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TMI Blog2024 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... to sell a capital asset is invested in specified Bonds, benefit of Section 54EC of the Act is available to the assessee. We are of the considered view that the assessee is eligible to claim deduction u/s 54EC of the Act since the assessee has been above to establish the direct nexus between the advance so received by the assessee towards sale of property and the investment made by the assessee in NHAI Bonds. Appeal of the assessee is allowed. - Smt. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Appellant : Shri Mehul K. Patel, A.R. For the Respondent : Shri Rignesh Das, Sr. DR ORDER PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration claimed for this transaction was ₹8,25,00,000/-, which as per the Assessing Officer lacked documentary support or justification on part of the assessee s. Consequently, to ensure the assessment was completed before the limitation period expired on December 31, 2011, the AO consulted the prevailing jantri/fair market value of residential properties in Andheri (West), and determined a market value of ₹11,651/- per square foot. This led to a calculated sale value of approximately ₹35,93,75,095/- for the entire property, to be equally shared among the co-owners. The Learned Commissioner of Income Tax directed the AO to adopt a sale consideration of ₹2.75/- crores, which represented one-third of the ₹8.25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the deduction was inappropriately claimed, since the investment was sourced from personal funds rather than capital gains from the property sale. 4. In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee by observing that that the assessee did not meet the burden of proof under Section 54EC of the Act. Consequently, the addition of ₹50,00,000/- made by the AO was confirmed by Ld. CIT(Appeals). 5. The assessee is in appeal before us against the addition made by the Assessing Officer. 6. Before us, the Counsel for the assessee submitted that the issue under appeal is on a limited point, which is whether the assessee is eligible to claim deduction under Section 54EC of the Act, in respect of investments made in NHAI Bonds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a direct nexus between the advance received by the assessee towards sale of property and investment made by the assessee in the NHAI Bonds amounting to Rs. 50 lakhs, as is evident from the bank statement of the assessee, submitted during the course of appellate proceedings. 7. In response, the Ld. D.R. placed reliance on the observations made by Ld. CIT(A) in the appellate order. 8. We have heard the rival contentions and perused the material on record. 9. It would also useful to reproduce Circular No. 359 dated 10.05.1983, for ready reference which specifies that if the assessee invest the earnest money or advance money in specified assets before the date of transfer of asset, the amounts so invested will qualify of exemption under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash Vinayak Supnekar, 77 taxmann.com 226 (Bombay) held that when amount received as advance by the assessee under an agreement to sell a capital asset is invested in specified Bonds, benefit of Section 54EC of the Act is available to the assessee. While passing the order the High Court made the following observation: 6. We find that the Sale Deed dated 5th April, 2007 is produced. This itself in clause (d) thereof records the fact that the Agreement to Sale had been entered into on 21st February, 2006 in respect of the subject property and the amounts being received by the vendor (respondent assessee) under that Agreement to Sale. Thus, these amounts when received as advance under an Agreement to Sale of capital asset are invested in specif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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