S. 54EC limit of Rs. 50L does not apply to the transaction but financial
year. Delay in investing within 6 M owing to non-availability of bonds
to be excused
The assessee sold property on 22.10.2007 and computed long-term capital gains. The s. 54EC investment was required to be made within 6 months i.e. on or before 21.04.2008. The assessee invested Rs. 50 lakhs in REC bonds on 31.12.2007 (FY 2007-08, within the 6 M time limit) and Rs. 50 lakhs in NHAI bonds on 26.5.2008 (FY 2008-08, beyond the 6 M time limit) and claimed a deduction of Rs. 1 crore. The assessee claimed that no eligible scheme was available for subscription from 1.4.2008 to 28.5.2008 and that he applied in the NHAI bonds as soon as it opened and that he was prevented by sufficient cause from investing within the time period of 6 months. The AO & CIT (A) rejected the claim for exemption of Rs. 50 lakhs in
respect of the NHAI bonds on the ground that (i) it exceeded the monetary limit of Rs. 50 lakhs prescribed in s. 54EC and (ii) it was made beyond the time limit of 6 months. On appeal to the Tribunal, HELD allowing the appeal:
(i) The Proviso to s. 54EC provides that the investment made in a long term specified asset by an assessee "during any financial year" should not exceed Rs. 50 lakhs. It is clear that if the assessee transfers his capital asset after 30th September of the financial year he gets an opportunity to make an investment of Rs.50 lakhs each in two different financial years and is able to claim exemption upto Rs.1 crore u/s 54EC. The language of the proviso is clear and unambiguous and so the assessee is entitled to get exemption upto Rs.1 crore in this case;
(ii) Though the time limit of 6 months for making the investment u/s 54EC expired on 21.4.2008, no bonds were available for subscription between 1.4.2008 to 28.5.2008. The investment was made as soon as the subscription opened on 26.5.2008. The assessee was accordingly prevented by sufficient cause which was beyond his control in making investment in these Bonds within the time prescribed. Exemption should be granted in cases where there is a delay in making investment due to non-availability of the bonds (Ram Agarwal 81 ITD 163 (Mum) followed)
See the contra view in ACIT vs. Raj Kumar Jain & Sons (HUF) (ITAT Jaipur)
Related Judgements
ACIT vs. Raj Kumar Jain & Sons (HUF) (ITAT Jaipur) The object of the proviso to s. 54EC is to provide a ceiling of Rs. 50 lakhs on investment by an assessee in the long term specified assets. If the assessee's interpretation is accepted then, because the transfer took place of assets has taken place from 1st Oct to…
Ahmedabad Urban Development Authority vs. ACIT (ITAT Ahmedabad) S. 194C defines "work" to include "carriage of goods and passengers by any mode of transport other than railways" while s. 194-I defines "rent" to mean payment for use of "plant" (which is defined in s. 43 to include vehicles). As the cars were owned and maintained by the…
Kumarpal Amrutlal Doshi vs. DCIT (ITAT Mumbai) When a payment is made by cheque, then the `date of payment' is the `date of the cheque' even though the cheque may be encashed subsequently. As the cheque was issued within 6 months of the transfer, s. 54EC relief was available even though the cheque was encashed, and
The assessee sold property on 22.10.2007 and computed long-term capital gains. The s. 54EC investment was required to be made within 6 months i.e. on or before 21.04.2008. The assessee invested Rs. 50 lakhs in REC bonds on 31.12.2007 (FY 2007-08, within the 6 M time limit) and Rs. 50 lakhs in NHAI bonds on 26.5.2008 (FY 2008-08, beyond the 6 M time limit) and claimed a deduction of Rs. 1 crore. The assessee claimed that no eligible scheme was available for subscription from 1.4.2008 to 28.5.2008 and that he applied in the NHAI bonds as soon as it opened and that he was prevented by sufficient cause from investing within the time period of 6 months. The AO & CIT (A) rejected the claim for exemption of Rs. 50 lakhs in
respect of the NHAI bonds on the ground that (i) it exceeded the monetary limit of Rs. 50 lakhs prescribed in s. 54EC and (ii) it was made beyond the time limit of 6 months. On appeal to the Tribunal, HELD allowing the appeal:
(i) The Proviso to s. 54EC provides that the investment made in a long term specified asset by an assessee "during any financial year" should not exceed Rs. 50 lakhs. It is clear that if the assessee transfers his capital asset after 30th September of the financial year he gets an opportunity to make an investment of Rs.50 lakhs each in two different financial years and is able to claim exemption upto Rs.1 crore u/s 54EC. The language of the proviso is clear and unambiguous and so the assessee is entitled to get exemption upto Rs.1 crore in this case;
(ii) Though the time limit of 6 months for making the investment u/s 54EC expired on 21.4.2008, no bonds were available for subscription between 1.4.2008 to 28.5.2008. The investment was made as soon as the subscription opened on 26.5.2008. The assessee was accordingly prevented by sufficient cause which was beyond his control in making investment in these Bonds within the time prescribed. Exemption should be granted in cases where there is a delay in making investment due to non-availability of the bonds (Ram Agarwal 81 ITD 163 (Mum) followed)
See the contra view in ACIT vs. Raj Kumar Jain & Sons (HUF) (ITAT Jaipur)
Related Judgements
ACIT vs. Raj Kumar Jain & Sons (HUF) (ITAT Jaipur) The object of the proviso to s. 54EC is to provide a ceiling of Rs. 50 lakhs on investment by an assessee in the long term specified assets. If the assessee's interpretation is accepted then, because the transfer took place of assets has taken place from 1st Oct to…
Ahmedabad Urban Development Authority vs. ACIT (ITAT Ahmedabad) S. 194C defines "work" to include "carriage of goods and passengers by any mode of transport other than railways" while s. 194-I defines "rent" to mean payment for use of "plant" (which is defined in s. 43 to include vehicles). As the cars were owned and maintained by the…
Kumarpal Amrutlal Doshi vs. DCIT (ITAT Mumbai) When a payment is made by cheque, then the `date of payment' is the `date of the cheque' even though the cheque may be encashed subsequently. As the cheque was issued within 6 months of the transfer, s. 54EC relief was available even though the cheque was encashed, and
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