The Tax Publishers2019 TaxPub(DT) 3331 (Ahd-Trib)

INCOME TAX ACT, 1961

Section 54EC

Where assessee re-invested Rs. 1 Crore in terms of section 54EC, within six months from the date of transfer, then even if such investment fell under two financial years, the exemption could not be denied because cap of re-investment up to Rs. 50 lacs has been introduced with effect from 1-04-2015 and could not be applied retrospectively to the case of assessee.

Capital gains - Deduction under section 54EC - Investment in specified bonds in different financial year during six months period - Position prior to 1-4-2015

Assessee sold a capital asset and invested Rs 1 Crore out of the sale proceeds in National Highways (NHAI) in two financial years but within the six month period from the date of transfer. AO alleged that assessee could take the benefit of investment in specified bonds to a maximum of Rs. 50 lacs only under section 54EC(1) and accordingly, restricted the exemption amount. Held: From a reading of section 54EC(1) and the first proviso, it was clear that the time limit for investment is six months from the date of transfer of capital asset and even if such investment falls under two financial years, the benefit claimed by the assessee could not be denied. Deduction claim of Rs 50 lacs each in terms of section 54EC spread over to two financial years but falling within six months of the capital asset's transfer in question is very much allowable. The legislature has inserted second proviso to section 54EC(1) introducing the above cap on re-investment quantum by the Finance (Act No. 2), 2014 with effect from 1-4-2015. However, whereas case of assessee pertained to assessment year 2011-12 and this was not revenue's case that the above amendment carries any retrospective operation.

REFERRED : CIT v. C. Jaichander (2015) 370 ITR 579 (Madras) : 2014 TaxPub(DT) 4189 (Mad-HC) Shashin Manibhai Patel v. Asst. CIT (ITA No. 3603/Ahd/2015, Order, dated 8-1-2018)

FAVOUR : In assessee's favour

A.Y. :



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