Section 54EC relief and property-income estimates turn on bond availability, accounting consistency, and evidentiary support.

Exemption under section 54EC was treated as available where specified bonds were not available within the statutory six-month period and the assessee invested within a reasonable time after they became available. The addition for accrued fixed-deposit interest was deleted because the assessee consistently followed the adopted accounting method and no illegality in that treatment was shown. The addition for notional rent was also deleted as the estimate had no supporting basis. By contrast, the addition based on the annual value of a let-out property was sustained because the assessee failed to furnish reliable particulars to justify a lower value under house-property provisions.

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Issues: (i) Whether exemption under section 54EC was allowable where investment in specified bonds was made after the original six-month period but when the bonds were not available in the market; (ii) whether the addition on account of accrued interest on fixed deposits was sustainable; (iii) whether the addition on account of notional rent was sustainable; and (iv) whether the addition made by estimating annual value of the let-out property was sustainable.

Issue (i): Whether exemption under section 54EC was allowable where investment in specified bonds was made after the original six-month period but when the bonds were not available in the market.

Analysis: The investment was made soon after the bonds became available. The period for investment had also been extended by the Board. The reasoning accepted the principle that where the specified bonds are unavailable within the statutory period, the time for investment can stand effectively extended until they are available for purchase, provided the assessee invests within a reasonable time thereafter.

Conclusion: Exemption under section 54EC was allowed in favour of the assessee.

Issue (ii): Whether the addition on account of accrued interest on fixed deposits was sustainable.

Analysis: The assessee had consistently followed the method of accounting based on banker's certificates and TDS particulars, and the interest was shown in accordance with that method. No illegality in the accounting treatment was established.

Conclusion: The addition of accrued interest was deleted in favour of the assessee.

Issue (iii): Whether the addition on account of notional rent was sustainable.

Analysis: The estimated rent was made without any supporting basis. In the absence of material justifying the estimated figure, the addition could not be sustained.

Conclusion: The addition of notional rent was deleted in favour of the assessee.

Issue (iv): Whether the addition made by estimating annual value of the let-out property was sustainable.

Analysis: The property was occasionally let out and the assessee claimed intermittent use, but no reliable details were furnished to show vacancy or the basis for reducing the annual value under section 23. The onus to establish the lower figure was not discharged.

Conclusion: The addition based on the assessed annual value was sustained against the assessee.

Final Conclusion: The appeal succeeded on the capital gains exemption and two additions, but failed on the addition relating to annual value of property income, resulting in partial relief.

Ratio Decidendi: Where specified bonds are not available during the statutory investment period, exemption under section 54EC can be allowed if the assessee invests within a reasonable period after availability; additions based on estimation must rest on some material basis, while a claim for reduced annual value under house-property provisions must be supported by adequate particulars.

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