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Issues involved: Interpretation of section 54EC of the Income-tax Act, 1961 and the impact of a notification restricting investment opportunities for tax benefits.
Summary: The judgment addresses the grievance of a company registered under the Indian Companies Act, 1913, regarding the frustration of its intention to avail benefits under section 54EC of the Income-tax Act, 1961. Section 54EC provides for exemption of capital gains from tax if invested in specified bonds within a specified period. The petitioner's investment plans were hindered by a notification limiting the investment opportunity to Rs. 1,500 crores, resulting in the bonds being fully subscribed before the petitioner could invest. The petitioner sought a writ of mandamus to compel the Central Government to remove the investment limit and allow them to avail the tax exemption benefits. The court noted that while section 54EC itself does not impose any investment limit, the notification restricting the investment amount to Rs. 1,500 crores has effectively curtailed the petitioner's ability to benefit from the tax exemption scheme. The court highlighted that the notification was primarily aimed at raising funds for National Highways under the National Highways Act, 1988, and not solely for the purpose of enabling tax benefits under section 54EC. The court emphasized that decisions on the scope of tax concessions and bond issuances are matters of legislative policy, and it is not within the court's purview to compel the government to extend or modify such schemes. Ultimately, the court declined to issue a writ of mandamus as requested by the petitioner, stating that it is not appropriate for the judiciary to interfere in matters of legislative policy regarding tax concessions. The petitioner was advised to pursue the matter with relevant authorities or functionaries to address any anomalies in claiming benefits under the Income-tax Act.
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