IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH , MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 6782/MUM/2012 : (A.Y : 2009-10) Income Tax Officer-25(1)(3), Vs. Shri Archibald D. Ferreira Mumbai (Appellant) 22, Quarter Dech, I.C. Colony, Borivali (W), Mumbai 400 103. PAN : AAAPF1673L (Respondent) Assessee by : Shri Neelkanth Khandelwal Revenue by : Shri A.B. Koli Date of Hearing : 01/09/2016 Date of Pronouncement : 23/09/2016 ORDER PER SAKTIJIT DEY, JM : This is appeal by Department against order dated 23.8.2012 by ld. CIT(A)-35, Mumbai for Assessment Year 2009-10. only effective ground raised by Department reads as under :- 1. On facts and in circumstances of case and in law, Ld. CIT(A) erred in directing A.O to allow expenditure u/s 54EC of Income Tax Act, 1961 amounting to Rs.50 lacs even though said investment was made beyond six months from end of month in which transfer took place. 2. Briefly put, facts are assessee is individual. For assessment year under consideration, assessee filed his return of income on 2 Shri Archibald D. Ferreira ITA No. 6782/Mum/2012 22.4.2009 declaring total income of Rs.2,19,659/-. In course of assessment proceedings Assessing Officer, on basis of AIR information available on record, found that assessee had invested Rs. 50 lacs in REC bonds and claimed exemption u/s 54EC of Income Tax Act, 1961 (in short Act ) against Long Term Capital Gain of Rs. 50 lacs. He, therefore, called upon assessee to furnish necessary details regarding claim of exemption u/s 54EC of Act. In response to query raised by Assessing Officer, assessee submitted necessary details alongwith Development Agreement dated 3.4.2008 in terms of which assessee had received amount of Rs. 50 lacs. On perusal of Development Agreement it was noticed by Assessing Officer that assessee was co-owner of property with another person. He found that development rights of property were given to one builder, namely, M/s. Shah Builders as per Development Agreement entered into between parties. He, however, noticed that though sale consideration of property is Rs.3,35,50,000/-, but assessee offered Rs. 50 lacs as Long Term Capital Gain, and moreover assessee claimed as exemption u/s 54EC of Act by claiming investment in REC bonds. Referring to Sec. 54EC of Act, Assessing Officer observed that as per said provision sale consideration/Long Term Capital Gain has to be invested in bond within period of 6 months from date of transfer. In assessee s case though transfer had taken place on 3.4.2008, however, amount of Rs. 50 lacs was invested on 5.7.2009 which is beyond 6 months from date of transfer. Thus, he disallowed assessee s claim of deduction u/s 54EC of Act for amount of Rs. 50 lacs. Being aggrieved by such disallowance, assessee preferred appeal before 3 Shri Archibald D. Ferreira ITA No. 6782/Mum/2012 CIT(A). Ld. CIT(A), following decision of ITAT, Pune Bench held that since assessee has invested sale consideration of Rs. 50 lacs within period of 6 months from date of receipt of money, he will be eligible for deduction u/s 54EC of Act. Accordingly, he allowed assessee s claim. Being aggrieved, Department is before us. 3. Ld. DR relied upon observations of Assessing Officer and grounds raised. 4. Ld. AR, on other hand, strongly supporting order of CIT(A) submitted that Sec. 54EC of Act being beneficial legislation has to be construed liberally. He submitted that assessee having received last installment of Rs. 50 lacs on 5.7.2009 could not have invested in REC bonds within 6 months from date of registration of Development Agreement. He submitted that benefit given under statute cannot be taken away by insisting upon assessee to perform impossible act. He submitted that considering hardship to assessee in aforesaid situation, ITAT Pune Bench in case of Mahesh Nemichand Ganeshwade vs ITO, [2012] 21 taxmann.com 136 has held that if assessee invests in bonds within period of 6 months from date of receipt of sale consideration, then assessee would be eligible to claim deduction u/s 54EC of Act. ld. AR also relied upon decision of ITAT, Kolkata Bench in case of Chanchal Kumar Sircar vs ITO, [2012] 18 taxmann.com 304 laying down same proposition. 5. We have considered submissions of parties and perused material on record in light of decisions relied upon. 4 Shri Archibald D. Ferreira ITA No. 6782/Mum/2012 Undisputedly, assessee has entered into registered Development Agreement on 3.6.2008 and sale consideration to be paid to assessee in terms of said Development Agreement was received in installments and last of such installment amounting to Rs. 50 lacs was received by assessee on 5.7.2009. These facts have not been controverted by Department. only issue which arises for consideration is, whether in aforesaid facts and circumstances, period of 6 months provided u/s 54EC should be reckoned from date of Development Agreement or date of receipt of last installment. While assessee has claimed deduction u/s 54EC of Act pleading that 6 months period should be counted from date of receipt of last installment, Assessing Officer has rejected such claim holding that it should be reckoned from date of Development Agreement. We find that identical nature of dispute came up for consideration before ITAT, Pune Bench in case of Mahesh Nemichand Ganeshwade (supra), wherein, Tribunal after analyzing object for which provision contained u/s 54EC of Act was brought to statute and other attendant circumstances ultimately concluded that if assessee invests sale consideration/capital gains in bonds within period of 6 months from date of receipt of money, it will be eligible for exemption u/s 54EC of Act. relevant observation of Tribunal is reproduced hereunder for convenience :- 18. In our considered opinion, interpretation placed by CBDT in consultation with Ministry of Law to condition of making investment within six months from date of transfer in section 54EC would support claim of assessee in this case also for 5 Shri Archibald D. Ferreira ITA No. 6782/Mum/2012 exemption from capital gain with respect to impugned sum of Rs.50 lakhs invested in specified assets on 3.8.2007 and 27.10.2007. In present case, admittedly impugned amount of sale proceeds have been received by assessee much after date of transfer i.e. 12.7.2005, so however, it is also emerging from record that investments of Rs.12,50,000/- and Rs.37,50,000/- made on 3.8.2007 and 27.10.2007 respectively have been made within six months of receipt of such consideration. Therefore, having regard to interpretation placed by CBDT to understand requirement of making investment within six months from date of transfer in section 54EC of Act we are inclined to uphold plea of assessee for exemption from tax on capital gain qua impugned amount of Rs. 50 lakhs. Therefore on this aspect, assessee has to succeed. Thus, this Ground of appeal is allowed. 6. ITAT, Kolkata Bench in case of Chanchal Kumar Sircar (supra) has also expressed similar view. As facts in assessees case are more or less similar and ld. DR has not brought to our notice any contrary decision, respectfully following aforesaid decisions of ITAT, we hold that assessee is eligible for exemption u/s 54EC of Act. Accordingly, we uphold order of CIT(A) by dismissing ground raised. 7. In result, appeal of Revenue is dismissed. Order pronounced in open court on 23rd September, 2016. Sd/- Sd/- (D. KARUNAKARA RAO) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date : 23rd September, 2016 SSL 6 Shri Archibald D. Ferreira ITA No. 6782/Mum/2012 Copy to : 1) Appellant 2) Respondent 3) CIT(A) concerned 4) CIT concerned 5) D.R, Bench, Mumbai 6) Guard file By Order Dy./Asstt. Registrar I.T.A.T, Mumbai Income-tax Officer-25(1)(3), Mumbai v. Archibald D. Ferreira