ACIT, New Delhi v. Mr. Ramesh Kumar Punjabi, New Delhi

ITA 1101/DEL/2010 | 2006-2007
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 110120114 RSA 2010
Assessee PAN ABBPP4673Q
Bench Delhi
Appeal Number ITA 1101/DEL/2010
Duration Of Justice 2 month(s) 11 day(s)
Appellant ACIT, New Delhi
Respondent Mr. Ramesh Kumar Punjabi, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 21-05-2010
Date Of Final Hearing 13-05-2010
Next Hearing Date 13-05-2010
Assessment Year 2006-2007
Appeal Filed On 11-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI K.G. BANSAL ACCOUNTANT MEMBER ITA NO. 1101/DEL/2010 ASSESSMENT YEAR: 2006-07 ACIT CIRCLE 47(1) 426 MAYUR BHAWAN NEW DELHI VS. SHRI RAMESH KUMAR PUNJABI A-206 SATISAR APTTS. PLOT NO. 6 SECTOR 7 DWARKA NEW DELHI PAN: ABBPP 4673 Q APPELLANT RESPONDENT APPELLANT BY : SHRI H.K. LAL SR . DR RESPONDENT BY : SHRI SANJAY AGGARWAL CA O R D E R PER: C.L. SETHI J.M. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 3 0.12.2009 PASSED BY THE LD. CIT IN THE MATTER OF AN ASSESSMENT MADE U/S . 143(3) OF THE INCOME TAX ACT 1961 (THE ACT) BY THE AO FOR THE A.Y. 20 06-07. 2. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE REVE NUE REVOLVING AROUND ONLY ONE ISSUE REGARDING THE DISALLOWANCE OF DEDUCT ION OF RS. 40 00 000/- U/S. 54EC ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN:- 1) DELETING THE ADDITION OF RS. 40 00 000/- AND CON SEQUENTLY ALLOWING THE ASSESSEE TO BE ELIGIBLE FOR EXEMPTION U/S. 54EC NOT APPRECIATING THE FACT THAT THE DATE OF SUB MITTING THE APPLICATION FOR THE PURCHASE OF THE BONDS THE ISSUE ITA NO. 1101/DEL/2010 PAGE 2 OF 7 UNDER DISPUTE CANNOT BE READ AS DATE OF MAKING PAY MENT FOR INVESTMENT. 2) THAT THE CBDTS CIRCULAR NO. 261 DATED 08.08.79 IS IN CONTEXT OF PAYMENT OF GOVERNMENT DUES WHICH IS NOT THE CASE HERE BEING A PAYMENT OF OBTAINING BONDS TO GET EXEMPTION U/S. 54EC OF THE I.T. ACT 1961. 3) THAT EVEN OTHERWISE THE CENTRAL GOVERNMENT ACCOUNT (RECEIPTS & PAYMENTS) RULES 1983 HAVE BEEN FRAMED WHICH PROVIDE THAT PAYMENT OF GOVERNMENT DUES TENDE RED IN FORM OF CHEQUE/DRAFT SHALL BE THE DATE OF WHICH IT WAS CLEARED AND ENTERED IN THE RECEIPT SCROLL AND IN TH E PRESENT CASE THE CHEQUE WAS ENCASHED ON 03.10.2005 WHICH I S BEYOND THE DUE DATE. 3. IN THE RETURN OF INCOME FILED BY THE ASSESSEE THE ASSESSEE CLAIMED A DEDUCTION OF RS. 40 00 000/- U/S. 54EC ON ACCOUNT O F INVESTMENT MADE IN BOND OF NATIONAL HOUSING BANK AGAINST LONG-TERM CA PITAL GAIN FROM SALE OF SHARES SOLD BY THE ASSESSEE. IT WAS NOTICED BY THE AO THAT THE CAPITAL ASSET I.E. SHARES OF THE COMPANY GIVING RISE TO THE CAPIT AL