2018 (3) TMI 2021 - AT - Income Tax

LTCG - Deduction in respect of investment in bonds - Excess claim of deduction u/s. 54EC - A.O. found that Rs. 50 lacs have been invested in bonds in two financial years - AO noticed that the assessee has claimed deduction u/s. 54EC on sale of immovable properties to the tune of Rs. 1 crore and investment cannot exceed Rs. 50 lacs - Assesee as brought to the notice of the ld. CIT(A) that the Finance Bill 2014 has inserted second proviso but only with effect from 01.04.2015 and subsequent years and therefore not applicable for the year under consideration thus deleted addition - HELD THAT - D.R. could not bring any factual or legal error in the findings of the ld. CIT(A). The Co-ordinate Bench in the case of Aspin Ginwala and Shree Ram Engg. Mfg. Industries 2012 (4) TMI 195 - ITAT AHMEDABAD held that if the appellant 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 under section 54EC. The language of the proviso is clear and unambiguous and so the appellant is entitled to get exemption upto Rs. 1 crore in this case;(ii) Though the time limit of 6 months for making the investment under section 54EC expired on 21.4.2008. no bonds were available for subscription between 1.4.2008 lo 28.5.2008. The investment was made as soon as the subscription opened on 26.5.2008. The appellant was accordingly prevented by sufficient cause which was beyond his control in making investment in these Bands 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. Since the amendment brought in the statute is with effect from 01.04.2015 and is applicable on and from assessment year 2015-16 the same is not applicable on the facts of the year under consideration. We therefore do not find any reason to interfere with the findings of the ld. CIT(A). Decided against revenue.

Summary

Issues:
- Appeal against deletion of addition of Rs. 50 lacs on account of excess claim of deduction u/s. 54EC of the Act for A.Y. 2013-14.

Detailed Analysis:
1. The appeal by the Revenue challenges the deletion of an addition of Rs. 50 lacs made for excess claim of deduction u/s. 54EC of the Act for the assessment year 2013-14.
2. The Assessing Officer (A.O.) observed that the assessee claimed a deduction of Rs. 1 crore u/s. 54EC of the Act on the sale of immovable properties, with Rs. 50 lacs invested in bonds over two financial years.
3. The A.O. limited the exemption to Rs. 50 lacs, citing the provision of Section 54EC which states that the investment cannot exceed Rs. 50 lacs, disallowing the claim for the remaining Rs. 50 lacs.
4. The assessee contended before the ld. CIT(A) that the Finance Bill, 2014 inserted a proviso effective from 01.04.2015 onwards, not applicable to the relevant year.
5. Relying on judicial decisions, the ld. CIT(A) directed the A.O. to allow the deduction for the Rs. 50 lacs investment in bonds.
6. The Revenue, aggrieved by this decision, appealed, but the Co-ordinate Bench referred to a case with similar facts and held that the appellant could claim exemption up to Rs. 1 crore under section 54EC.
7. As the statutory amendment was effective from 01.04.2015 and applied from A.Y. 2015-16, it was deemed inapplicable to the relevant year, leading to the dismissal of the Revenue's appeal.

This judgment clarifies the interpretation of the provision under Section 54EC of the Act regarding the maximum investment limit for claiming deductions. It emphasizes the importance of statutory amendments and their applicability to specific assessment years. The decision also highlights the relevance of judicial precedents in determining tax liabilities and deductions, ensuring consistency and fairness in tax assessments.