Tribunal allows Assessee's appeal on exemption limit under section 54EC

The Appellate Tribunal allowed the Assessee's appeal against the CIT order for A.Y. 2008-09, which challenged the restriction of exemption u/s 54EC to &8377; 50,00,000 instead of &8377; 90,00,000 allowed by the AO. The Tribunal held that the AO's decision to grant a total deduction of &8377; 90 lacs u/s 54EC was permissible, as investments in eligible bonds were made in two different financial years, not exceeding &8377; 50 lacs in any single year. Therefore, the CIT's action was deemed unjustified, and the appeal was allowed in favor of the Assessee on 28/6/2013.

---

---

Issues involved: Appeal against CIT order u/s 143(3) for A.Y. 2008-09 regarding deduction u/s 54EC.

Summary:
The appeal was filed by the Assessee against the CIT order for A.Y. 2008-09, challenging the CIT's decision to hold the AO's order u/s 143(3) as erroneous and prejudicial to revenue interests. The main contention was regarding the restriction of exemption u/s 54EC to &8377; 50,00,000 instead of &8377; 90,00,000 allowed by the AO. The Assessee argued that the CIT did not have the authority to revise the order u/s 143(3) while the first appeal was pending before the CIT(Appeals) who could enhance the assessment if necessary.

The case involved the sale of Capital assets resulting in Capital Gains, with investments made in eligible bonds u/s 54EC in two different financial years. The AO allowed a total deduction of &8377; 90 lacs u/s 54EC, which the CIT deemed as an excess claim of &8377; 40 lacs. The dispute centered around the interpretation of the proviso of section 54EC, specifically the ceiling of &8377; 50 lacs per person per financial year for investments in eligible bonds.

The Appellate Tribunal considered the arguments presented by both parties. It noted that the Assessee had invested &8377; 50 lacs in one financial year and &8377; 40 lacs in another, totaling &8377; 90 lacs, which was allowed by the AO. Referring to a previous decision, the Tribunal held that it was permissible to grant deduction for amounts invested in two financial years as long as the investment in one year did not exceed &8377; 50 lacs. Therefore, the Tribunal concluded that the AO had taken a permissible view, and the CIT's action was not justified.

Ultimately, the appeal of the Assessee was allowed, and the Tribunal pronounced the order in favor of the Assessee on 28/6/2013.

---