GAIN ON SALE WERE SOLD BY THE ASSESSEE ON 01.04.2005 AND THUS IN ORDER TO AVAIL THE DEDUCTION U/S. 54EC THE ASSESSEE WAS REQUIRED TO MAKE INVESTMENT IN SPECIFIED BONDS WITHIN SIX MONTHS FROM THE DATE OF TRANSFER OF CAPI TAL ASSETS I.E. SHARES. HOWEVER ON PERUSING THE DETAILS OF PAYMENT IT WAS NOTICED BY THE AO THAT THE CHEQUE ISSUED BY THE ASSESSEE FOR PURCHASE OF S PECIFIED BONDS WAS CLEARED FROM THE BANK ACCOUNT ON 3 RD OCTOBER 2005 I.E. AFTER EXPIRY OF SIX MONTHS. THE AO THEREFORE ASKED THE ASSESSEE TO S HOW CAUSE AS TO WHY DEDUCTION U/S. 54EC SHOULD NOT BE DISALLOWED. IN R EPLY VIDE LETTER-DATED 22.12.2008 IT WAS SUBMITTED BY THE ASSESSEE THAT I NVESTMENT IN SPECIFIED ITA NO. 1101/DEL/2010 PAGE 3 OF 7 BOND WAS MADE BY THE ASSESSEE WITHIN SIX MONTHS AFT ER THE DATE OF TRANSFER OF SHARES IN AS MUCH AS THE ASSESSEE SUBMITTED APP LICATION FOR PURCHASE OF SPECIFIED BOND ON 29 TH SEPTEMBER 2005 ALONGWITH CHEQUE DATED 26.09.2005. THIS CONTENTION OF THE ASSESSEE WAS NO T ACCEPTED BY THE AO AS THE AO WAS OF THE VIEW THAT THE DATE OF PAYMENT FOR INVESTMENT IS TO BE TAKEN AS THE DATE ON WHICH THE AMOUNT HAD ACTUALLY GONE OUT OF THE ASSESSEES BANK ACCOUNT AND WHEN THE AMOUNT WAS REA LIZED BY THE BOND ISSUING AUTHORITY. THE AO THEREFORE HAD TAKEN TH E DATE OF INVESTMENT AS 03.10.2010 I.E. THE DATE ON WHICH THE CHEQUE WAS CLEARED FROM THE ASSESSEES BANK ACCOUNT. THE AO THEREFORE DISALL OWED THE ASSESSEES CLAIM OF DEDUCTION OF RS. 40 00 000/- U/S. 54EC AND FRAME D THE ASSESSMENT ACCORDINGLY. 4. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED AS UNDER:- THE LD. ACIT HAS ERRED IN DISALLOWING THE EXEMPTIO N U/S. 54EC OF RS. 40 00 000/- ON THE GROUND THAT THE CHEQUE OF INVESTMENT WAS CLEARED TWO DAYS AFTER THE END OF 6 MONTHS PERIOD; IN THIS MANNER HE ERRED IN TAKING THE DATE OF INVESTMENT AS MENTIONED IN THE SECTION 54EC WIT H THE DATE OF CLEARING OF CHEQUE THE LD. ACIT HAS ERRED IN OVERLOOKING AND NOT CONSIDERING THE CBDTS CIRCULAR NO. 261 DATED 08.08 .79 WHERE IN IT IS STATED THAT- ITA NO. 1101/DEL/2010 PAGE 4 OF 7 IN TERMS OF RULE 80 OF THE COMPILATION OF THE TREASURY RULES IF A CHEQUE OR DRAFT TENDERED IN PAYMENT OF GOVERNMENT DUES AND ACCEPTED UNDER THE PROVISIONS OF RULE 79 (IBID) IS HONOURED ON PRESENT ATION ON PRESENTATION THE PAYMENT IS DEEMED TO HAVE BEEN MADE ON THE DATE ON WHICH IT WAS OVER TO THE GOVERNMENT BANKERS. THE APPELLANT HAS RELIED ON THE CASE OF KANGOLD (IN DIA) LTD. VS. 1998 IT2-FJX-1489-GUJ WHERE IT HAS BEEN HE LD THAT- WHAT IS RELEVANT HERE IS PAYMENT AND NOT ENCASHMEN T OF THE CHEQUE IT IS SETTLED LEGAL POSITION THAT IN CASE OF PAYMENT