AI Drafter 
TaxTMI 
TaxTMI 
2018 (3) TMI 889
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.... of Furniture and Interior design. Assessee filed the return of income declaring income of Rs. 63,24,200/-. During the year, assessee earned capital gains on sale of lands. On this account, the assessee earned capital gains of Rs. 1,46,10,643/-. While the sum of Rs. 1 crore was invested in specified NHAI bonds in two instalments in two financial years and claimed deduction u/s.54EC of the Act. The balance of gains was duly offered to tax as per the provisions. The said sum of Rs. One crore was invested by the assessee in the bonds in two instalments of Rs. 50 lakhs each. Relevant dates includes that the lands were sold on 08-12-2012 and therefore, the due date for investment in the bonds is 07-06-2013, i.e. six months from the date of transfer of assets. Assessee invested Rs. 50 lakhs on 26-02- 2013 (A.Y. 2013-14) and another sum of Rs. 50 lakhs was invested on 27-05-2013 (A.Y. 2014-15), i.e. two financial years. Assessee claimed deduction u/s.54EC of the Act in respect of the said investment of Rs. One Crore. Relying on the provisions of Ist proviso to section 54EC of the Act, Ld. Counsel for the assessee justified the claim and explained that the expression 'that the investment m....
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....tracted above. 6. Before us, it is the case of assessee before us that the expression 'that the investment made. . . . . in the long term specified assets by an assessee during any financial year does not exceed Rs. 50 lakhs' does not take away the right of the assessee to invest the capital gains in subsequent financial years. Further, referring to the amendments, Ld. Counsel for the assessee argued that the judgment in the case of C. Jaichander (supra) has clearly established the principle allowing the assessee to make a claim of deduction u/s.54EC of the Act accepting Rs. 50 lakhs of the capital gains in subsequent assessment years. Further, referring to the amended provisions of section 54EC of the Act, Ld. Counsel for the assessee submitted that the interpretation of the AO and the CIT(A) are legally unsustainable as the said amendment is merely prospective in nature in both in language and in spirit. The subsequent amendments cannot be applied to the events of the past when it comes to the claim of deductions which constitutes a beneficiary provision. 7. On the other hand, the case of the Revenue revolves around the literal interpretation of the said expression 'that th....
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....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 invest sum of Rs. 50 lakhs each in two different financial years, within period of six months from the date of transfer of capital assets, the said deduction was allowable to the assessee. The Hon'ble High Court of Ma....
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.... order : "10. Similar issue of claim of deduction under section 54EC of the Act arose before the Pune Bench of Tribunal in the case of ITO Vs. Smt. Bala R. Venkitachalam (supra) and relying on the ratio laid down by the Hon'ble High Court of Madras in CIT Vs. C. Jaychander (supra) and later in CIT Vs. Coromandel Industries (2015) 370 ITR 586 (Mad), the Tribunal held that the assessee was entitled to claim deduction under section 54EC of the Act. The Tribunal also referred to the amendment made by the Finance (No.2) Act, 2014 w.e.f. 01.04.2015 by which proviso was inserted after existing proviso to section 54EC(1) of the Act, which was referred to by the Hon'ble High Court of Madras and it was held by the Hon'ble High Court that second proviso was held to be applicable from assessment year 2015-16 and subsequent assessment years. The relevant findings of the Tribunal are as under:- "9. The issue arising in the present appeal is against the claim of deduction under section 54EC of the Act, under which deduction is provided against the income from long term capital gains in case the investment is made in specified assets within time frame of six months from the date ....
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....to be applicable from assessment year 2015-16 and subsequent assessment years. The Hon'ble High Court thus, categorically held that the investment made on or after 01.04.2007 in long term specified assets by an assessee during any financial year should not exceed Rs. 50 lakhs. However, the benefit that flows from the proviso was that where the assessee makes investment of Rs. 50 lakhs in any financial year, it could have the benefit of section 54EC(1) of the Act. Applying the aforesaid proposition to the facts of the present case, where the assessee had invested Rs. 50 lakhs in REC bonds i.e. specified assets as provided under section 54EC of the Act on 28.02.2010 i.e. in financial year 2009-10 and Rs. 22,50,000/- on 30.04.2010 i.e. in financial year 2010-11 as against the capital gains arising of Rs. 72,49,401/- on the transfer of long term capital gains i.e. sale of shares on 21.01.2010 falling in financial year 2009-10, the assessee is entitled to the benefit provided by the proviso under section 54EC of the Act and consequently, the order of CIT(A) merits to be upheld. Dismissing the grounds of appeal raised by the Revenue, the appeal of the Revenue is dismissed." 11. ....