2015 (2) TMI 1183 - AT - Income Tax

Denial of claim of deduction u/s 54EC - Held that - The investments in the bonds of NHAI and REC Ltd. of ₹ 50,00,000/- made by the assessee on 28.03.2008 and 22.08.2008 respectively are within the period of six months from the date of transfer as prescribed in section 54EC of the Act and accordingly the assessee is eligible for deduction of ₹ 1,00,00,000/- u/s 54EC of the Act.

Summary

Issues:
1. Incorrect noting of investment dates in the bonds of REC Ltd. and NHAI.
2. Discrepancy in the treatment of investments by Assessing Officer and Tribunal.
3. Correct interpretation of the date of property transfer for claiming exemption u/s 54EC.
4. Request for modification of the Tribunal's order under section 254(2) of the Income Tax Act, 1962.

Analysis:
1. The assessee pointed out errors in the Tribunal's order regarding the investment dates in REC Ltd. and NHAI bonds. The correct date for the REC Ltd. investment was 22.08.2008, not 28.02.2008 as noted. The Assessing Officer had denied the deduction u/s 54EC for both investments, contrary to the Tribunal's initial understanding. The CIT(A) upheld this denial, leading to the assessee's appeal.

2. The errors in the Tribunal's order were acknowledged by the Departmental Representative. The Tribunal had mistakenly believed that the NHAI investment made on 28.03.2008 was allowed by the Assessing Officer, when in fact, both investments were disallowed. The Tribunal only directed the allowance of deduction for the REC Ltd. investment, necessitating a correction.

3. The crux of the matter was the interpretation of the property transfer date for exemption u/s 54EC. The assessee argued that the transfer date was 01.03.2008, making both investments within the six-month period for claiming exemption. The Tribunal agreed with this interpretation, but errors in noting the investments led to confusion regarding the Assessing Officer's decisions.

4. Under section 254(2) of the Act, the Tribunal modified its order to rectify the errors. The corrected order clarified that both the NHAI and REC Ltd. investments made on 28.03.2008 and 22.08.2008, respectively, were eligible for deduction u/s 54EC. The Miscellaneous Application by the assessee was allowed, and the order was pronounced on 20th February 2015.