TMI Blog2016 (9) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement dated 14/10/2008, therefore, there are two separate computation of capital gains, for each assets. The assessee while computing capital gains has sought reinvestment benefit by investing, in the bonds prescribe u/s 54EC on 30/09/2008 against capital gain on 28/04/2008 and on 09/04/2009 against capital gain on 14/10/2008, therefore, the case of the assessee is clear, consequently, in view of the foregoing decision this ground of the assessee, in both appeals, is allowed. - ITA No.169/Mum/2015, ITA No.170/Mum/2015 - - - Dated:- 7-9-2016 - Shri Joginder Singh, Judicial Member, and Shri Ashwani Taneja, Accountant Member Assessee by : Shri D.B.Sanghavi Revenue by : Shri Sunil Kumar Agarwal-DR O R D E R Per Joginder Singh (Judicial Member) Both these appeals are by the different assessee, closely related to each other, having common grounds of appeal. The assessees are aggrieved by the impugned orders both dated 04/09/2014 of the ld. First Appellate Authority, Mumbai. 2. During hearing, the ld. counsel for the assessee, Shri D.B. Sanghavi, did not press grounds number 1.1 and 1.2 of both appeals with respect to confirming the action of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irachandani Estate, Thane. The ld. Assessing Officer made the addition of ₹ 51,34,710/- while framing assessment u/s 143(3) of the Act on account of decline of exemption claimed u/s 54E of the Act amounting to ₹ 50 lakhs. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the addition was deleted against which the Revenue is in appeal before this Tribunal. 2.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. departmental counsel, if kept in juxtaposition and analyzed, under the facts discussed hereinabove, we find that the assessee sold shares leading to capital gains of ₹ 1,11,63,450/- and out of this amount rupees One crore was invested in REC Bonds on two dates namely ₹ 50 lakh on 31/03/2009 and remaining ₹ 50 lakh on 31/05/2009. The ld. Assessing Officer disputed the allowability of claimed exemption u/s 54EC of the Act, amounting to rupees One crore when the maximum limit for making investment u/s 54EC of the Act was ₹ 50 lakhs only. The stand of the assessee was that no restriction is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferred and in the subsequent financial year does not exceed fifty lakh rupees.] (2) Where the long-term specified asset is transferred or converted (otherwise than by transfer) into money at any time within a period of three years from the date of its acquisition, the amount of capital gains arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such long-term specified asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1) shall be deemed to be the income chargeable under the head Capital gains relating to long-term capital asset of the previous year in which the long-term specified asset is transferred or converted (otherwise than by transfer) into money. Explanation.-In a case where the original asset is transferred and the assessee invests the whole or any part of the capital gain received or accrued as a result of transfer of the original asset in any long-term specified asset and such assessee takes any loan or advance on the security of such specified asset, he shall be deemed to have converted (otherwise than by transfer) such specified asset into money on the date on which such loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956). 2.2. If the aforesaid provision is analyzed, it deals with capital gains not to be charged on investment in certain bonds. Sub-section (1) speaks where the capital gain arises from the transfer of long term capital asset and the assessee has any time within a period of six months, after the date of such transfer, invest, the whole or any part of the capital gains in the long term specified asset, the capital gain shall be dealt with in accordance with the provisions of the section. The position has been clarified with insertion of explanation which speaks about cost in relation to any long term specified asst , means the amount invested in such specified asset out of the capital gains received or accruing as a result of the transfer of the original asset, meaning thereby, the date of receipt or accruing are the important dates for making investment. The impugned amount was invested in REC bond by the assessee in two different financial years. The provision section 54EC provides for exemption from tax to long term capital gain, provided the same is invested in the specified bonds, decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahmedabad Bench of the Tribunal in Aspi Ginwala vs ACIT (2012) 044 (II) ITCL 0488; ITA No.3226 and 3227/Ahd/2011. Considering the totality of facts, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal). Finally, the appeal of the Revenue is dismissed. 3.2. If the aforesaid decision of the Tribunal, wherein, one of us (Judicial Member), is signatory to the order, deliberated upon the issue in length and place reliance upon various judicial decisions and finally dismissed the appeal of the Revenue. Even otherwise, on a plain reading of section 54EC(1) of the Act, it restrict the time limit, for the period of investment after the property is 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 01/04/2007 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 in six months and the benefit that flows from the first proviso is that if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged 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 : [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 asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees.] 3.4. Thus, on plain reading of the abovesaid 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 01/04/2007 in the long term specified asset, by an assessee, during any Financial Year does not exceed fifty lakhs rupees. The notes on clauses, Financial Bill 2014 and the memorandum explaining the provisions in Finance (No.2) Bill 2014, reads as under:- Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Accordingly, it is proposed to insert a proviso in sub-section (1r so as to provide that the investment made by an assessee in the long-term specified asset, out of capital gains arising from transfer of one or more original asset, 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 assessment years. 3.5. From the above, it can be inferred that the intention of the legislature probably appears to be that this amendment should be for the Assessment year 2005-06 to avoid unwanted litigation of the previous years. In any event, from the reading of section 54EC(1) and the first proviso, it is clear that the time limit for investment in 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. Our view find supports from the decision from Hon'ble Madras High Court in CIT vs C. Jaichandar (2015) 370 ITR 579 (Mad.), decision of the Tribunal in ACIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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