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2015 (2) TMI 527 - AT - Income TaxDeduction u/s 54EC - investment of Short Term Capital Gain arising from the sale of depreciable asset - CIT(A) allowed the claim - Held that:- Section 50 and Section 54EC are independent provisions. Section 54E does not make any distinction between depreciable asset and non-depreciable asset, therefore, exemption available to depreciable asset u/s 54E cannot be denied by referring to fiction created u/s 50 of the Act. In the present facts, we note that the assessee has fulfilled the conditions set out in section 54E of the Act to avail exemption which was denied by the Assessing Officer, in view of fiction created u/s 50. Section 54E of the Act specifically provide that where capital gain arising on transfer of long term capital asset is invested or deposited in the manner prescribed by the Government at the relevant time in the specified asset, the assessee shall not be charged to capital gain tax. Our view is squarely covered by the decision from Hon’ble jurisdictional High Court in the case of ACE Builders (P.) Ltd. (2005 (3) TMI 36 - BOMBAY High Court). - Decided against revenue. Disallowance on account restricted exemption available to only ₹ 50 lakh u/s 54EC - Held that:-Section 54EC (1) of the Act restrict the time limit for the period of investment after the property was sold to six month and there was no cap on the investment to be made in bonds, meaning thereby, as per the mandate of section 54EC(1) of the Act, the time limit for investment is six month and the benefit that flows from the first proviso is that if the assessee makes the investment of ₹ 50 lakh in any financial year, it would have benefit of section 54EC (1) of the Act. However, the ambiguity, if any, was removed by the legislature with effect from 01/04/2015. Thus, the Assessing Officer is directed to examine the claim of the assessee and allow the exemption up to ₹ 1 crore if the investment is found to be made within six month in two different financial years - Cross objection of the assessee is allowed for statistical purposes.
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