TaxTMI 
TaxTMI 
2018 (2) TMI 713
X X X X Extracts X X X X
X X X X Extracts X X X X
....slative intent was different, therefore, the Ld. Commissioner of Income Tax (Appeal) erred in granting relief to the assessee. On the other hand, Ms. Vaishali Mehta, ld. counsel for the assessee, invited our attention to the amendment made by the Finance Act 2014, which is applicable to and from Assessment Year 20015-16, whereas, the case of the assessee is of Assessment Year 2011-12, wherein, the limit was Rs. 50 Lakhs per Financial Year. Reliance was placed upon the decision of Hon'ble Madras High Court in COMMISSIONER OF INCOME-TAX v. COROMANDEL INDUSTRIES LTD. 370 ITR 586 (Mad.) and in COMMISSIONER OF INCOME TAX vs. C. JAICHANDER 370 ITR 579 (Mad.). 2.1. We have considered the rival submissions and perused the material available on record. We find that the aforesaid issue is covered in favour of the assessee by the decision in the case of Bharatkumar M Jain (HUF) & Manekchand G Jain, (ITA No.169 & 170/Mum/2015) Order dated 07/09/2016 of the Mumbai Bench of the Tribunal, wherein, one of us (Judicial Member) is signatory to the order. The relevant portion from the aforesaid order is reproduced hereunder for ready reference and analysis:- "Both these appeals are by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x-parte, qua the assessee, and tend to dispose of this appeal on the basis of material available on record. 2.1. We have considered the submissions of the ld. DR and perused the material available on record. The facts, in brief, are that the assessee is a retired senior citizen, was connected with marketing consultancy in the field of pharmaceutical industry, was having its office at 102B Atlanata, Hirachandani Estate, Thane. The ld. Assessing Officer made the addition of Rs. 51,34,710/- while framing assessment u/s 143(3) of the Act on account of decline of exemption claimed u/s 54E of the Act amounting to Rs. 50 lakhs. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the addition was deleted against which the Revenue is in appeal before this Tribunal. 2.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. departmental counsel, if kept in juxtaposition and analyzed, under the facts discussed hereinabove, we find that the assessee sold shares leading to capital gains of Rs. 1,11,63,450/- and out of this amount ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 : [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.] (2) Where the long-term specified asset is transferred or converted (otherwise than by transfer) into money at any time within a period of three years from the date of its acquisition, the amount of capital gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such long-term specified asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1) shall be deemed to be the income chargeable under the head "Capital gains" relating to long-term capital asset of the previous year in which the long-term specified asset is transferred or converted (otherwise than by transfer) into money. Explanation.-In ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2007, such bond shall be deemed to be a bond notified under this clause; (ba) "long-term specified asset" for making any investment under this section on or after the 1st day of April, 2007 means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988) or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956). 2.2. If the aforesaid provision is analyzed, it deals with capital gains not to be charged on investment in certain bonds. Sub-section (1) speaks where the capital gain arises from the transfer of long term capital asset and the assessee has any time within a period of six months, after the date of such transfer, invest, the whole or any part of the capital gains in the long term specified asset, the capital gain shall be dealt with in accordance with the provisions of the section. The position has been clarified with insertion of explanation which speaks about 'cost in relation to any long term specified asst', means the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....long term capital gains, earned by the assessee, is invested in the specified long term asset and such investment is made within six months from the date of transfer of such long term asset. As per the proviso to section 54EC, the investment in any Financial Year is restricted to Rs. 50 lakh and since the assessee has made the investment of Rs. 50 lakh each in different two Financial Years but within six month from the date of transfer of the asset,. The decision from Ahmedabad Bench of the Tribunal in Aspi Ginwala vs ACIT (2012) 044 (II) ITCL 0488; ITA No.3226 and 3227/Ahd/2011. Considering the totality of facts, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal). Finally, the appeal of the Revenue is dismissed." 