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2015 (10) TMI 1068 - AT - Income TaxDisallowance of claim for exemption under section 54EC on investment made in NHAI bonds - Held that - This issue is squarely covered in favour of the assessee by various decisions of the Tribunal and respectfully following the same and keeping in view the Central Board of Direct Taxes Circular No. 3/2008, dated March 12, 2008, we direct the Assessing Officer to allow the claim of the assessee for exemption under section 54EC of the Act. See Shri Vivek Jairazbhoy Versus Dy. Commissioner of Income Tax (International Taxation) 2014 (9) TMI 419 - ITAT BANGALORE Aspi Ginwala Versus Assistant Commissioner of Income-tax, Circle-5, Baroda 2012 (4) TMI 195 - ITAT AHMEDABAD - Decided in favour of assessee.
Issues Involved:
1. Disallowance of exemption claimed under section 54EC of the Income-tax Act, 1961. 2. Validity of assessment made under section 143(3) read with section 147 of the Act. 3. Charging of interest under sections 234A and 234B of the Act. Issue 1 - Disallowance of Exemption under Section 54EC: The main issue in this case revolved around the disallowance of exemption claimed under section 54EC of the Income-tax Act, 1961. The assessee had declared total income and claimed exemption of Rs. 34,59,538 under section 54EC on investment made in NHAI bonds. The Assessing Officer reopened the assessment, denying the claim for exemption beyond Rs. 50 lakhs, leading to a dispute. The learned Commissioner of Income-tax (Appeals) upheld the disallowance citing the absence of direct decisions from the Bombay High Court or the Income-tax Appellate Tribunal, Mumbai, favoring the Revenue's stance. The Commissioner highlighted the legislative intent to limit investment in 'long-term specified assets' to Rs. 50 lakhs, aiming for fair distribution among taxpayers. However, the Tribunal, considering various precedents, including decisions from different benches, ruled in favor of the assessee. They emphasized the clear language of the proviso to section 54EC and the benefits available to the assessee, directing the Assessing Officer to allow the exemption claim. Thus, the disallowance was overturned, and the appeal was treated as allowed. Issue 2 - Validity of Assessment under Section 143(3) read with Section 147: The second issue regarding the validity of the assessment made under section 143(3) read with section 147 of the Act became academic due to the decision on the first issue. As the Tribunal ruled in favor of the assessee on the disallowance of exemption under section 54EC, the validity of the assessment under section 143(3) read with section 147 was no longer relevant or necessary to adjudicate upon. Issue 3 - Charging of Interest under Sections 234A and 234B: The third issue raised in ground No. 3 concerning the charging of interest under sections 234A and 234B of the Act was deemed consequential. The Tribunal directed the Assessing Officer to allow consequential relief to the assessee on these interest-related issues. Therefore, the charging of interest under sections 234A and 234B was addressed, and relief was granted to the assessee accordingly. In conclusion, the appeal before the Appellate Tribunal ITAT MUMBAI primarily dealt with the disallowance of exemption claimed under section 54EC of the Income-tax Act, 1961. The Tribunal's decision favored the assessee, overturning the disallowance and allowing the exemption claim. Additionally, the issues related to the validity of assessment under section 143(3) read with section 147 and the charging of interest under sections 234A and 234B were addressed, with appropriate relief granted to the assessee.
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