Whether Sec 54E benefit is available even if assessee invests or deposits whole or part of net consideration in specified asset within six months from date of consideration received - NO: HC

THE issue before the Bench is - Whether the benefit of Section 54E is available where the assessee has invested or deposited the whole or any part of net consideration in any specified asset within six months from the date of consideration received. NO is the answer.

Facts of the case

The assessee, an individual, had sold two plots of land for Rs.8,98,775/-. The original assessment made u/s 143(3) was set aside by the CIT(A) and the AO was directed to make fresh assessment. Thereafter, the AO completed the fresh assessment and passed an order. In the fresh assessment, the assessee claimed deduction u/s 54E on the basis of investment of Rs.1,89,400/- made in NRDB on 20th February, 1987, within six months of the receipt of final installment. However, the AO, rejected the claim of the assessee. On appeal, CIT(A) dismissed the said appeal. On further appeal, Tribunal had also dismissed the appeal of assessee.

Held that,

++ the contention of advocate for the assessee is misconceived inasmuch as the six months’ period will have to be counted when sale-deed was executed i.e. from 07.08.1982. Therefore, we are of the opinion that the contention of advocate for the assessee is not acceptable. Further, the Tribunal in paragraph No.17 of its order has observed that it is very clear that an assessee who desired to avail benefit of section 54E must strictly satisfy all those conditions which are provided therein;

++ One of the conditions of the section is that assessee is to deposit whole or any part of the net consideration in any specified assets within a period of six months after the date of transfer. There is no dispute about the facts that the transfer in the present case took place when sale deed was executed and registered on 07.08.1982 and the investment of Rs.1,89,904/- is made by the assessee in National Rural Development Bonds on 20.02.1987 i.e. after the stipulated period of 6 months from the date of transfer. The case of assessee being not a case of compulsory acquisition of property, the benefit granted under the provision would not be available to the assessee. The contention of the assessee that this stipulated period of six months which is to be reckoned from the date of receipt of consideration is not acceptable. In view of clear language of Section 54E(1), the alternate submission, that the view beneficial to the assessee is to be accepted, is also not acceptable. In view of the aforesaid discussions, we are in complete agreement with the view taken by the Tribunal. The Tribunal has not committed any error in dismissing the appeal of the assessee. Hence, the present appeal is dismissed. Accordingly, we hold that the Tribunal was right in law in holding that benefit of Section 54E is available where the assessee has invested or deposited the whole or any part of net consideration in any specified asset within six months from the date of consideration received and not from the date of such transfer.