2014 (1) TMI 482

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...., MGR Salai, Palavakkam, Chennai-41, for a consideration of Rs. 3,46,50,000/-. Sale proceeds were invested by the assessee as under:- Sl. No. Description of the property/investment Date of Investment Amount Invested (Rs.) 1. Rural Electrification Corporation bonds 27.02.2008 50,00,000 2. Bonds issued by National Highways Authority of India 30.06.2008 50,00,000 3. Capital gains account scheme in Syndicate Bank, Mount Road Branch, Chennai 27.06.2008 26,00,000 4. Flat No.33 at "Ankur Grand", No.252/254 Poonamallee High Road, Chennai - 600 010 from M/s Ankur Foundations, No.25, Barnaby Road, Kellys, Chennai - 600 010. 23.06.2008 2,05,68,904 5. Flat No.43 at "Ankur Grand", No. 252/254 Poonamallee High Road, Chennai - 600 01....

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....al asset. Therefore, both of them were eligible for exemption under Section 54EC of the Act. These were made in two different financial years and therefore, were well within the ceiling. However, CIT(Appeals) was not impressed. According to him, the Explanatory note in Finance Act, 2007 through which the limitation for investment in exempt assets was introduced in the statute, clearly implied that this was with a view to ensuring equitable distribution of benefits among prospective investors. Therefore, according to him, it had to be construed as applicable transaction-wise and not year-wise. Thus, he confirmed the view taken by the A.O. in this regard. 4. Now before us, learned A.R., strongly assailing the orders of authorities below, sub....

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....that assessee was eligible for exemption of Rs. 1 Crore, if it could make such investment in two instalments of Rs. 50 lakhs which fell in two financial years, though the dates were within six months from the date of transfer of capital asset. 7. We have perused the orders and heard the rival submissions. There is no dispute that assessee had transferred the capital asset on which she had claimed exemption under Section 54EC on 18.2.2008. Assessee had also claimed exemption under Section 54EC on investments made in REC and NHAI Bonds. Section 54EC(1), which is relevant to the case, is reproduced hereunder, for brevity:-      "54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset (the ca....

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....lapse on 17.8.2008. Assessee had purchased REC Bonds worth of Rs. 50 lakhs on 27.2.2008 and Bonds of NHAI for Rs. 50 lakhs on 30.6.2008. Both these purchases were within the six months' period. Only question that arises is whether proviso to Section 54EC(1) would limit the claim of exemption to Rs. 50 lakhs. Said proviso mentions that investment on which an assessee could claim exemption under Section 54EC(1) shall not exceed Rs. 50 lakhs during a financial year. So, the exemption provision has to be construed not transaction-wise but, financial year-wise. No doubt, Explanatory Memorandum does say that limitation has been placed with a view to ensure equitable distribution of benefits among the prospective investors. Relevant Explanatory Me....