BY CHEQUE THE PAYMENT IS DEEMED TO HAVE BEEN MADE ON THE DATE OF DELIVERY OF THE CHEQUE AND NOT ON THE DATE OF ENCASHMENT WHEN THE CHEQUE IS HONOURED.' IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT THE CHEQUE WAS HONOURED. THOUGH THE CHEQUE WAS ENCASHED ON 03.04.1998 THE PAYMENT MUST BE DEEMED TO HAVE BEEN MADE ON 30.03.1998 WHEN CHALLAN DATED 30.03.1998 WA S SUBMITTED BY THE PETITIONER TO THE RESPONDENT ALONG WITH CHEQUE. THEREFORE PAYMENT OF TAX WAS MADE WITHIN T HE PERIOD PRESCRIBED. 6. AFTER CONSIDERING THE AOS ORDER AND ASSESSEES SUBMISSIONS THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AND OBSERVING AS UNDER:- 5. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT CAREFULLY AND THE CASE LAW RELIED UPO N BY HIM. MOREOVER THIS ISSUED HAS BEEN DECIDED IN FAVO UR OF THE APPELLANT BY THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX BOMBAY SOUTH BOMBAY VS . OGALE GLASS WORKS LIMITED 25 ITR 529 THAT- THE POSITION THEREFORE IS THAT IN ONE VIEW OF TH E MATTER THERE WAS IN THE CIRCUMSTANCES OF THIS CASE AN IMPLIED AGREEMENT UNDER WHICH THE CHEQUES WERE ACCE PTED UNCONDITIONALLY AS PAYMENT AND ON ANOTHER VIEW VIE W ITA NO. 1101/DEL/2010 PAGE 5 OF 7 EVEN IF CHEQUES WERE TAKE CONDITIONALLY THE CHEQUE S NOT HAVING BEEN DISHONOURED BUT HAVING BEEN CASHED THE PAYMENT RELATED BACK TO THE DATES OF THE RECEIPT OF THE CHEQUES AND IN LAW THE DATES OF PAYMENTS WERE DATES OF THE DELIVERY OF THE CHEQUES. 7. BEING THE AGGRIEVED WITH THE CIT(A)S ORDER THE DEPARTMENT HAS PREFERRED THIS APPEAL BEFORE US. 8. THE LD. DR REITERATED THE REASONS GIVEN BY THE A O IN REJECTING THE ASSESSEES APPLICATION AND CONTENDED THAT SINCE THE CHEQUE WAS ACTUALLY CLEARED ON 03.10.2005 THE DATE OF INVESTMENT IN TH E BOND IS TO BE TAKEN AS 03.10.2005 WHICH IS UNDOUBTEDLY BEYOND THE PERIOD OF SIX MONTHS. HE MADE A REFERENCE TO THE CENTRAL GOVERNMENT ACCOUNT (RECEIPTS AND PAYMENTS) RULES 1983. 9. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND REITERATED THE SUBMISSIONS THAT WERE MADE BEFORE THE CIT(A) WHICH HAS ALSO BEEN REPRODUCED ABOVE HEREIN. THE LD. COUNSEL FOR THE A SSESSEE ALSO SUPPORTED THE REASONING GIVEN BY THE LD. CIT(A) IN DELETING THE ADDITION. 10. RIVAL CONTENTIONS OF BOTH THE PARTIES HAVE BEEN CONSIDERED AND ORDERS OF THE AUTHORITIES BELOW HAVE BEEN CAREFULLY PERUSE D. 11. IN THE PRESENT CASE WE ARE CONCERNED ABOUT THE DATE ON WHICH THE INVESTMENT IN BOND CAN BE SAID TO HAVE BEEN MADE BY THE ASSESSEE. THE PAYMENT MADE BY THE ASSESSEE IS TOWARDS PURCHASE OF BOND OF NATIONAL HOUSING BANK VIDE APPLICATION SUBMITTED AT DESIGNAT ED BANK I.E. CANARA