Tribunal directs AO to allow deduction under Section 54EC, instructs verification of TDS claim

The Tribunal partially allowed the appeal, directing the Assessing Officer to allow the assessee's claim of deduction under section 54EC of the Income-tax Act for the balance amount of Rs. 50 lakh. The issue of TDS claim was restored for further verification, with the Tribunal instructing the Assessing Officer to properly verify the claim of TDS and credit the amount as per law.

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Issues:
1. Disallowance of assessee's claim of exemption under section 54EC of the Income-tax Act, 1961 for an amount of Rs. 50 lakh.
2. Disallowance of claim of TDS of Rs. 1,75,429.

Issue 1: Disallowance of assessee's claim of exemption under section 54EC of the Income-tax Act, 1961 for an amount of Rs. 50 lakh:

The appeal challenged the order disallowing the assessee's claim of exemption under section 54EC of the Income-tax Act, 1961 for Rs. 50 lakh. The Assessing Officer disallowed the claim as the second investment of Rs. 50 lakh was made after the prescribed period of six months from the date of transfer of the capital asset. The Commissioner (Appeals) upheld the disallowance, stating the delay was not due to non-availability of REC Bonds. The assessee argued that REC Bonds were not available for investment during the stipulated period and invested the balance amount when the Bonds became available. The Tribunal noted that in the original assessment, a similar disallowance was made but was later directed to be verified by the Assessing Officer. The Tribunal found the assessee's contention acceptable, as per the conditions imposed, the maximum investment was Rs. 50 lakh during the relevant period. The Tribunal held that the delay in investment due to non-availability of Bonds was justified and allowed the claim of deduction for the balance amount of Rs. 50 lakh. The Tribunal also clarified that there was no restriction in the Act for allowing deductions for investments made in two financial years.

Issue 2: Disallowance of claim of TDS of Rs. 1,75,429:

The additional ground raised by the assessee was regarding the disallowance of the claim of TDS of Rs. 1,75,429. The Tribunal noted that the Commissioner (Appeals) had directed the Assessing Officer to give credit for TDS as per law in the original assessment order. The Tribunal decided to admit the additional ground and restored the issue to the Assessing Officer for proper verification of the claim of TDS, including the TDS certificate filed by the assessee, and to allow credit for TDS as per law. The additional ground was allowed for statistical purposes.

In conclusion, the Tribunal partially allowed the appeal, directing the Assessing Officer to allow the assessee's claim of deduction under section 54EC of the Act for the balance amount of Rs. 50 lakh and restoring the issue of TDS claim for further verification.

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