TMI Blog2014 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 50,00,000/- is incorporated in Section 54EC(1) of the Act itself – thus, the order of the Tribunal is upheld – Decided against revenue. - T. C. (A).Nos.419 and 533 of 2014 - - - Dated:- 15-9-2014 - R. Sudhakar And G. M. Akbar Ali,JJ. For the Appellant : Mr. J. Narayanasamy Senior Standing Counsel For the Respondent : Mrs. Pushya Sitaraman JUDGMENT (Delivered by R. Sudhakar, J.) The Revenue is the appellant in these appeals. While T.C.(A) No.419 of 2014 is filed challenging the order of the Income Tax Appellate Tribunal 'B' Bench, Chennai, dated 1.11.2013 made in I.T.A.No.456/Mds/2013 for the assessment year 2009-2010, T.C.(A).No.533 of 2014 is filed challenging the order of the Income Tax Appellate Tribunal 'D' Bench, Chennai, dated 31.1.2013 made in I.T.A.No.1950/Mds/2012 for the assessment year 2008-2009. 2. These appeals were admitted on the following substantial questions of law: (i) Whether on the facts and circumstances of the case, the Tribunal was right in holding that the assessee is eligible for deduction of ₹ 1 Crore under Section 54EC, in respect of investment of ₹ 50 Lakhs made in two different fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of transfer of capital asset. Since the date of transfer in the given is 18.2.2008, six months period will elapse on 17.8.2008. Assessee had purchased REC Bonds worth of ₹ 50 lakhs on 27.2.2008 and Bonds of NHAI for ₹ 50 lakhs on 30.6.2008. Both these purchases were within the six months' period. Only question that arises is whether proviso to Section 54EC(1) would limit the claim of exemption to ₹ 50 lakhs. Said proviso mentions that investment on which an assessee could claim exemption under Section 54EC(1) shall not exceed ₹ 50 lakhs during a financial year. So, the exemption provision has to be construed not transaction-wise but, financial year-wise. No doubt, Explanatory Memorandum does say that limitation has been placed with a view to ensure equitable distribution of benefits among the prospective investors. Relevant Explanatory Memorandum is reproduced for brevity:- 'The quantum of investible bonds issued by NHAI and REC being limited, it was felt necessary to ensure that the benefit was available to all the investors. For this purpose, it was necessary to ensure that the limited number of bonds available for subscription is also avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avan, learned counsel appearing for the respondent in T.C.(A) No.533 of 2014. 5. The key issue that arises for consideration is whether the first proviso to Section 54EC(1) of the Act would restrict the benefit of investment of capital gains in bonds to that financial year during which the property was sold or it applies to any financial year during the six months period. 6. For better understanding of the issue, it would be apposite to refer to Section 54EC(1) of the Act, which reads as under: Section 54EC. Capital gain not to be charged on investment in certain bonds. (1) Where the capital gain arises from the transfer of a long-term capital asset (the capital asset 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in certain bonds. The existing provisions contained in sub-section (1) of section 54EC provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has within a period of six months invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset out of total capital gain shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. It is proposed to insert a proviso below first proviso in said sub-section (1) so as to provide that the investment made by an assessee in the long-term specified asset, from 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 the subsequent financial year does not exceed fifty lakh rupees. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent years. Memorandum: Explaining the provisions in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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