ITA NO. 1101/DEL/2010 PAGE 6 OF 7 BANK CAPITAL MARKET NEW DELHI. IT IS NOT THE PAY MENT OF ANY GOVERNMENT DUES SUCH AS PAYMENT OF INCOME TAX SALES TAX OR E XCISE DUTY OR ANY OTHER DUES PAYABLE TO THE GOVERNMENT. THEREFORE RULES F RAMED WITH REGARD TO THE PAYMENT OF GOVERNMENT DUES IS NOT APPLICABLE TO THE PRESENT CASE. IN THE PRESENT CASE THE PAYMENT IS IN THE COURSE OF A CON TRACTUAL AGREEMENT BETWEEN THE INVESTOR AND BOND ISSUING AUTHORITY. I T IS NOT IN DISPUTE THAT ON 29.09.2005 THE ASSESSEE SUBMITTED APPLICATION FOR PURCHASE OF SPECIFIED BOND ENCLOSING THEREWITH CHEQUE NO. 079360 DATED 2 6.09.2005. IT IS ALSO NOT IN DISPUTE THAT THE AFORESAID CHEQUE WAS ULTIMA TELY HONOURED AND ENCASHED. IT IS NOT THE CASE OF THE DEPARTMENT THA T ON THE DAY WHEN THE CHEQUE WAS PRESENTED TO CANARA BANK THE ASSESSEE H AD NO SUFFICIENT MONEY AVAILABLE IN THE BANK ACCOUNT TO HONOUR THE CHEQUE. THE APPLICATION SO SUBMITTED BY THE ASSESSEE WAS ACCEPTED BY THE DESIG NATED BANK ON 29.09.2005 ITSELF. MERE BECAUSE THE BANK HAD TAKEN SOME TIME TO ENCASH THE CHEQUE THAT BY ITSELF CANNOT BE A CRITERIA TO SA Y THAT THE AMOUNT WAS NOT ACTUALLY PAID ON 29.09.2005 BUT ON 03.10.2005 WHEN THE CHEQUE WAS CLEARED. IN ORDER TO AVAIL THE BENEFIT OF SECTION 54EC THE CAPITAL GAIN HAVE TO BE INVESTED IN A LONG TERM CAPITAL GAIN SPECIFIE D WITHIN A PERIOD OF SIX MONTHS OF THE DATE OF THE TRANSFER OF CAPITAL ASSET . IT IS THUS CLEAR THAT FOR THE PURPOSE OF THE PROVISIONS OF SECTION 54EC THE DATE OF THE INVESTMENT IS RELEVANT. SINCE IN THE PRESENT CASE THE ASSESSEE HAD MADE AN APPLICATION FOR ITA NO. 1101/DEL/2010 PAGE 7 OF 7 PURCHASE OF SPECIFIED BONDS ON 29.09.2005 ALONGWITH CHEQUE AND THAT APPLICATION WAS RECEIVED BY DESIGNATED CANARA BANK ON THAT DATE ITSELF AND THE ASSESSEE HAD SUFFICIENT BALANCE IN THE BANK ACC OUNT ON THAT DATE TO HONOUR THE CHEQUE AND THE CHEQUE WAS ULTIMATELY HO NOURED AND ENCASHED IN DUE COURSE OF TIME IT SHALL BE DEEMED THAT THE ASS ESSEE HAD MADE THE INVESTMENT IN SPECIFIED BOND ON 29.09.2005 WHICH I S UNDOUBTEDLY WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF S HARES SOLD ON 01.04.2005. WE THEREFORE UPHELD THE ORDER OF THE CIT(A) IN DI RECTING THE AO TO ALLOW THE ASSESSEES CLAIM OF DEDUCTION OF RS. 40 00 000/ - U/S. 54EC OF THE ACT ON ACCOUNT OF INVESTMENT MADE IN SPECIFIED BONDS. 12 IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. 13. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 21 ST MAY 2010. SD/- (K.G.BANSAL) ACCOUNTANT MEMBER SD/- (C.L. SETHI) JUDICIAL MEMBER DATED: 21 ST MAY 2010 *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR