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)
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