Itxa/1565/2011 Of Commissioner Of Income Tax, 11 Mumbai v. Deccan Talkies

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1565 OF 2011 The Commissioner of Income Tax-II, Mumbai ..Appellant. V/s. M/s. Deccan Talikes ..Respondent. Mr. Vimal Gupta, Senior Advocate with Padma Divakar for the appellant. None for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATED : 21ST MARCH, 2013 P.C. :- 1. In this appeal by the revenue for the assessment year 2006-07, following questions of law have been raised for our consideration :- (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in allowing the claim of exemption u/s.54EC of the IT Act, 1961 for the sum invested in Rural Electrication Corporation (REC) Bonds, out of sale of depreciated asset, as the facts of the case falls squarely within the provisions of Section 50 of the Act ?law, the Tribunal was correct in allowing the claim of exemption u/s.54EC of the IT Act, 1961 for the sum invested in Rural Electrication Corporation (REC) Bonds, out of sale of depreciated asset, as the facts of the case falls squarely within the provisions of Section 50 of the Act ? (ii)Whether on the facts and in the circumstances of the case, the Tribunal was right in relying on the decision of the Bombay High Court in the case of Ace Builders Pvt. Ltd. which is not accepted by the revenue ? 2.The Tribunal has allowed the claim of the respondent -assessee by following the decision of this Court in the matter of CIT V/s. ACE Builders P. Ltd. reported in [2006] 281 ITR 210 (Bom). The Tribunal had applied the principles laid down by this Court in respect of the investment of long term capital gains under Section 54E of the Income Tax Act, 1961 (the Act) to investment of long term capital gains under Section 54EC of the Act in the subject appeal. This Court in the matter of Ace Builders (P) Ltd. (supra) has held that the legal fiction created in Section 50 of the Act is only restricted to the computation provisions and would have no application to exemption provisions i.e. Sections 54E and 54EC of the Act. In view of the fact that the Tribunal has applied the decision of this Court in the matter of Ace Builders P. Ltd. (supra) and allowed the claim of the respondent-assessee, we see no reason to entertain the proposed questions of law. 3.Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)