TaxTMI 
TaxTMI 
2016 (5) TMI 487
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....he case, the assessee is an individual having income from salary, rental income, capital gains and interest income and filed e-return on 28.09.2011 declaring total income Rs. 4,97,77,530/- and same was processed u/s.143(1) of the Act and subsequently the case was selected for scrutiny through CASS and notices u/s.143(2) and 142(1) of the Act was issued with questionnaire. In compliance, the ld. Authorised Representative of assessee appeared from time to time and filed details and produced books of accounts and written submissions. The Assessing Officer verified the source of income and Assessing Officer found that assessee has made investments in REC bonds Rs. 50,00,000/- on 14.03.2011 and Rs. 50,00,000/- on 27.04.2011 and also assessee filed explanation that assessee has complied with the provisions of Sec.54EC as investment was made within the period of six months from the date of transfer and relied on the Tribunal decisions. But the Assessing Officer though accepted Tribunal decision in the cases of Coromandel Industries (P) Ltd vs. ACIT, Company Circle I(3), Chennai 36 taxmann.6 (Chennai) and Smt. Sriram Indubal vs. ITO 32 taxmann.com 118 (Chennai) as under:- "The ITA....
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....nder section 45''. The ld. Assessing Officer based on the action of Department in filing an appeal in High Court, disallowed exemption of Rs. 50,00,000/- and assessed total income of Rs. .6,48,77,528/- and raised demand. Aggrieved by the order of Assessing Officer, the assessee filed an appeal before Commissioner of Income Tax (Appeals). 5. In the appellate proceedings, the ld. Authorised Representative of assessee explained the facts and argued the grounds and supported his arguments with judicial decisions and produced supporting documents in respect of sale of shares and allotment letter of REC bonds u/sed. 54EC of the Act as on 31.03.2011 and second allotment letter dated 30.04.2011. The ld. Commissioner of Income Tax (Appeals) considered the submissions on the provisions of Sec. 54EC of the Act and Department circular no.3/2008 and but made distinction on the decision relied by the assessee and deferred the judgment of High Court and come to a unilateral conclusion that assessee is eligible only for Rs. 50,00,000/- as investment u/sec. 54EC of the Act and concurred with the findings of the Assessing Officer and dismissed the appeal of the assessee. Aggrieved by the order....
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....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 rupeees''. On combined reading of both the provisions, the legislative intent in the subsequent amendment is to restrict the investment of Rs. 50,00,000/- to one financial year only. There was ambiguity and confusion on interpreting the provisions as the Commissioner of Income Tax (Appeals) examined the issue on the interpreting the word ''any'' referring to dictionary meaning because there was no certainty was visualized considering the provisions, CBDT circulars and facts of the case. The Assessing Officer tried to make a distinction of provisions for restricting investment of Rs. 50,00,000/- only in one financial year. The assessee has invested in two installments falling in two financial years and availed tax exemption. Amendment of provisions of Sec.54EC in Finance Act, 2014 are prospective and apply from 01.04.2015 effective from assessment year 2015-16 onwards. We considering the facts and amendment of provisions rely on the jurisdictional High Court decision of CIT vs. C. Jaichander 370 ITR 579 (Mad) and CIT vs. Coramande....
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.... and accepted the principles based on jurisdictional High Court and Karnataka High Court decision but deferred on clubbing of total income and relied on Sec. 64(1A) of the Act observed at page 16 of his order and interpreted the computation of total income should include all such income and not total income on which tax is levied and dismissed the ground of the assessee observed at page 16 of his order as under:- 'I have carefully considered the contentions of the appellate on the above issue. The relevant portion of Sec. 64(1A) reads under:- [(1A) In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child, not being a minor children suffering from any disability of the nature specified in section 80U: Provided that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any- (a) Manual work done by him or (b) Activity involving application of his skill, talent or specialized knowledge and experience. Explanation:- For the purposes of this sub- section, the income of the minor child shal....
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....en above. Thus in view of see 251(1) & (2) of the It Act 1961 The income of the appellant is enhanced and the assessing officer is directed that the all such income of the minor children be aggregated u/s.54(1A) without allowing exemption u/s.54EC, Thus this ground of appellant is dismissed. Aggrieved by the order of Commissioner of Income Tax (Appeals), the assessee assailed an appeal before Tribunal. 12. Before us, the ld. Authorised Representative argued on the denial of exemption u/s.54EC of the Act and substantiated the arguments that Commissioner of Income Tax (Appeals) erred in enhancing income of the assessee by denying exemption u/sec. 54EC of Rs. 50,00,000/- allowed to two minor children and whose income has been aggregated with parents. Further, the observations of Commissioner of Income Tax (Appeals) that clubbing of income should be before allowing any exemption u/s. 54EC of the Act on the interpretation of word ''All such income''. But the total income of the minor should be clubbed after allowing relief and prayed for allowing the ground. 13. Contra, the ld. Departmental Representative relied on the orders of the lower authorities and vehemently opposed the ....
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....see for rate purposes. So, considering the definition, interpretation of statutes, judicial provisions of law applicable for minor children. We rely on the decision of Tribunal DCIT vs. Rajeev Goyal, Kolkata in ITA No.951/Kol/2011, dated 1st June, 2012 were held as under:- ''there is nothing in the notification issued by Rural Electricity Corporation Ltd, dated 29.06.2006, in so far as deduction is to be allowed u/s.54EC. Section 64(1A) speaks of addition of total income of minor child and income of a minor child for purpose of inclusion u/s.64(1A) will be his total income. From above definition of total income as given u/s.2(45), it is clear that it is not gross total income but income of any person, who is an assessee, as computed under provisions of the Act, means total income as computed under provisions of the Act is to be added. Capital gain is to be computed under Chapter IV-E. Section 54EC provides that capital gain not to be charge on investment on certain bonds. Therefore investments made in certain bonds shall be outside scope of capital gain for purpose of computation of total income itself, It is not a deduction under Chap. VIA which comes into picture only....