Issue:
The issue before the Tribunal was – whether for the purpose of section 54EC the period of investment of six months should be reckoned after the date of transfer or from the end of the month in which transfer of capital asset took place? The assessee had earned Long Term Capital Gain on sale of a flat. She invested the gain earned in purchase of NHAI bonds and claimed deduction u/s. 54 EC. The sale of flat took place on 10th of June, 2008 and the bonds were purchased on 17th of December, 2008.According to the AO, the assessee was required to invest the capital gain in the specified asset within a period of six months from the date of thetransfer i.e. 10th of December 2008, and that requirement was not complied with by the assessee; hence, not eligible for the deduction u/s. 54EC of IT Act. The contention of the assessee was that since the application for the purchase ofthose bonds was tendered in the bank on 8th December, 2008,which was within the period of six months from the date of the transfer of the Long Term Capital Asset, the assesseewas eligible for the deduction u/s. 54EC.
Alternatively, the assessee’s contention was that up to the endof the month of December 2008, the said investment waseligible for the deduction. According to the AO as well as the CIT(A), the assessee was unable to establish that the impugned application for investment in NHAI bond was actually tendered on 8th of December, 2008. They were also not convinced with the alternate contention of the assessee.
Before the Tribunal, the revenue justified the orders of the lower authorities and contended that the Income-tax Act and the Income-tax Rules have used two types of phraseology in respect of the computation of period for the purpose of prescribing a limitation. The first type of wordings used is “not exceeding 6 months from the date on which application is made” or “anytime within a period of 6 months after the date of suchtransfer”. These words are used in section 54EC and section 281 B as well as in Rule 10K(2) and Rule 11AA(6). The second type of wordings used are “6 months/4months/1 month from the end of the month” in which a particular order is made/received/application is received. This wording is found in section 275 and section 154(8) aswell as in Rule 6DDA(5). It was emphasised that the wordings are unambiguous and the intention of the legislation is apparent that wherever the end of the month is to be calculated then the intention is made clear in the statute itself. Otherwise as per the language, a particular date is to be taken into account for the purpose of calculation of days/ months. It was therefore pleaded that in a situation when the intention of the legislation is clear, then there is no necessity to take the help of “General Clauses Act,1897” as suggested by the assessee. Further, it was pleaded that in section 54EC, the limitation of period for an investment has beenprescribed as “at any time within a period of 6 months from thedate of such transfer”. In ordinary sense, a ‘month’ is a period from a specified date in a month to the date numerically corresponding to the date in the following months, less one. For example, if a particular date is 10th June, 2008, one month shall be up to 9th July, 2008. Therefore, the term”month” has been used in section 54EC in an ordinary sense and the same should not exceed more than 30 days.The wordings of the section should not be replaced by any other wordings. Therefore, in the said example, one month cannot be extended up to 31st July, 2008. If that would have been the intention of the legislation, then certainly these words ought to have been prescribed in the provisions of section 54EC of the Act.
The revenue also relied on the following decisions:
• Dhanraj Singh Choudhary vs. Nathulal Vishwakarma 16 taxmann.com249 (SC);
• Chironjilal Sharma HUF vs. UOI,(unreported decision of the Supreme Court);
• Jethmal Faujimal Soni vs. ITAT231 CTR332(Bom.);
• Kumarpal Amrutlal Doshi vs. DCIT (Appeal) (ITA No, 1523Mum/2010, order dated 09.02.2011);
• Shree Ram Engg. & Mfg Industries vs. ACIT (ITANo. 3226& 3227/Ahd/2011);
• Hindustan Unilever Ltd. vs. Deputy Commissioner of Income-tax [191 Taxman 119 (Bom.)];
• S. Lakha Singh Bahra Charitable Trust [15Taxmann. com 97(Asr)].
Held:
The Tribunal noted the argument of the revenue thatsince the statute has prescribed the limitation of six months, the words viz.,“at any time within a period of six months” must not be replaced by the words “at any time within a period of end of six months”. However, according to the tribunal, the incentive provision is to be examined by “purposive construction of statute” or “constructive interpretation of statute” which is neither “liberal interpretation of statute” nor a ‘literal interpretation of statute’. It further added that, it is the true intention of the enactment, which is required to be considered by a court of law.
To resolve the controversy i.e., whether the intention of the legislator was to compute six calendar months or to compute 180 days,the tribunal relied on a decision of the Allahabad High Court in the case of Munnalal Shri Kishan Mainpuri, 167 ITR 415 where the Court while answering the dispute in respect of law of limitation held that, there is nothing in the context of section 256(2) to warrant the conclusion that the word ‘month’ in it refers to a period of 30 days. Therefore, it was held by the Apex court that reference to six months in section 256(2) is to six calendar months and not 180 days. Similarly, it was noted that in the case of Tamal Lahiri vs. Kumar P. N. Tagore, 1978 AIR 1811/1979 SCC (1) 75, the Apex court opined while interpreting section 533 of Bangalore Municipal Act, 1932 the expression six months in the said section means sixcalendar months and not 180 days.
The Tribunal also noted that in a few more sections of the Income-tax Act, the legislature had not used the terms “Month” but has used the number of days to prescribe a specific period e.g. first proviso to section 254(2A) where it is provided that the Tribunal may pass an order granting stay but for a period not exceeding 180 days.This according to the Tribunal was an important distinction made in the statute while prescribing the limitation period. Therefore, the tribunal concluded that in the absence of any definition of the word ‘month’ in the Act, the definition of General Clauses Act 1897 shall be applicable. Accordingly, the tribunal held that the investment in question qualifies for the deduction u/s. 54EC.
