TMI Blog2007 (7) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sale proceeds in Rural Electrification Bonds - REC 54EC Series III on 24-3-2004. The investment was in the joint names of herself, being the first name, and her son A.R. Sridhar. She claimed exemption from capital gains tax under section 54EC which was negatived by the Assessing Officer on the ground that the investment in the bonds was in the joint names which is not permitted under the above section under which it is the assessee who has to invest the gains in her own name. The CIT(A) however held that there is no such requirement in the section and the assessee having invested the sale proceeds of the shares in the REC bonds without any contribution from her son the section was complied with and the exemption cannot be denied. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 54EC, was 'to give an incentive to the development of infrastructure'. In para 30.2, it was stated that section 54EC is being introduced in the place of sections 54EA and 54EB which were being terminated and that section 54EC 'will allow exemption from tax on long-term capital gains, if invested in bonds, targeted exclusively on agricultural finance and highway infrastructure'. In 2001 the section was widened to include bonds issued by Rural Electrification Corporation Ltd. and while explaining the amendment made by the Finance Act, 2001 by Circular No. 14/2001, dated 12-12-2001 (252 ITR St. 65) the Board stated in paragraph 39.2 that 'since rural electrification, including electrification of villages and energisation of pump sets in rur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise. Normally, when an investment is made, particularly if it is made by a person of advanced age, precautions are taken to include another name - the name of a much younger person, preferably a heir (may be spouse or children) - is included so that no problems arise in future in case the person investing dies. It is quite common to find a person investing in a house to include the name of the spouse as a joint name. Even in case of financial assets such as bank deposits it is quite common to find people investing in joint names, more often including the name of the spouse or children. The object in doing so is merely to avoid any problem in future in case anything untoward should happen to the investor. I find it difficult to imagine that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstrued liberally, having due regard to the object which it intends to serve. The Assessing Officer has interpreted the word 'invested' in section 54EC to mean 'invested in the assessee's name', an approach which has no justification as it adds words into the section and also ignores the purpose which the section is intended to serve. 5. For the above reasons, I agree with the view taken by the CIT(A) that the assessee is eligible for the exemption under section 54EC. I further find that the Mumbai Bench, ITAT has held in the case of Jt. CIT v. Smt. Armeda K. Bhaya [2005] 95 ITD 313 that for the purpose of section 54 of the Act, it is sufficient compliance with the section that the assessee purchased the new flat in the names of himself, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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