2017 (9) TMI 1460
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.... section 54EC of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] at Rs. 1 crore on the long-term capital gain of 99,53,675/-. As per provision of section 54 EC of the income tax act, the assessee is entitled to exemption on the investment made by the assessee under NHAI bonds under the said provision. The question arose in this case as to what extent the assessee should be so entitled. The assessee has invested Rs. 1 crore under section 54 EC. As per the assessee, he is entitled to 50 lakh exemption in each of the financial year totalling to Rs. 1 crore and in support of the claim it referred to various decisions mentioned in para 5.6 of the assessment order namely: a) Aspi Cinwala v. Asstt. CIT{2012} 20 taxman.com 75(Ahd-Trib) b) Ram Aggarwal v. Jt. CIT {2002)81 ITD163 (Mum) c) In Asstt. CIT v. shri Raj kumarjain & Sons (HUF) {2012} 19 taxman.com 27 (Jp) d) CBDT Circular No 3/2008 finance Act 2007 for deduction in respect of long term infrastructure bonds. 4. However the AO relying on the judgement of Raj Kumar Jain and Sons HUF delivered by ITAT Jaipur bench restricted the exemption to Rs. 50 lakh. The observations of the assessing offic....
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....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 as: (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 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 4S ; [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.] The following second proviso shall be inserted after the existing proviso to subsection (1) of section 54EC by the Finance (No. 2) Act, 2014, w.e.f. 1-4-2015: Provided further 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 ....
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.... 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 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." 11. 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 l....
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....plaining the provisions in the Finance (No.2) Bill, 2014: Capital gains exemption on investment in Specified Bonds. 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 subsection 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....