment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, has argued that the provisions of s. 54E of the I.T. Act and the notification issued in pursuance thereof postulate that in order to earn an exemption from the capital gains tax the assessee should invest the net sale proceeds of the immovable property sold by him, within six months of the transfer, in the Bonds. Since, in the present case, the bank draft for Rs. 40,000 which is a negotiable instrument, along with an application had been handed over to the State Bank of India, Chandigarh Branch, oil January 28, 1981, the money stood invested in the Bonds because the State Batik of India was an authorised agent of the Reserve Batik of India and could receive the payments and applications. On the other hand, Mr. H. S. Brar has argued that the application made by the petitioner when submitted to the State Bank was incomplete. It lacked in material information in so far as its col. No. 4 had not been filled in. This was not a competent application and no action could be taken on it. When a complete application was filed, the limitation of six months had already expired. In order to appreciate the contentions raised by the learned counsel for the parties, it will he appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offices of the Reserve Bank of India at Ahmedabad, Bangalore, Bombay (Fort and Byculla), Calcutta, Hyderabad, Jaipur, Kanpur, Madras, Nagpur, New Delhi and Patna; and (b) the following branches of the State Bank of India, Agartala Branch, Aizwal Branch, Bhopal Main Branch, Bhubaneshwar Branch, Chandigarh Branch, Gangtok Branch, Gauhati Branch, Imphal Branch, Itanagar Branch, Kohima Branch, Panaji Branch, Pondicherry Branch, Port Blair Branch, Shillong Branch, Simla Branch, Srinagar Branch and Trivandrum Branch. (3) Applications shall be submitted in duplicate, in the form attached hereto or in such other form which may be so varied as the circumstances of each case may require ...... (4) Applications should be accompanied by the necessary payment in the form of cash or cheque. Cheques tendered at the office of the Reserve Bank of India or the State Bank of India should be drawn in favour of the bank concerned. " It is manifest from the language of s. 54E of the Act that the most important thing is that the capital gains arising from the transfer of capital asset should be invested or deposited in the new assets within period of six months. The investment or deposit is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opped from contending that the petitioner was not entitled to the benefits under section 54E of the Act." Even the authorities of the Reserve Bank of India are of the view, and rightly so, that ultimately it is the I.T. Dept. who has to accept or reject the claim of a person for exemption from capital gains tax. The authorities of the Reserve Bank of India have taken a highly technical view which cannot be supported on the language of s. 54E of the Act and the notification dated June 22, 1972 , issued thereunder. This view is not in consonance with the settled principles regarding the interpretation of statutory provisions relating to procedure. I can do no better than to quote a passage from the judgment of their Lordships of the Supreme Court in Kalipada Das alias Mahanto v. Bimal Krishna Sen Gupta [1983] 1 SCC 14 ; AIR 1983 SC 876. The facts of that case are that the appellant-tenants, during pendency of their , appeal before the High Court, twice failed to comply with the order of the High Court to supply copies of paper-books to it within a fixed period. The High Court thereupon dismissed the appeal on ground of non-compliance with its order. The Supreme Court allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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