TMI Blog2017 (9) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial year aggregating to ₹ 1 crore. In this connection, it is worth mentioning that the Legislature, by the Finance (No. 2) Act, 2014 with effect from April 1, 2015 has inserted second proviso to sub-section (1) of section 54EC to remove the above ambiguity in the said provision so that the exemption is limited to ₹ 50 lakhs on account of investment in the specified bonds out of the long-term capital gains from the transfer of one or more assets during the financial year. - Decided against revenue - I. T. A. No. 964/Bang/2016 - - - Dated:- 2-5-2017 - Inturi Rama Rao (Accountant Member) And Sudhanshu Srivastava (Judicial Member) For the Appellant : R. N. Siddappaji, Additional Commissioner of Income-Tax (Departmental Representative) For the Respondent : H. G. Vinutha, Chartered Accountant ORDER Inturi Rama Rao (Accountant Member) 1. This is an appeal filed by the Revenue directed against the order of the Commissioner of Income-tax (Appeals), Mangaluru, dated February 15, 2016 for the assessment year 2012-13. 2. The Revenue raised the following grounds of appeal : 1. The order of the learned Commissioner of Income-tax (Appeals) is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year as well as in the following years, the details of which are as under : (a) REC Bonds of ₹ 12,50,000 on January 31, 2012 (date of allotment) (b) REC Bonds of ₹ 10,00,000 on March 31, 2012 (date of allotment) (c) REC Bonds of ₹ 27,50,000 on March 31, 2012 (date of allotment) (d) REC Bonds of ₹ 12,50,000 on March 31, 2012 (date of allotment) (e) REC Bonds of ₹ 6,00,000 on September 30, 2012 (date of allotment) (f) REC Bonds of ₹ 31,50,000 on September 30, 2012 (date of allotment) 5. The Assessing Officer disallowed the claim holding that the exemption under section 54EC is restricted to a sum of ₹ 50 lakhs only and therefore, investment made in the subsequent financial year was disallowed. The relevant observations of the Assessing Officer are as follows : 9. The assessee's objection is not acceptable under the following grounds. The honourable Jaipur Income-tax Appellate Tribunal in Asst. CIT v. Rajkumar Jain and Sons (HUF) TS-142-ITAT-2012(Jpr) had held that the exemption of gains was to be restricted to investment in specified bonds to ₹ 50 lakhs only and any other interpretation would lead to discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant in the case of ITO v. Ms. Raina Faleiro (I. T. A. No. 9/Pnj/2013) (Panaji ITAT) on the ground that the Department did not accept the said decision and filed appeal before the hon'ble Mumbai High Court. 5.4. The hon'ble Income-tax Appellate Tribunal Mumbai Bench A in the case of Mrs. Lilavati M. Sayani v. ITO [2014] 32 ITR (Trib) 174 (Mumbai) held that the issue involved in the appeal of the asses see is squarely covered by decision rendered in the case of ASPI Ginwala, Shree Ram Engg. and Mfg. Industries v. Asst. CIT [2012] 52 SOT 16 ; 20 taxmann.com 75 (Ahd), wherein the Ahmedabad Bench of the Income-tax Appellate Tribunal held that the provision of section 54EC makes it clear that where the assessee transfers it capital asset after the 30th September of the financial year, he gets an opportunity to make an investment of ₹ 50 lakhs each in two different financial years and is able to claim exemption up to ₹ 1 crore under section 54EC. The Tribunal observed that the language of the proviso is clear and unambiguous and relied on the decision of the hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench in the case cited above, I hereby direct the Assessing Officer to delete the entire addition made. The appellant fulfilled all the conditions laid down under section 54EC of Income-tax Act. In view of the above, respectfully following the decision of the hon'ble Madras High Court and the jurisdictional hon'ble Income-tax Appellate Tribunal, Bangalore C Bench in the case cited above, I hereby direct the Assessing Officer to delete the entire addition made. 7. Being aggrieved, the Revenue is in appeal before us in the present appeal. 8. The only issue that arises in the present appeal is whether the assessee is entitled for deduction of claim under section 54EC in respect of investment made in prescribed bonds though in different financial years i.e. immediately succeeding financial year. There is no dispute as to the amount of capital gains computed. The provisions of section 54EC provide for deduction in respect of investment made in prescribed bonds against income from long-term capital gains in case investment is made in specified assets within a period of six months from the date of sale assets. The said section also specifies maximum amount of inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs in each financial year aggregating to ₹ 1 crore. The relevant portion of the judgment of the hon'ble Madras High Court in the case of Coromandel Indus tries Ltd. (supra) is extracted below (page 592) : 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 ₹ 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 April 1, 2015 in relation to the assessment year 2015- 16 and the subsequent years. In this connection, it is worth mentioning that the Legislature, by the Finance (No. 2) Act, 2014 with effect from April 1, 2015 has inserted second proviso to sub-section (1) of section 54EC to remove the above ambiguity in the said provision so that the exemption is limited to ₹ 50 lakhs on account of investment in the specified bonds out of the long-term capital gains from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets, the said deduction was allowable to the assessee. The hon'ble High Court of Madras in C. Jaichander (supra) has held that as per the mandate of section 54EC(1) of the Act, time limit for investment is six months and benefit that flows from the first proviso is that if the assessee makes investment of ₹ 50 lakhs in any financial year, it would have benefit of section 54EC(1) of the Act. The hon'ble High Court further held that however, to remove the ambiguity in the above said provisions, the Legislature by the Finance (No. 2) Act, 2014 with effect from April 1, 2015 had inserted proviso after existing proviso to sub-section (1) of section 54EC of the Act. The second proviso, as per which the investment made by the assessee in long-term capital gains specified assets out of capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in subsequent financial years, does not exceed ₹ 50 lakhs. The said amendment was held to be applicable from the assessment year 2015-16 and the subsequent assessment years. The hon'ble High Court thus, categorically held that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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