TaxTMI 
TaxTMI 
2013 (7) TMI 417
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....ts and circumstances of the case, the Tribunal was right in deciding that, first, the computation of capital gain has to be given effect to and then only apply the provisions of Section 70 of the Income Tax Act?" 2. It is seen from the facts narrated that the assessee herein made a long term capital gain to the tune of Rs.6,42,22,435/- on the sale of shares. Admittedly, the assessee had invested the long term capital gains in REC Bonds to the tune of Rs.6,50,00,000/-. Apart from this, there were long term capital loss on sale of shares and immovable properties which were claimed to be carried forward to the subsequent years. The Assessing Officer apparently agreed with the assessee on this state of affairs. However, in exercise of jurisd....
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....ction 70 would come into play only when the capital gains have been computed in accordance with the provisions contained in Sections 45 to 55A. Irrespective of whether Section 54EC(1) is found in Section 45 or not, in terms of Section 54EC, the effect of it cannot be ignored, as the investment in REC bonds takes the capital gains out of the charging provision. Since the amount invested in REC bonds does not enter into the computation at all, the revision done was not sustainable in law. Consequently, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals). Aggrieved by this, present appeal has been filed by the Revenue. 4. Before going into the contentions raised herein, the relevant provisions of Sections 45(1), 54E....
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....on of the long term specified asset bears to the whole of the capital gain, shall not be charged under Section 45. Set off, or carry forward and set off. Set off of loss from one source against income from another source under the same head of income. Section 70. (1) Save as otherwise provided in this Act, where the net result for any assessment year in respect of any source falling under any head of income, other than "Capital gains", is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head. (2) Where the result of the computation made for any assessment year under Sections 48 to 55 in respect of any short term capital asset is a loss, the ass....
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...., units and deposits of banks and various other instruments. The two sections were introduced in 1996 to give an incentive to the development of infrastructure. However, the objective has been diluted in the presence of a large number of varied and diverse instruments. Further, incentives to infrastructure are also available under other sections of the Income Tax Act such as sections 80-IA, 80-IB and 10(23G). In a regime of low tax rate on long term capital gains, there is very little justification for having such an omnibus basket of exemptions. Therefore, it has been decided to insert sun-set clauses to sections 54EA and 54EB limiting their application to transfers of long term capital asset made on or before 31st March 2000. Where the ca....
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....lar issued and the insertion of Section 54EC is only a substitute in the place of Section 54EA and Section 54EB to cover cases of transfer of long term capital asset on and from 01.04.2001, we do not find that the argument of the Revenue by reason of Section 45, not excluding the operation of Section 54EC, the other provisions under Section 54EC would stand at different footing from that of similarly worded other provisions under the said Chapter. It may further be seen that as per Section 54EC(1)(a) on the capital gains arising from the transfer of long term capital asset invested in accordance with the said Section, capital gains shall not be charged under Section 45. 7. Secondly, one may also note that Section 54EC does not specifical....
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....fied bonds or debentures and Section 54EB deals with capital gain on transfer of long-term capital assets not to be charged. 9. A reading of Section 54EC shows that it replaced Sections 54EA and 54EB by the Finance Act, 2000 with effect from 01.04.2001, with the result that the benefit of Section 54EA and 54EB ceased to be available with reference to transfer of long term capital assets before 01.04.2000. Thus relief of transfer under Section 54EC is available in respect of transfers from the accounting year relevant to the assessment year 2001-02 to preserve the continuity of the benefit of deduction with the only difference that Section 54EC limits the available bonds for purposes of reinvestment benefit with the minimum lock in the pe....