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of <h1>Assessee wins Rs. 1 crore exemption claim under Section 54EC</h1> <h3>Income-tax Officer, Ward - 2, Margas, Goa Versus Ms. Rania Faleiro</h3> Income-tax Officer, Ward - 2, Margas, Goa Versus Ms. Rania Faleiro - TMI Issues Involved:1. Interpretation of the provisions of Section 54EC of the Income Tax Act.2. Determination of the allowable exemption limit under Section 54EC for investments in long-term specified assets within a financial year.3. Validity of the investments made within six months but spanning two financial years.Issue-wise Detailed Analysis:1. Interpretation of the provisions of Section 54EC:The primary issue in this appeal is the interpretation of the proviso to Section 54EC of the Income Tax Act, which states, 'provided that the investment made on or after the first day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.' The Revenue argued that the allowable exemption under Section 54EC is limited to Rs. 50,00,000/- per financial year, thereby restricting the total exemption to Rs. 50,00,000/- even if the investments span two different financial years.2. Determination of the allowable exemption limit under Section 54EC for investments in long-term specified assets within a financial year:The Assessee had invested Rs. 50,00,000/- in REC Bonds on 31.3.2008 and another Rs. 50,00,000/- on 30.6.2008, claiming a total exemption of Rs. 1,00,00,000/-. The Assessing Officer allowed only Rs. 50,00,000/- as exemption, adding the remaining Rs. 50,00,000/- to the Assessee's income. The CIT(A) deleted this addition, allowing the full exemption of Rs. 1,00,00,000/-.The Tribunal noted that the issue is covered in favor of the Assessee by decisions of the Bangalore Bench in Vivek Jairazbhoy v. Dy. CIT and the Ahmedabad Bench in Aspi Ginwala, Shree Ram Engg. & Mfg. Industries v. Asstt CIT. In these cases, it was held that the Assessee is entitled to an exemption of Rs. 1 crore under Section 54EC if the six-month investment period spans two financial years, allowing Rs. 50,00,000/- investment in each financial year.3. Validity of the investments made within six months but spanning two financial years:The Tribunal emphasized that the language of Section 54EC and its proviso is clear and unambiguous, indicating that the exemption limit of Rs. 50,00,000/- is per financial year. The Tribunal also referred to CBDT Circular No. 3/2008, which clarifies that the ceiling on investment is to ensure equitable distribution among investors, not to restrict the total exemption.The Tribunal further supported its decision by citing the Hon'ble Supreme Court's rulings in IPCA Laboratory Ltd. v. Dy. CIT and Vikrant Tyres Ltd. v. First ITO, emphasizing that the interpretation of tax statutes should adhere to the clear wording of the provision. The Tribunal concluded that the Assessee could make investments in two different financial years, each not exceeding Rs. 50,00,000/-, and thus claim a total exemption of Rs. 1 crore.Conclusion:The Tribunal upheld the CIT(A)'s order, allowing the Assessee's claim for exemption under Section 54EC amounting to Rs. 1 crore, as the investments were made within six months but spanned two financial years. The appeal filed by the Revenue was dismissed.
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