2019 (2) TMI 522 - AT - Income Tax

Exemption u/s. 54EC - investments made in REC Bonds within the specified mandatory time period - Held that - In view of undisputed facts and the decision of Coordinate Bench in assessee s own case 2017 (12) TMI 1327 - ITAT PUNE we hold that the assessee is eligible for claiming exemption u/s. 54EC on the entire amount of investments made in REC Bonds within the specified mandatory time period.

Summary

Issues:
Restriction of exemption u/s. 54EC of the Income Tax Act to ?50,00,000.

Analysis:
The case involved an appeal against the order of the Commissioner of Income Tax (Appeals) regarding the restriction of exemption u/s. 54EC of the Income Tax Act to ?50,00,000 for the assessment year 2013-14. The appellant contested the restriction, claiming the exemption should be ?97,32,657. The appellant's representative argued that the investment in Rural Electrification Corporation (REC) Bonds was made within six months from the date of buy back of shares, with ?50,00,000 invested on one date and ?47.50 Lacs on another. The Assessing Officer limited the exemption to ?50 Lacs based on the provision of section 54EC. The Commissioner of Income Tax (Appeals) upheld this decision.

In a previous assessment year, a similar claim for exemption u/s. 54EC was made for ?1 crore, which was also restricted to ?50,00,000. However, the Tribunal had allowed the entire claim of exemption in that case. The Department defended the order of the Commissioner of Income Tax (Appeals) but acknowledged that the Tribunal had previously allowed the exemption on the entire investment amount. The Tribunal in the present case noted the previous decision and allowed the appellant's claim based on the findings of the Hon'ble Madras High Court.

The Tribunal referred to the decision of the Hon'ble Madras High Court in a similar case and held that the appellant was entitled to claim the deduction under section 54EC of the Act at ?1 crore, considering the investment made within the specified time period. The Tribunal found no contrary decision by the Hon'ble High Court or the Hon'ble Apex Court to overturn this decision. Therefore, the Tribunal allowed the appeal, holding the appellant eligible for claiming exemption u/s. 54EC on the entire amount of investments made in REC Bonds within the specified time period.

In conclusion, the Tribunal allowed the appeal, overturning the order of the Commissioner of Income Tax (Appeals) and directing the Assessing Officer to allow the deduction under section 54EC of the Act at ?1 crore. The decision was based on the precedent set by the Hon'ble Madras High Court and the lack of evidence to counter this ruling.