2016 (10) TMI 89 - AT - Income Tax

Tribunal grants Rs. 1 crore exemption under Section 54EC for investments in multiple financial years.

The Tribunal allowed the assessee's appeal, granting an exemption of Rs. 1 crore under Section 54EC for the assessment year 2009-10. The Tribunal held ... Exemption u/s.54EC entitlement - the investment in specified Bonds under section 54EC of the Act was made in two different financial years - Held that:- Respectfully following the decision of the Hon’ble Madras High Court in the case of CIT v. C.Jaichandar (2014 (11) TMI 54 - MADRAS HIGH COURT ) we hold that the language of the provisions of section 54EC(1) of the Act clearly and unambiguously mandate that the assessee can make the investments in two different financial years, provided the investment in a financial year does not exceed ₹ 50.00 lakhs. In the factual and legal matrix of the case on hand, we, therefore, reverse the findings of authorities below and direct the Assessing Officer to allow the assessee exemption of ₹ 1.00 crore under section 54EC(1) of the Act in respect of the investment of ₹ 50.00 lakhs each made by it in specified bonds on 30/9/2008 and 9/4/2009 i.e. in two separate financial years, pursuant to the sale of two properties on 28/4/2008 and 14/10/2008. We hold and direct accordingly. - Decided in favour of assessee. Issues Involved:1. Initiation of re-assessment proceedings under Section 147/148 of the Income Tax Act.2. Restriction of exemption claimed under Section 54EC of the Income Tax Act to Rs. 50 lakhs as against Rs. 1 crore claimed by the assessee.Issue-Wise Detailed Analysis:1. Initiation of Re-Assessment Proceedings:- Grounds 1.1 and 1.2: The assessee challenged the action of the Assessing Officer (A.O.) in initiating re-assessment proceedings under Section 147/148 of the Income Tax Act. However, during the appeal, the assessee's representative submitted that these grounds were not being pressed or urged. Consequently, these grounds were rendered infructuous and dismissed.2. Restriction of Exemption Under Section 54EC:- Grounds 2.1 to 2.3: The primary issue was the restriction of the exemption claimed under Section 54EC of the Income Tax Act to Rs. 50 lakhs by the A.O., as against Rs. 1 crore claimed by the assessee. The assessee argued that the investments in specified bonds were made in two different financial years, thereby entitling him to claim an exemption of Rs. 1 crore.- Facts and Arguments: The assessee sold two properties and invested Rs. 50 lakhs each in specified bonds in two different financial years (30/09/2008 and 09/04/2009). The A.O. restricted the exemption to Rs. 50 lakhs, interpreting that the exemption limit under Section 54EC was Rs. 50 lakhs per financial year. The CIT(A) upheld this view, relying on the decision of the Jaipur Bench of the ITAT and the amendment introduced by the Finance (No.2) Act, 2014, effective from 01/04/2015.- Judicial Precedents: The assessee cited several judicial pronouncements supporting his claim:- CIT vs. C. Jaichander (2015) 370 ITR 579 (Mad): The Madras High Court held that the time limit for investment under Section 54EC is six months, and the benefit cannot be denied if the investments are made in two different financial years, provided each investment does not exceed Rs. 50 lakhs.- CIT vs. Coromandal Industries Ltd. (2014) 370 ITR 586 (Mad)- Dr. Kumar M. Dhawale vs. ACIT (ITA No.7585/M/2012)- JNR Securities Broking Ltd. (ITA No.6987/Mum/2013)- Vivek Jairozbhoy vs. DCIT (ITA No.236/Bang/2012)- Tribunal's Analysis: The Tribunal acknowledged the judicial precedents and noted that the amendment introduced by the Finance (No.2) Act, 2014, was applicable from 01/04/2015, i.e., for assessment year 2015-16 onwards. The Tribunal concluded that the language of Section 54EC(1) allowed investments in two different financial years, provided each investment did not exceed Rs. 50 lakhs.- Decision: The Tribunal held that the assessee was entitled to an exemption of Rs. 1 crore under Section 54EC, as the investments were made in two different financial years. The A.O. was directed to allow the exemption of Rs. 1 crore, reversing the findings of the authorities below.Conclusion:- The appeal was partly allowed in favor of the assessee, granting the exemption of Rs. 1 crore under Section 54EC for the assessment year 2009-10.Order Pronouncement:- The order was pronounced in the open court on 24/08/2016.