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TMI Blog2014 (8) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is entitled to capital gains exemption under Section 54EC even though the assessee had invested in REC bonds beyond the stipulated period of six months, when the section does not provide for extension of the time limit for investment? 2. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the assessee is entitled to capital gains exemption under Section 54EC on the ground that the bonds were not available till the last date for investment when the bonds were available for the period of more than 5 months from the date of sale of asset? 2.1. The brief facts of the case are as under: The respondent/assessee sold his property on 22.11.2006 and invested the same in Rural Electrification Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Therefore, the assessee's claim non-availability of REC Bonds in the market as on the last date to invest (i.e. 21.5.2007) is not genuine and because of such non-availability of bonds on that particular date will not entitle the assessee to extend the time limits to invest in the bonds till the next bonds are made available in market. Hence, the assessee's explanations have no merits and the Assessing Officer, in my view, has rightly disallowed the assessee's claim of deduction u/s.54EC of the Act on the investments made in REC Bonds after the expiry of 6 months from the date of sale of the original asset. The disallowance made by Assessing Officer is therefore, confirmed. The assessee fails in his appeals. In resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say, (a) if the cost of the long-term specified asset is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the Official Gazette under the provisions of clause (b) as they stood immediately before their amendment by the Finance Act, 2007, such bond shall be deemed to be a bond notified under this clause; (ba) long-term specified asset for making any investment under this section on or after the 1st day of April, 2007 means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India constituted under section 3 of the National Highways Authority Act, 1988 (68 of 1988) or by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956). 6. Section 54EC of the Act contemplates that where capital gain arises fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 to 1.7.2007, it creates an artificial cut-off period contrary to Section 54EC of the Act. The statutory benefit granted under Section 54EC of the Act is sought to be curtailed on the ground that the said option should have been exercised in a period earlier to six months, even though such right is available to the assessee for a period of six months as a whole. The assessee will be entitled to exercise his option during the entire period. The assessee can make his choice based on what is available or wait for a better option. However, he cannot be expected to visualize unforeseen eventualities and do the impossible. In the present case, assessee chose to wait but by the meantime, the option ran out and hence had to wait till the next opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute viz. Section 54EC of the Act provides for exemption from tax to long term capital gain provided the same is invested in bonds of Rural Electrification Corporation Limited or National Highway Authority of India. However, as the bonds were not available, it was impossible for the respondent-assessee to invest in them within six months of the sale of their factory building. Therefore, in the circumstance one would have to interpret Section 54EC of the Act ensure that it does not lead to injustice. The Apex Court in the matter of Directorate of Enforcement v. Deepak Mahajan (1994) 3 SCC 440 observed as follows: 'Though the function of the Courts is only to expound the law and not to legislate, nonetheless the legislature cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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