TMI Blog2018 (3) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... /s.54EC to ₹ 50 lakhs, as against the deduction of Rs. One Crore claimed by the appellant u/s.54EC of the Act. 2. The Ld.CIT(A) failed to appreciate that the investments in the bonds u/s.54EC of the Act were made ₹ 50 lakhs each in two different financial years. 3. It is submitted that in the facts and circumstances of the case, and in law, no such rejection of the claim was called for. 3. Briefly stated relevant facts are that the assessee is engaged in the production and trading of Furniture and Interior design. Assessee filed the return of income declaring income of ₹ 63,24,200/-. During the year, assessee earned capital gains on sale of lands. On this account, the assessee earned capital gains of ₹ 1,46,10,643/-. While the sum of ₹ 1 crore was invested in specified NHAI bonds in two instalments in two financial years and claimed deduction u/s.54EC of the Act. The balance of gains was duly offered to tax as per the provisions. The said sum of Rs. One crore was invested by the assessee in the bonds in two instalments of ₹ 50 lakhs each. Relevant dates includes that the lands were sold on 08-12-2012 and therefore, the due date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of Madras High Court in the case of C. Jaichander 370 ITR 0579 (Mad.) the CIT(A) hypertechnically distinguishing the judgment stating that the said judgment is merely relevant for the legal proposition on the prospective nature of the amendment to section 54EC of the Act. Referring to the clarificatory amendments brought in by the Finance (No.2) Act, 2014, CIT(A) attributed the same to the then existing provisions of Ist proviso before dismissing the appeal of the assessee. 5. Aggrieved with the same, the assessee is in appeal before us with the grounds extracted above. 6. Before us, it is the case of assessee before us that the expression that the investment made. . . . . in the long term specified assets by an assessee during any financial year does not exceed ₹ 50 lakhs does not take away the right of the assessee to invest the capital gains in subsequent financial years. Further, referring to the amendments, Ld. Counsel for the assessee argued that the judgment in the case of C. Jaichander (supra) has clearly established the principle allowing the assessee to make a claim of deduction u/s.54EC of the Act accepting ₹ 50 lakhs of the capital gains in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.9 is extracted as under : 9. The issue arising in the present appeal is against the claim of deduction under section 54EC of the Act, under which deduction is provided against the income from long term capital gains in case the investment is made in specified assets within time frame of six months from the date of sale of asset. The said 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 question which arises for adjudication is whether the assessee can claim the aforesaid deduction under section 54EC of the Act to the extent of ₹ 50 lakhs in each of the financial year totaling ₹ 1 crore, where the investment is made in the aforesaid bonds in two financial years separately but within period of six months from the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer of long term capital gains i.e. sale of shares on 21.01.2010 falling in financial year 2009-10, the assessee is entitled to the benefit provided by the proviso under section 54EC of the Act and consequently, the order of CIT(A) merits to be upheld. Dismissing the grounds of appeal raised by the Revenue, the appeal of the Revenue is dismissed. Similar view was followed by the Tribunal in the cases of Shri Bimal Desai and Smt. Kinna Patel ITA Nos. 40 and 41/PUN/2016 for the A.Y. 2012-13 dated 31-10-2017. Content of Para Nos. 10 to 12 are relevant and the same are extracted below for the sake of completeness of this order : 10. Similar issue of claim of deduction under section 54EC of the Act arose before the Pune Bench of Tribunal in the case of ITO Vs. Smt. Bala R. Venkitachalam (supra) and relying on the ratio laid down by the Hon ble High Court of Madras in CIT Vs. C. Jaychander (supra) and later in CIT Vs. Coromandel Industries (2015) 370 ITR 586 (Mad), the Tribunal held that the assessee was entitled to claim deduction under section 54EC of the Act. The Tribunal also referred to the amendment made by the Finance (No.2) Act, 2014 w.e.f. 01.04.2015 by whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have benefit of section 54EC(1) of the Act. The Hon ble High Court further held that however, to remove the ambiguity in the above said provisions, legislature by Finance (No.2) Act, 2014 w.e.f. 01.04.2015 had inserted proviso after existing proviso to subsection (1) of section 54EC of the Act. The second proviso, as per which the investment made by the assessee in long term capital gains specified assets out of 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 subsequent financial years, does not exceed ₹ 50 lakhs. The said amendment was held to be applicable from assessment year 2015-16 and subsequent assessment years. The Hon ble High Court thus, categorically held that the investment made on or after 01.04.2007 in long term specified assets by an assessee during any financial year should not exceed ₹ 50 lakhs. However, 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. Applying the aforesaid proposition to the facts of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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