Tribunal grants full exemption claim under section 54EC of Income-tax Act

The Tribunal allowed the assessee's appeal, overturning the restriction imposed on the exemption claim under section 54EC of the Income-tax Act to Rs. 50 lakhs. The Tribunal held that the assessee's investments in bonds issued by different entities in separate financial years did not justify limiting the exemption claim. The decision was based on the application of relevant case laws and the jurisdictional bench's precedent, leading to the allowance of the assessee's claim for the full exemption amount of Rs. 1 crore.

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Issues:
Claim of exemption u/s 54EC of the Income-tax Act restricted to Rs. 50 lakhs - Whether restriction justified or not.

Analysis:
The appeal and stay petitions were filed against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2009-10. The assessee argued that the Assessing Officer and CIT(A) wrongly limited the exemption claim u/s 54EC to Rs. 50 lakhs. The assessee cited case laws to support the appeal. The Revenue contended that the CIT(A) correctly upheld the restriction. The assessee, an individual, had income from various sources in the impugned year. The Assessing Officer found that the assessee owned two properties and had sold them. The assessee invested in bonds issued by National Highways Authority of India and Rural Electrification Corporation bonds. The claim was for exemption of Rs. 1 crore u/s 54EC. The Assessing Officer rejected the claim for the latter investment of Rs. 50 lakhs, stating that the benefit under the provision was available for one financial year only. The CIT(A) affirmed this decision.

The Tribunal heard both parties and reviewed the case file and judicial precedents. The question was whether the assessee's claim could be restricted since the investments were made in two different financial years. The Tribunal noted that case laws cited by both parties addressed similar scenarios. The Tribunal followed the decision of the jurisdictional bench of the tribunal and allowed the assessee's claim. Consequently, the assessee's appeal was allowed, and the stay petitions became infructuous. The judgment was pronounced in open court on November 1, 2013, in Chennai.

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