The Tax Publishers2020 TaxPub(DT) 5057 (Karn-HC) : (2021) 277 TAXMAN 0211 INCOME TAX ACT, 1961
Section 54EC
Tribunal rightly held that amendment to section 54EC brought with effect from 1-4-2015 restricting investment in assets from sale consideration on sale of original asset to Rs. 50 lakhs is prospective in nature, thus; prior to assessment year 2015-16, it was possible for assessee to claim deduction of Rs. 1 crore by investing Rs. 50 lakhs in each of financial years but within six months from date of transfer. Further, Commissioner was not justified in invoking revisionary jurisdiction under section 263 in relation to aforesaid issue regarding prospective applicability of amendment to section 54EC because view taken by AO was one of the possible views.
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Capital gains - Exemption under section 54EC - Amendment to section 54EC brought with effect from 1-4-2015 restricting investment in assets from sale consideration on sale of original asset to Rs. 50 lakhs, whether amendment prospective in nature -
Assessee was an individual, who derived income from capital gains and other sources. AO accepted the return of income while completing scrutiny assessment. Commissioner invoking section 263 passed revision order holding that assessee claimed deduction to the extent of Rs. 1 crore, which was in excess of the limit prescribed under the proviso to section 54EC. On appeal, Tribunal held that for assessment year prior to assessment year 2015-16 on interpretation of the provisions, it was possible for the assessee to claim deduction of Rs. 1 crore by investing Rs. 50 lakhs in each of the financial years but within six months from the date of transfer. Tribunal further held that view taken by AO was one of the possible views and therefore, the power under section 263 of the Act in the fact situation could not have been exercised by the CIT. In the result, the Order passed by the CIT was quashed. In the aforesaid factual background, this appeal has been filed. Held: Tribunal rightly held that amendment to section 54EC brought with effect from 1-4-2015 restricting investment in assets from sale consideration on sale of original asset to Rs. 50 lakhs is prospective in nature, thus prior to assessment year 2015-16, it was possible for assessee to claim deduction of Rs. 1 crore by investing Rs. 50 lakhs in each of financial years but within six months from date of transfer. Twin conditions are required to be satisfied for exercise of revisional jurisdiction under section 263. Firstly, the order of AO is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment. As per facts of instant case, it was axiomatic that the view taken by AO was one of the possible views. Therefore, Commissioner did not rightly invoke the powers under section 263.
Followed:Ultratech Cement Ltd. & Ors. v. State of Rajasthan & Ors. [Civil Appeal No. 2773/2020 decided on 17-7-2020], CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC), Malabar Industrial Co. Ltd. v. CIT 2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), Smt. Neena Krishna Menon v. The CIT [ITA No.578/Bang/2014, dt. 5-3-2015] and Vivek Jairazbhoy v. Dy. CIT (International Taxation) [ITA No. 236/BANG/2012, dated 14-12-2012] : 2014 TaxPub(DT) 4856 (Bang-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
IN THE KARNATAKA HIGH COURT
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