TaxTMI 
TaxTMI 
2015 (4) TMI 758
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....and another Rs. 50 lakhs on 31.5.2009. Both these purchases of REC Bonds were made within a period of six months from the date of transfer. The deduction claimed u/s. 54EC of the Act was allowed by the AO in his order dated 22.11.2011 passed u/s. 143(3) of the Act. 3. The ld. CIT, in exercise of his powers u/s. 263 of the Act, was of the view that the aforesaid order of the AO was erroneous and prejudicial to the interests of the revenue. According to him, the maximum amount of deduction that ought to have been allowed u/s. 54EC was only Rs. 50 lakhs and the AO fell into error in allowing deduction of a sum of Rs.One crore. The assessee in reply to the show cause notice u/s. 263 of the Act, submitted as follows:- "The first condition mentioned in 54EC(l) is that the investment has to be made within a period of six months from the date of transfer of capital asset. Since, the date of transfer in the given case is 03/12/2008, six months period elapse on 03/06/2009. Assessee had purchased REC bonds worth of Rs. 50 lakhs on 31/03/2009 and another Rs. 50 lakhs on 31/05/2009. Both these purchases were within the six months period. ......... The said provision mentions that investment....
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....e with the following provisions of this section, that is to say,- (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45 : Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees." (emphasis supplied) 9. We have considered the rival submissions. We are of the view that the order of CIT u/s. 263 of the Act cannot be sustained. Identical issue had directly come up for consideration before the coordinate Bench of the Tribunal in the case of Shri Vivek Jairazbhoy (supra) and the same was dealt with as follows:- "9.4 The issues now before us for adjudication are the....
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....s under : " 28.2 The quantum of investible bonds issued by NHAI and REC being limited, it was felt necessary to ensure that the benefit was available to all the investors. For this purpose, it was necessary to ensure that the limited number of bonds available for subscription is also available for small investors. Therefore, with a view to ensure equitable distribution of benefits amongst prospective investors, the government decided to impose a ceiling on the quantum of investment that could be made in such bonds. Accordingly, the said section has been amended so as to provide for a ceiling on investment by an assessee in such long-term specified assets. Investments in such specified assets to avail exemption under section 54EC, on or after 1st day of April, 2007 will not exceed fifty lakh rupees in a financial year." It is clear form the Circular no.3/2008 of CBDT (supra) that the Government only intended to restrict the investment in a particular financial year and thus has fixed a limit of Rs. 50 lakhs as permissible investment in a particular financial year. It also appears clear that the Government did not intend to restrict the maximum amount of exemption permissible under....
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....3/2008, and the principles laid down by the Hon'ble Apex Court for interpreting statutes, we are of the considered view that it would be in the fitness of things, to follow the decision of the ITAT, Ahmedabad Bench in the case of Aspi Ginwala & Others (supra) relied on by the assessee and hold that the assessee is entitled to total deduction under section 54EC of the Act spread over a period of two financial years @ Rs. 50 lakhs each on investments made in specified instruments within a period of six months from the date of sale of the property." 10. It may also be mentioned that section 54EC has been amended by the Finance (No.2) Act, 2014 w.e.f. 1.4.2015 as follows:- "The following second proviso shall be inserted after the existing proviso to sub-section (1) of section 54EC by the Finance (No. 2) Act, 2014, w.e.f. 1-4-2015 : Provided further that the investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees." 11. The purpose of insertion of the....