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2017 (12) TMI 1327
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....e assessee in ITA No.41/PUN/2016 has raised the following ground of appeal:- 1. On the facts and in the circumstances of the case and in law the Lower Authorities have erred in restricting the claim of exemption u/s 54EC of the Income Tax Act, 1961 from Rs. 100,00,000/- to Rs. 50,00,000/- by disregarding appellant's contention and clear provisions of law. 4. Briefly, in the facts of the case, the assessee for the year under consideration, had furnished the return of income declaring total income of Rs. 2,54,23,259/-. The case of the assessee was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer noted that the assessee had disclosed capital gains of Rs. 2,87,80,767/- on sale of various shares / units. The assessee claimed deduction under section 54EC of the Act in respect of long term capital gains amounting to Rs. 1 crore i.e. investment in specified capital gains of Rs. 38.50 lakhs on 22.09.2011, Rs. 11.50 lakhs on 30.03.2012 and Rs. 50 lakhs on 13.04.2012. The assessee was show caused as to why deduction under section 54EC of the Act should not be restricted to Rs. 50 lakhs, in view of the provisions of the Act. The assessee exp....
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....but before the expiry of six months and had resulted in claim for relief of Rs. 1 crores as against intended limit for relief of Rs. 50 lakhs. Hence, it was proposed to insert proviso in sub-section (1) so as to provide that investment made by the assessee in long term specified asset would not exceed Rs. 50 lakhs. In respect of binding precedent of the Hon'ble High Court of Madras, the CIT(A) was of the view that as per the ratio laid down by the Hon'ble Bombay High Court in Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom), it was held that the decision of another High Court is neither binding on another High Court nor other Tribunals outside its territorial jurisdiction. Thus, the CIT(A) held that the assessee was entitled to claim deduction under section 54EC of the Act at Rs. 50 lakhs only. 6. The assessee is in appeal against the order of CIT(A). 7. The learned Authorized Representative for the assessee pointed out that the issue in the present appeal has been decided first by the Hon'ble High Court of Madras which has been relied upon before the CIT(A) and also by the Pune Bench of Tribunal in ITO Vs. Smt. Bala R. Venkitachalam (2016) 71 taxmann.com 219 (Pune-Trib....
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....ap on the investment to be made in the bonds to the extent of Rs. 50 lakhs in any financial year. As per the mandate of the said section and the proviso thereunder, where the assessee makes an investment of Rs. 50 lakhs in the specified bonds within time frame of six months from the date of sale, in any financial year, then the benefit of said section is to be allowed to the assessee. In case, the period of six months falls within two financial years, then the question which arises for adjudication is whether the assessee can claim the aforesaid deduction under section 54EC of the Act to the extent of Rs. 50 lakhs in each of the financial year totaling Rs. 1 crore, where the investment is made in the aforesaid bonds in two financial years separately but within period of six months from the date of sale of assets. This issue arose for consideration before the Hon'ble High Court of Madras in CIT Vs. C. Jaichandar (supra) and later in CIT Vs. Coromandel Industries Ltd. (2015) 370 ITR 586 (Mad) have laid down that the exemption granted under the proviso to section 54EC(1) of the Act should be construed not transactionwise but financial year wise, wherein if the assessee was able to inv....
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....of Madras, which undoubtedly, is not the jurisdictional High Court but the said view has persuasive value and has been applied by the Pune Bench of Tribunal in another case and hence, we find no merit in the observations of the CIT(A) in this regard. Accordingly, we reverse the findings of the CIT(A) and hold that the amendment by the Finance (No.2) Act, 2014 w.e.f. 01.04.2015 by which proviso has been inserted after the proviso to section 54EC(1) of the Act is to be applied prospectively from assessment year 2015-16 onwards. Accordingly, the year under appeal being assessment year 2012-13, the assessee is entitled to claim the deduction under section 54EC of the Act at Rs. 1 crore i.e. on account of investment made in the financial year in which the asset was sold at Rs. 50 lakhs and further deduction of Rs. 50 lakhs which was made in the subsequent financial year, though within period of six months from the date of sale of asset. Accordingly, we allow the claim of assessee and direct the Assessing Officer to allow the deduction under section 54EC of the Act at Rs. 1 crore. The ground of appeal raised by the assessee is thus, allowed. 12. In the case of Bimal Desai, the first g....
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....n DCIT Vs. Rajeev Goyal (supra) are identical to the facts before the Tribunal in assessee's own case. 17. The learned Departmental Representative for the Revenue on the other hand, pointed out that maximum deduction allowable under section 54EC of the Act is at Rs. 50 lakhs which has been allowed in the hands of assessee. Hence, there is no merit in claiming any further deduction on this count. 18. We have heard the rival contentions and perused the record. In the facts of the issue which is raised the assessee had computed the income in the hands of minor daughter Ms. Jogoya B Desai on account of sale of certain assets and had claimed deduction under section 54EC of the Act at Rs. 45,95,766/- and the balance income was added in the hands of assessee under section 64(1A) of the Act. The Assessing Officer on the other hand, was of the view that the assessee is only entitled to the deduction under section 54EC of the Act at maximum of Rs. 50 lakhs which has been allowed in her hands while computing her income from long term capital gains on sale of assets. In respect of clubbing of income of minor, he was of the view that no further deduction under section 54EC of the Act is t....
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.... (iii) a company (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding subclauses; Explanation - For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains" From the above definition of 'person' it is clear that in case minor is an assessable entity even though his income is clubbed u/s. 64(1) of the Act in the hands of his parents, he is to be considered separate than his parents who is also an individual and a person as per this definition. There was no limit in separately allotting bonds up to Rs. 50,00,000/- to each of such person nor there is any mentioned limiting the deduction to an assessee. Section 54EC (3) Explanation (b) of the Act, suggests that the conditions for providing a limit on the ....
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....in para-36 page 31 of said circular reported in 198 ITR(St.)1 which reads as under :- "Clubbing of Minor's Income" "36. Section 64 of the Income-tax Act provided that in computing the total income of any individual, there shall be included all such income as arises directly or indirectly to a minor child of such individual from, - 9. We further find support from the decision of Bangalore Bench of this ITAT in the case of Bajaj Ashok Chunnilal (supra), wherein it is held as under: "Considering all the aforesaid decisions it can be held that unless and until the income of the minor child is computed, the clubbing provision will not apply. " Further, Mumbai Bench of this Tribunal in the case of Smt. Babita P. Kanungo (supra), held as under: "From the above, we find that in computing total income of an assessee, all such income as arises or accrues to his minor child is to be clubbed. The words "all such income" in this section refer to total income and we are of the considered opinion that for giving effect to this section, first the total income of the minor children is to be computed and then such total income only of the min....
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....me arises from the sale of the shares stood in the name of the assessee's minor son. If he could legally purchase and sell the shares through his father, the income realized from this sale also can be utilised for the purchase of the house property acting through his father. Merely because the income is clubbed with the income of the assessee's father, there is no meaning in saying that he is not entitled for the benefits contemplated under the section as rightly contended by the assessee. The minor son is not a non-entity, but, he acts only through his parent. In the case of S. K. Naik (supra), the Hon'ble High Court held that "it would be contrary to the scheme of the Act itself not to allow deductions before clubbing the income of the wife with that of her husband. " This was the case where we find income was clubbed in the hands of her husband and where the revenue did not allow the standard deduction. The Hon'ble High Court held concurring with the Tribunal that the standard deduction is to be allowed. Further more in the case of Segu Harnath (supra), the Hon'ble A.P. High Court held "Where the assessee was a partner in a firm and his minor daughte....