Neela S. Karyakarte vs. ITO ITAT “B” Bench, Mumbai Before Joginder Singh (J. M.) and Ashwani Taneja (A. M.) ITA No.: 7548/Mum/2012 A.Y.: 2005-06, Date of Order:28th August, 2015 Counsel for Assessee / Revenue: Dr. K. Shivaram / Vijay Kumar Soni

Facts
The assessee sold a row house on 27.04.2004 for Rs.18,50,000/-. After indexation, the assessee earned long term capital gain of Rs.10,90,176/-. The assessee invested this capital gain in NHB Capital Gain Bonds 2006 on 31st December, 2004 and claimed exemption u/s 54EC. However, the AO found that the assessee was not eligible for exemption u/s 54EC, since the investment was not made by the assessee within six months from the date of transfer of original asset, as per requirement of section 54EC. The AO observed that the sale of row house was executed on 27.04.2004, as per the registered sale agreement, whereas the assessee has invested the amount in NHB Bonds on 31.12.2004. Thus, as per AO, it was beyond the period of six months as stipulated in section 54EC. Accordingly, it was held by the AO that benefit of deduction u/s. 54EC was not allowable to the assessee.

Being aggrieved, the assessee filed appeal before the CIT(A) who after considering all the submissions and evidences placed by the assessee held that going by the date of full and final settlement, the date of transfer would be 29th June, 2004. However, according to him, since the assessee made investment in the bonds on 31.12.2004, it fell beyond the period of six months from the date of transfer and therefore, the assessee was not eligible for deduction u/s. 54EC.

Held
The Tribunal noted that the CIT(A) has held that the date of transfer of the original asset was 29th June, 2004 and the same is not disputed by the revenue. The Tribunal further took note of the decisions of the Special Bench of Ahmedabad in the case of Alkaben B. Patel (2014) (148 ITD 31) and the Mumbai Bench of Income Tax Tribunal in the case of M/s. Crucible Trading Co. Pvt. Ltd. (ITA No. 5994/Mum/2013 dated 25.02.2015) where the term “6 months” have been interpreted to mean 6 calendar months and not 180 days. Further, it also took note of the decision of the Supreme Court in the case of Ogale Glass Works Ltd. (1954) 25 ITR 529, where it was held that the cheques not having been dishonoured but having been cashed, the payment relates back to the dates of the receipt of the cheques and as per the law the dates of payments would be the date of delivery of the cheques. As per the facts, the assessee had filed an application with National Housing Bank on 23.12.2004 along with the cheque of even date. Thus, it was held that the assessee had clearly made investment within the period of 180 days also. Thus, the Tribunal held that viewed from any angle it can be safely said that the assessee has made investment within the period of six months. In the result, the appeal of the assessee was allowed.