TMI Blog2014 (12) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no cap on the investment to be made in bonds. The first proviso to Section 54EC(1) of the Act specifies the quantum of investment and it states that the investment so made on or after 1.4.2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees - as per the mandate of Section 54EC(1) of the Act, the time limit for investment is six months and the benefit that flows from the first proviso is that if the assessee makes the investment of ₹ 50,00,000/- in any financial year, it would have the benefit of Section 54EC(1) - The intention of the legislature probably appears to be that the amendment should be for the AY 2015-2016 to avoid unwanted litigations of the previous years - 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. The decision of this Court in Areva T and D India Ltd. v. Assistant Commissioner of Income tax, [2008 (9) TMI 510 - Madras High Court] is not applicable to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 142(1) of the Act was issued on 14.7.2011. The assessee furnished such details on 9.10.2011 and 19.10.2011. 2.2. It was noticed from the documents filed by the assessee that the assessee sold the land and building of Hyderabad Unit for a total consideration of ₹ 1,75,00,000/-. The assessee claimed to have sold the land component at Hyderabad for ₹ 1,13,74,000/- and after adjusting the indexed cost of acquisition, the total long term capital gains was calculated at ₹ 1,09,98,256/-, of which ₹ 1,00,00,000/- was claimed as deduction under Section 54EC of the Act, by investing ₹ 50 Lakhs in REC Bonds on 31.3.2009 and another ₹ 50 Lakhs in REC Bonds on 31.4.2009. However, the Assessing Officer restricted the deduction to ₹ 50 Lakhs by stating that the intention of the legislature is to limit the investment in long term specified asset to ₹ 50 Lakhs only, by placing reliance on the decision of this Court in Areva T D India Ltd. v. Assistant Commissioner, 326 ITR 540. 2.3. Aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who confirmed the order passed by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45. Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.' 7. On a plain reading of the above said provision, we are of the view that Section 54EC(1) of the Act restricts the time limit for the period of investment after the property has been sold to six months. There is no cap on the investment to be made in bonds. The first proviso to Section 54EC(1) of the Act specifies the quantum of investment and it states that the investment so made on or after 1.4.2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees. In other words, as per the mandate of Section 54EC(1) of the Act, the time limit for investment is six months and the benefit that flows from the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onds. The existing provisions contained in sub-section (1) of section 54EC of the Act provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has, at any time within a period of six months, invested the whole or any part of capital gains in the long-term specified asset, out of the whole of the 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. However, the wordings of the proviso have created an ambiguity. As a result the capital gains arising during the year after the month of September were invested in the specified asset in such a manner so as to split the investment in two years i.e., one within the year and second in the next year but before the expiry of six months. This resulted in the claim for relief of one crore rupees as against the intended limit for relief of fifty lakhs rupees. Accordingly, it is proposed to insert a proviso in sub-section (1) so as to provide that the investment made by an assessee in the long-term specified asset, out of capital gains aris ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
