Section 54EC exemption required factual verification of bond availability and investment timing before disallowance could stand.

Section 54EC exemption dispute turned on whether the second investment in specified bonds was made beyond the six-month period from transfer, but the Tribunal found the matter could not be finally decided without verifying whether REC bonds were actually unavailable during the relevant period and when the later investment was made. Because the claim depended on that factual verification, the disallowance was not conclusively upheld at this stage. The matter was set aside to the jurisdictional Assessing Officer for necessary examination, and the assessee obtained only partial relief. The dispute also arose in the context of processing under section 143(1) and rectification under section 154.

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Issues: Whether the disallowance of exemption claimed under section 54EC of the Income-tax Act, 1961, on the ground that the second investment in specified bonds was made beyond six months from the date of transfer, was justified, and whether the matter required verification by the Assessing Officer.

Analysis: The claim turned on the factual plea that the specified REC bonds were not available for subscription during the relevant period after the first investment, and that the later investment was made only when the bonds became available. In view of this contention, the correctness of the disallowance could not be finally determined without verification of the availability of bonds and the timing of investment. The Tribunal also noted that the dispute arose from the processing of return under section 143(1) and the subsequent rectification proceedings under section 154 of the Income-tax Act, 1961.

Conclusion: The matter was set aside to the jurisdictional Assessing Officer for necessary verification, and the assessee obtained only partial relief.

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