Unreported Decisions – November 2021
By Ajay R. Singh, Advocate and CA Rohit Shah
1. S. 54EC: The tax-payer cannot be asked to do impossible- Investment within 6 months of receipt of consideration after date of transfer :
Assessee had sold TDR for an amount of Rs. 1,45,92,750/- vide agreement dated 06-08-2008 and long term capital gains to the tune of Rs. 47,35,420/- were computed by the assessee as per provisions of the Act. It was observed by the AO that capital gain of Rs. 24,85,420/- was claimed to be invested in NHAI/REC Bonds on 26-03-2009 and exemption u/s 54EC of 1961 Act was claimed by the assessee. The AO observed that the last date of making investment in REC/NHAI Bonds for claiming exemption u/s 54EC should have been on or before 06-02-2009 hence claim of the assessee for exemption u/s 54EC of the Act was rejected. Before Ld. CIT(A), it was submitted by the assessee that last payment towards sale consideration on transfer of TDR was received on 15-11-2008 and period of 6 months should be reckoned from this date. The assessee relied upon circular no 791 dated 02-06-2000 issued by CBDT. The Ld. CIT(A) held that the CBDT circular covers the situation of conversion of capital asset into stock-in-trade and the time is allowed till when the stock-in-trade is actually sold or otherwise transferred by the assessee which is not the issue in the present case and, hence, this circular is not applicable to the facts of the assessee’s case and thus upheld action of the AO.
The Hon’ble ITAT held that, the second installment of Rs. 35,00,000/- was received on 26-09-2008 and if the period of six month is reckoned from this date of second installment, the assessee has made the investment within time stipulated u/s 54EC of Act of six months as investment in REC/NHAI Bonds of Rs. 43,51,000/- was made on 26-03-2009. The section encourages making investments in REC/NHAI bonds out of long-term capital gains on transfer of original asset earned by tax-payer and is to be construed reasonably to give full effect to the beneficial provisions and it cannot be interpreted in a manner to frustrate the intent of legislature. The tax-payer cannot be asked to do impossible, as in cases if the consideration is not received by the tax-payer on sale / transfer of long-term capital assets but is received subsequently as provided in an agreement to sale, the tax-payer cannot be expected to invest in REC/NHAI Bonds out of his own other sources or to make borrowings to invest in NHAI/REC Bonds to claim exemption u/s 54EC of Act and thus, allowed the appeal.
Lemes E. D’ Souza Vs. ITO Ward- 21(3)(3)
[ITA No. 5802/MUM/2013 ; Bench : A ; dated : 10/4/17 ; A.Y. 2009-10]
Lemes E. D’ Souza2. Condonation of delay in filing the appeal before Ld. CIT(A) – by making delay in filing appeal before the ld.CIT(A), the assessee would not achieve anything – Delay condone:
Assessment order under section 144 rws 147 of the Act was passed by the AO on 21.12.2017. Against this order assessee preferred a belated appeal before the Ld. CIT (A), there was a delay of 66 days. The reason explained that Assessee was not aware about the passing of the assessment order, and the proceedings which were going on before the AO. The Ld. CIT (A) observed that there was no reasonable and sufficient cause which prevented the assessee to file the appeal within the stipulated time. He accordingly rejected the delay condonation and dismissed the appeal. Assessee filed appeal against the order of the Ld. CIT (A), before the Tribunal. Assessee reiterated submission made before Ld. CIT (A). It was prayed that small delay of 66 days in filing the appeal be condoned and matter be remitted to the Ld. CIT (A) for adjudication on merit, because the assessee has good case on hand and hope to succeed the same.
The Hon’ble Tribunal while directing Ld. CIT(A) to condone the delay held that the expression “sufficient cause” employed in the section has also been used identically in sub-section 3 of section 249 of the Act, which provides powers to the ld. CIT(A) to condone the delay in filing the appeal before him. Similarly, wordings has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. Reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353 was also taken:
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Ordinarily a litigant does not stand to benefit by lodging an appeal late.
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Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
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"Every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common sense pragmatic manner.
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When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
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There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
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It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”
The Tribunal held that the assessee was not aware about the assessment order or about the proceedings at the level of the assessment officer. Immediately, when she came into the knowledge about the order, she e-filed the appeal, and in the process delay of 66 days was occurred. It is pertinent to take note that by making delay in filing appeal before the ld.CIT(A), the assessee would not achieve anything. Thus, such delay cannot be adopted as a strategy. The ITAT condoned the impugned delay, and set aside order of the ld.CIT(A).
Smt.Rupa Maheshbhai Gandhi vs ITO, Ward-3(2)(10) Ahmedabad
[ITA No.2224/Ahd/2018 ; Bench SMC ; dated : 1/6/2021 ; AY: 2010-11 ]