TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 1421
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....s. 50 lakh as against the claimed deduction of Rs. 1 crore, by the assessee. The crux of argument advanced on behalf of the assessee is that the impugned issue is covered by the decision from Hon'ble Madras High Court in the case of CIT vs C. Jaichandar (2015) 275 CTR 222 (Mad.); (2015) 370 ITR 579(Mad.), CIT vs Coromandal Industries Ltd. (2015) 370 ITR 586 (Mad.), Ms. Lilavati M. Sayani vs Income Tax Officer (2014) 151 ITD 659)(Mum.), Dr. Kumar M. Dhawale vs ACIT (ITA No.7585/Mum/2012) order dated 09/01/2015, M/s JNR Securities Broking Ltd. (ITA No.6987/Mum/2013) order dated 08/07/2015 and Shri Vivek Jairazbhoy vs CIT (ITA No.236/Bang/2012) dated 14/12/2012. This factual matrix was not controverted by the ld. DR, Shri Sunil Kumar Agarwal. 3.1. We have considered the rival submissions and perused the material available on record. We find that the Tribunal vide order dated 09/06/2016 in the case of ACIT vs Prakash Gunaji Sawardekar ITA No.6642/Mum/2014, on identical issue held as under:- "The Revenue is aggrieved by the impugned order dated 07/07/2014 of the ld. First Appellate Authority, Mumbai, on the ground that the Ld. Commissioner of Income Tax (Appeal) did not appreciat....
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....sum of Rs. 50 lakh per person. Reference was also made to the decision from Hon'ble Madras High Court in Areba T & D India Ltd. vs ACIT 177 Taxman 192. The Ld. Commissioner of Income Tax (Appeal) deleted the addition on the plea that the assessee has fulfilled the condition enshrined in section 54EC of the Act as the investment was made on two different financial years. Before coming to any conclusion, we are reproducing hereunder the relevant provision of section 54EC of the Act:- Capital gain not to be charged on investment in certain bonds. 54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance 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....
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....he income with reference to such cost shall not be allowed under section 80C for any assessment year beginning on or after the 1st day of April, 2006. Explanation.-For the purposes of this section,- (a) "cost", in relation to any long-term specified asset, means the amount invested in such specified asset out of capital gains received or accruing as a result of the transfer of the original asset; (b) "long-term specified asset" for making any investment under this section during the period commencing from the 1st day of April, 2006 and ending with the 31st day of March, 2007, means any bond, redeemable after three years and issued on or after the 1st day of April, 2006, but on or before the 31st day of March, 2007,- (i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 (68 of 1988); or (ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), and notified by the Central Government in the Official Gazette for the purposes of this section with such conditions (including the condition for providing a limit on the amount of inve....
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....s, thus, the assessee, possibly can make the investment of the amount within the specified period, when it is received by the assessee. The intent and purpose of section 54EC is the date, when the assessee actually collects/receives the sale consideration and thereafter makes investment within six months and that is the date of transfer, thus, the spirit of the legislation is very much clear. The investment can only be made when any amount is actually received by the assessee. In fact, date of receipt by the assessee/investor and date of deposit for obtaining the prescribed bonds are important dates. Suppose, the required bonds are not available with a particular bank/institution and are issued at a later stage, the date of deposit of the amount in the bank or the institution, as the case may be, are the relevant dates for getting the benefit of exemption u/s 54EC of the Act. For the purpose of section 54EC, the date of investment is to be regarded as the dates of investment/ the payment received by the authorized bank. It is noted that section 54EC of the Act has no restriction if the specified investment of Rs. 50 lakh is made in two different financial years. The ratio laid down....
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.... 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 in any subsequent Financial Year does not exceed 50 Lakhs rupees" 3.3. In any event, from a reading of section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two Financial Year the benefit, claimed by the assessee, cannot be denied. It would have made a difference, if the restriction on the investment in bonds to Rs. 50 lakhs is incorporated in section 54EC(1) of the Act itself. However, the ambiguity has been removed by this legislature w.e.f 01/04/2015 in relation to Assessment year 2015-16 and the subsequent years. For better understanding of the issue, it would be appropriate to refer to section 54EC (1) of the Act, which reads as under:- 54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period ....
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....set, 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 proposed to insert a proviso below first proviso in said subsection (1) so as to provide 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. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years. Memorandum: Explaining the provisions in the Finance (No.2) Bill. 2014: Capital gains exemption on investment in Specified Bonds. The existing provisions contained in sub-section (1) of section 54EC of the Act provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has, at any time within a period of six mo....