2021 (6) TMI 305 - AT - Income Tax

Exemption u/s 54EC - Investment made after the cut of date - transfer of the long-term capital asset in order to claim the exemption on account of long- term capital gain - HELD THAT - In order to claim exemption on account of long- term capital gain under section 54EC the assessee was required to make investment in the eligible bonds within six months from the date of transfer of the long-term capital asset i.e. 12.12.2013. Since the investment in the eligible bonds was admittedly made by the assessee on 21. 01.2014 i.e. after the period stipulated in section 54EC, we find myself in agreement with the ld. CIT(Appeals) that the assessee is not entitled for the exemption under section 54EC. Assessee has not been able to raise any material contention to dispute this position. He has only submitted that the assessee wanted to invest the long- term capital gain in purchase of another residential property and unable to find the suitable property, he finally invested the amount in long- term capital gain bonds on 21. 01.2020. In my opinion, this aspect is irrelevant to decide the eligibility of assessee for exemption under section 54EC, which specifically provides that the investment in eligible bonds is required to be made by the assessee within a period of six months from the date of transfer of the long-term capital asset in order to claim the exemption on account of long- term capital gain - Decided against assessee.

Issues Involved:
Addition of long-term capital gain and condonation of delay in filing appeal.

Analysis:
1. Condonation of Delay: The appeal before the Tribunal was filed with a delay of 484 days. The assessee sought condonation of the delay, providing reasons for the same. The Vice-President of the Tribunal noted that there was a sufficient cause for the delay and the Delay Condonation was granted after the Departmental Representative did not object to it.

2. Long-Term Capital Gain Addition: The assessee, an individual, declared a long-term capital gain of &8377; 6,14,674 arising from the sale of a residential property in the return of income. The Assessing Officer disallowed the claim of adjusting this gain against a loss from commodity share transactions. Consequently, the AO made an addition of the said amount to the total income of the assessee. The ld. CIT(Appeals) upheld this addition as the investment in long-term capital gain bonds was made after the stipulated period of six months from the date of transfer of the asset, as required by section 54EC of the Act.

3. Exemption Claim under Section 54EC: During the appellate proceedings before the ld. CIT(Appeals), the assessee claimed exemption of long-term capital gain by investing in long-term capital gain bonds under section 54EC of the Act. However, the investment was made after the prescribed period. The Tribunal agreed with the ld. CIT(Appeals) that the assessee was not entitled to exemption under section 54EC due to the delayed investment in eligible bonds.

4. Merits of the Appeal: The Tribunal considered the arguments from both sides and found that the assessee failed to meet the conditions specified under section 54EC for claiming exemption on long-term capital gain. The contention that the delay in investment was due to the inability to find suitable residential property was deemed irrelevant as the statute mandates the investment within a specific timeframe. Consequently, the appeal of the assessee was dismissed, upholding the addition of long-term capital gain made by the Assessing Officer.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the addition of long-term capital gain due to the delayed investment in eligible bonds as required under section 54EC of the Income Tax Act.

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