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2016 (6) TMI 1122 - ITAT MUMBAI

2016 (6) TMI 1122 - ITAT MUMBAI - TMI - Eligibility of exemption u/s 54EC - investment is made in two financial years - Held that:- The benefit that flows from the proviso was that where the assessee makes investment of ₹ 50 lakhs in any financial year, it could have the benefit of section 54EC(1) of the Act. - In the present case as where the assessee had invested ₹ 50 lakhs in REC bonds i.e. specified assets as provided under section 54EC of the Act on 28.02.2010 i.e. in financ .....

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issed. - Decided in favour of assessee - ITA No. 321/PN/2015 - Dated:- 30-6-2016 - MS. SUSHMA CHOWLA, JM Appellant by : Shri Amit Dua Respondent by : None ORDER PER SUSHMA CHOWLA, JM: This appeal filed by the Revenue is against the order of CIT(A)-2, Nashik, dated 02.01.2015 relating to assessment year 2010-11 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. Despite service of notice, none appeared on behalf of the assessee nor any application was mov .....

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ubal TC(A) No.419 & 533 of 2014 in the facts & circumstances of assessee s case. 4. The only issue raised in the present appeal filed by the Revenue is against allowability of deduction under section 54EC of the Act in excess of ₹ 50 lakhs if investment is made in two financial years. 5. Briefly, in the facts of the case, the assessee was an individual and had furnished return of income for the year under consideration declaring total income of ₹ 13,90,540/-. The Assessing Of .....

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4EC of the Act. As per the assessee, investment in ea ch of the financial years did not exceed ₹ 50 lakhs and consequently, the assessee made the claim. The Assessing Officer referred the matter to JCIT, Range - 2, Nashik under section 144A of the Act, who issued the instructions and the claim of exemption under section 54EC of the Act of ₹ 72.50 lakhs was restricted to ₹ 50 lakhs and the claim of remaining exemption of ₹ 22,49,401/- was not allowed to the assessee. 6. Be .....

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7; 50 lakhs was applicable to the investment made during the financial year and where the period of six months comprised of two financial years, then the total investment of ₹ 1 crore i.e. ₹ 50 lakhs in each financial year was permissible to be made. If the intention of legislation was to allow the exemption of ₹ 50 lakhs only, then the same could have been easily done by providing limit in the main provisions itself. With regard to the reliance placed upon by the Assessing Off .....

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the financial year and not for financial year in which transfer of capital asset had taken place . The CIT(A) in turn, allowed the claim of the assessee holding that the proviso was putting a cap of the monetary limit of ₹ 50 lakhs during the financial year. The substantive provision already had set a time limit of six months from the date of transfer of capital gains for investment for exemption. Further, newly inserted provision by the Finance Act, 2007 sets an additional time limit by s .....

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and 22 of the appellate order. The CIT(A) thus, held that the investment so made in REC bonds within six months from the date of transfer, though in two distinct financial years to the tune of ₹ 72,50,000/- was eligible for exemption under section 54EC of the Act. The CIT(A) also noted that no contrary court decision of the High Court level had been brought to his notice. 7. The Revenue is in appeal against the order of CIT(A). 8. The learned Departmental Representative for the Revenue str .....

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d section also provides a cap on the investment to be made in the bonds to the extent of ₹ 50 lakhs in any financial year. As per the mandate of the said section and the proviso thereunder, where the assessee makes an investment of ₹ 50 lakhs in the specified bonds within time frame of six months from the date of sale, in any financial year, then the benefit of said section is to be allowed to the assessee. In case, the period of six months falls within two financial years, then the .....

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omandel Industries Ltd. (2015) 370 ITR 586 (Mad) have laid down that the exemption granted under the proviso to section 54EC(1) of the Act should be construed not transactionwise but financial year wise, wherein if the assessee was able to invest sum of ₹ 50 lakhs each in two different financial years, within period of six months from the date of transfer of capital assets, the said deduction was allowable to the assessee. The Hon ble High Court of Madras in CIT Vs. C. Jaichandar (supra) h .....

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