TaxTMI 
TaxTMI 
2018 (7) TMI 1550
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....on of Rs. 2,75,00,000/-. The AR of the assessee stated that the deduction of Rs. 1 crore u/s 54EC is eligible, since assessee invested Rs. 50 lakhs in one FY i.e. 2012-13, and another Rs. 50 lakhs in the FY 2013-14 i.e. on 12/04/2014 before filing of return u/s 139(1) of the IT Act and in this context, he placed reliance on the decision of ITAT, Chennai Bench in the case of Coromandel Industries (P.) ltd. Vs. ACIT in ITA No. 411/MDS/2013 for the AY 2009-10. 2.2 After considering the submissions of the assessee as well as referring to the provisions of section 54EC of the Act, the AO observed that the threshold limit for claiming exemption is Rs. 50 lakhs per one sale transaction, hence, the claim of the assessee relying on the decision of the ITAT (supra) is not tenable in principle and which is against the provisions of section 54 of the Act. He further observed that the assessee paid advance tax on liability of capital gains tax after claiming deduction of Rs. 50 lakhs only, later on, the assessee made further investment in REC bonds to claim double deduction. In view of the above observations, the AO restricted the deduction u/s 54EC to Rs. 50 lakhs and balance deduction of R....
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....ssee was not eligible for deduction u/s.54EC of the IT Act for Rs. 50,00,000/- invested on 25-03- 2013 in NHAI Bonds prior to the date of transfer of long term capital asset on 28-03-2013 (vi) The appellant craves leave to add, delete, substitute, and amend any of the grounds of appeal before the hearing of appeal and/ or at the time of hearing of the appeal. For these and other grounds of appeal that may be canvassed at the time of the hearing of appeal, it is prayed that disallowance made by the Assessing Officer u/ s 54EC of the I.T. Act be restored." 5. Ld. DR relied on the order of AO. 6. Ld. AR relied on the order of ITAT, Mumbai Bench in the case of Shri Upendra C Parekh in ITA No. 3351/Mum/2017 vide ITA No. 04/09/2017 wherein the Bench has held as under: "3. We have heard the rival submissions and carefully considered the same. We noted that this issue is duly covered in favour of the Assessee by the decision of the Bangalore Bench in case of Vivek Jairazbhoy Vs. Dy. Commissioner of Income-tax, ITA No. 236/Bang/2012 and Ahmedabad Bench in the case of Aspi Ginwala, Shree Ram Engg. & Mfg. Industries Vs. Asst. Commissioner of Income-tax, 20 tax....
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...., whether investment made by the assessee on 26-05- 2008 beyond six months period Subrahmanyam Kotikalapudi is eligible for exemption in view of the fact that no subscription for eligible investment was available to the assessee from 1st April, 2008 to 26-05- 2008. 8. While going through the proviso of section 54EC, we find that the proviso to section reads as under. - "[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 rupee]" It is clear from this proviso that where assessee transfers his capital asset after 30th September of the financial year he gets an opportunity to make an investment of Rs. 50 lakhs each in two different financial years and is able to claim exemption upto Rs. 1 Crore u/s 54EC of the Act. Since the language of the proviso is clear and unambiguous, we have no hesitation in holding that the assessee is entitled to get exemption upto Rs. 1 Crore in this case. This view of ours gets support from the following finding of the Hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. Dy. CIT[2004] 266 ITR 521 /....
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....-1995. The assessee remained unable to obtain receipt on 31-8-1995 due to bank strike and the cheque was cleared on 1-9-1995. In this view of the situation, it can well be said that the deposit of the assessee was in accordance with the provisions of statute as on the last date i.e. the 31-8- 1995, the deposit could not be made due to the reason which was beyond the control of the assessee particularly in view that the efforts were made by the assessee a day prior to last date to deposit the requisite amount in the bank to make him entitle for exemption under sec 54F. As mentioned earlier, this position has also been accepted by the learned CIT(A). Therefore, we direct the Assessing officer to allow the necessary exemption to the assessee. Before parting we may observe that section 54F is a beneficial provision to encourage assessee to invest in house properties, Keeping in mind the above object behind the insertion of section 54F and considering the fact that the assessee was not at fault in not depositing the amount before 31-8- 1995, we hold that the deposit made on 1-9-1995 satisfies the condition laid down in section 54F of the Act." Since no contrary decision was cit....
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.... "28.2 The quantum of investible bonds issued by NHAI and REC being limited, it was felt necessary to ensure that the benefit was available to all the investors. For this purpose, it was necessary to ensure that the limited number of bonds available for subscription is also available for small investors. Therefore, with a view to ensure equitable distribution of benefits amongst prospective investors, the government decided to impose a ceiling on the quantum of investment that could be made in such bonds. Accordingly, the said section has been amended so as to provide for a ceiling on investment by an assessee in such long-term specified assets. Investments in such Shri Upendra C. Parekh specified assets to avail exemption under Section 54EC, on or after 1st day of April, 2007 will not exceed fifty lakh rupees in a financial year." From this circular also, it is apparent that the Government only intended to restrict the investment in a particular financial year and accordingly has fixed the limit of Rs. 50,00,000/- as permissible limit in a particular financial year. The Government did not intend to restrict the maximum amount of exemption permissible under Section 5....
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....d CIT(A) has rightly deleted the addition made by the Assessing Officer. We, accordingly, dismiss the appeal filed by the Revenue." 6.1 The Hon'ble High Court of Madras in the case of CIT Vs. C. Jaichander (TC(A) Nos. 419 and 533 of 2014) has held as under: "9. At this juncture, for better clarity, it would be appropriate to refer to the Notes on Clauses _ Finance Bill 2014 and the Memorandum explaining the provisions in the Finance (No.2) Bill, 2014, which read as under: _Notes on Clauses _ Finance Bill 2014: 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 spec....
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....ove the ambiguity in the proviso to Section 54EC(1) of the Act by inserting a second proviso with effect from 1.4.2015. The memorandum explaining the provisions in the Finance (No.2) Bill, 2014 also states that the same will be applicable from 1.4.2015 in relation to assessment year 2015-16 and the subsequent years. The intention of the legislature probably appears to be that this amendment should be for the assessment year 2015-2016 to avoid unwanted litigations of the previous years. Even otherwise, we do not wish to read anything more into the first proviso to Section 54EC(1) of the Act, as it stood in relation to the assessees. 11. 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 years, 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. 50,00,000/- is incorporated in Section 54EC(1) of the Act itself. However, the ambiguity has been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 20....