3.2. If the aforesaid decision of the Tribunal, wherein, one of us (Judicial Member), is signatory to the order, deliberated upon the issue in length and place reliance upon various judicial decisions and finally dismissed the appeal of the Revenue. Even otherwise, on a plain reading of section 54EC(1) of the Act, it restrict the time limit, for the period of investment after the property is sold, to six months. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ified 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 : [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.] 3.4. Thus, on plain reading of the abovesaid provision, we are of the view that section 54EC(1) of the Act restricts the time limit for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. However, the wordings of the proviso have created an ambiguity. As a result the capital gains arising during the year after the month of September were invested in the specified asset in such a manner so as to split the investment in two years i.e., one within the year and second irf the next year but before the expiry of six months. This resulted in the claim for relief of one crore rupees as against the intended limit for relief of fifty lakhs rupees. Accordingly, it is proposed to insert a proviso in sub-section (1r so as to provide that the investment made by an assessee in the long-term specified asset, out of capital gains arising from transfer of one or more original asset, 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. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years." 3.5. From the above, it can be inferred that the intention of the legisl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....restricted the deduction to Rs. 50 lakhs u/s 54EC of the Act as against Rs. 1 crore claimed by the assessee. It is noteworthy that the assessee made investment of Rs. 1 crore in REC bonds i.e. Rs. 50 lakh on 31/03/2011 and the remaining Rs. 50 lakh on 30/04/2011. The assessee claimed the deduction of total investment u/s 54EC of the Act. The Ld. Assessing Officer following first proviso to section 54(1) restricted the deduction to Rs. 50 lakh. 2.3. On appeal before the Ld. Commissioner of Income Tax (Appeal), the decision from the Tribunal and another decision in the case of CIT vs C. Jaichandar (supra) was followed and allowed the full deduction, which is under challenge before this Tribunal. We find that Mumbai Bench of the Tribunal made an elaborate discussion including the amendment made by the Finance Act, 2014 (applicable to and from Assessment Year 2015-16) and analyzed the provision of section 54EC of the Act and thereafter reached to a particular conclusion. Even otherwise, the issue in hand is squarely covered by the decisions (supra) from Hon'ble Madras High Court. In any event, from a reading of section 54EC(1) and the first proviso, it is clear that the time lim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o cap on the investment to be made in bonds. The first proviso to section 54EC(1) of the Act, specifies the quantum of investment and it states that the investment so made on or after 01/04/2007 in the long term specified asset, by an assessee, during any Financial Year does not exceed fifty lakhs rupees. The notes on clauses, Financial Bill 2014 and the memorandum explaining the provisions in Finance (No.2) Bill 2014, reads as under:- "Clause 23 of the Bill seeks to amend section 54EC of the Income-tax Act relating to capital gain not to be charged on investment in certain bonds. The existing provisions contained in sub-section (1) of section 54EC provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has within a period of six months invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset out of total capital gain shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. It is propose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avoid unwanted litigation of the previous years. In any event, from the reading of section 54EC(1) and the first proviso, it is clear that the time limit for investment in six months from the date of transfer and even if such investment falls under two Financial Years, the benefit claimed by the assessee cannot be denied. Our view find supports from the decision from Hon'ble Madras High Court in CIT vs C. Jaichandar (2015) 370 ITR 579 (Mad.), decision of the Tribunal in ACIT vs M/s JNR Securities Broking Ltd. (ITA No.6987/Mum/2013) order dated 08/07/2015 and various other decisions mentioned in the preceding paras of this order. Thus, it is concluded that, prior to amendment, the time limit of Rs. 50 lakhs as prescribed u/s 54EC of the Act is per year and if the assessee invest Rs. 50 lakh each in two different years, otherwise fulfilling other conditions of section 54EC, thus assessee will be entitle to the benefit of Rs. 1 crore and not merely Rs. 50 lakhs. Thus, the limit of Rs. 50 lakh under the first proviso is not per assessee but per Financial Year. So far as, the amendment made by the Finance Act, 2014 is w.e.f. 01/04/2015 i.e. Assessment Year 2015-16 onwards and cannot....