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TMI Blog2012 (6) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... y embargo on the investments by an assessee but the embargo is on allotment of the bonds to a "person" and such embargo is on the allotting authority. Sec. 54EC stipulates investment limit and not deduction limit, hence deduction for investment by each minor child is thereby allowed - Decided in favor of assessee - IT Appeal Nos. 951 & 963 (Kol.) of 2011 - - - Dated:- 1-6-2012 - Mahavir Singh, C.D. Rao, JJ. ORDER Mahavir Singh, Judicial Member Both these appeals by revenue are arising out of separate orders of CIT(A)-VIII, Kolkata in Appeal No. 286 285/CIT(A)-VII1/Kol/09-10 dated 17.02.2011. Assessments were framed by DCIT, Circle-8, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Years 2007-08 vide his separate orders both dated 30.11.2009. Since grounds are common and facts are identical, we dispose of both these appeals together by consolidated order. 2. The only common issue in these two appeals of revenue is, whether the assessee is eligible for deduction u/s. 54EC of the Act on investment in REC Capital Gain Bonds on account of minors' income from Long Term Capital Gains (LTCG) separately, in case in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed the deduction claimed by assessee on account of two minors at Rs.49.50 lacs and Rs.39.50 lacs respectively and restricting deduction u/s. 54EC of the Act at Rs.50 lacs invested by assessee. Aggrieved, assessee preferred appeal before CIT(A), who allowed the claim of assessee and deleted the disallowance. Aggrieved, revenue is in appeal before us. 4. Before us Ld. Sr. DR Shri P. S. Dutta relied on section 54EC of the Act and argued that as per explanation to section 54EC(3)(b) of the Act and as per CBDT Notification no. 380/2006 dated 22.12.2006 providing limit on the amount of investment by an assessee in REC Bond and maximum limit prescribed at Rs.50 lacs, which is to be adhered by the Assessing Officer and he rightly allowed the claim of assessee by restricting the deduction u/s. 54EC of the Act at Rs.50 lacs. According to Ld. Sr. D.R., benefit of deduction is available to an assessee and in the present case there is only one assessable entity being the individual Shri Shankar Sharma, the present assessee, for the purpose of computation of total income under the Act. According to him, his daughter Miss. Shakshi Sharma and his son Master Kesav Sharma cannot be termed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BDT Notification No. 380 of 2006 dated 22.12.2006 and he referred to the relevant Notification which reads as under: "In exercise of the powers conferred by sub"-clause (ii) of clause (b) of the Explanation to section 54EC of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the bonds for an amount of Rupees three thousand five hundred crores (redeemable after three years) to be issued by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), during the period from 26th day of December, 2006 to 31st day of March, 2007 (both days inclusive), as 'long-term specified asset' for the purposes of the said section subject to the following conditions, namely : ( i ) a person who has made an investment of an amount aggregating more than fifty lakhs rupees in the bonds notified as long-term specified asset by the Central Government for the purposes of section 54EC of the Income-tax Act 1961 (43 of 1961) in the Official Gazette vide notification number S.O. 963(E), dated the 29th June, 2006 or notification number S.O. 964(E), dated the 29th June, 2006, shall not be allotted any bonds notified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovind Rohira Alias Srichand Rohra [2005] 95 ITD 77 (Mum) and of Chandigarh Bench in the case of ACIT v. Madan Lal Bassi [2004] 88 ITD 557 (Chd.). 7. We have heard rival submissions and gone through facts and circumstances of the case. We find from the notification issued by Rural Electricity Corporation Ltd. dated 29.06.2006 (reproduced above in para 5) that there is nothing in the above notification in so far as the deduction is to be allowed u/s. 54EC of the Act. From the above notification issued by Rural Electricity Corporation Ltd., which says that "a person" shall not be "allotted" bonds more than Rs. 50,00,000/-. This word "Person" has been defined in sec. 2(31) of the Act, which includes an individual. The relevant definition of 2(31) reads as under: "(31) "person" includes ( i ) an individual, ( ii ) a Hindu undivided family, ( iii ) a company ( iv ) a firm, ( v ) an association of persons or a body of individuals, whether incorporated or not, ( vi ) a local authority, and ( vii ) every artificial juridical person, not falling within any of the preceding sub-clauses; Explanation - For the purposes of this clause, an association of persons or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income. The word 'such' means the "same" or of the "same nature" as has been defined in all the dictionaries and here the word 'such' is preceded by the word total income. The word total income has been defined U/s. 2(45) of the Act which is as under: (45) "total income" means the total amount of income referred to in section 5, computed in the manner laid down in this Act;" From the above definition of total income, it is clear that it is not the gross total income but the income of any person, who is an assessee, as computed under the provisions of the Act, means the total income as computed under the provisions of the Act is to be added. As referred by Ld. Counsel CBDT Circular No. 636, dated 31-8-1992 and scope of this sections is explained in para-36 page 31 of said circular reported in 198 ITR(St.)1 which reads as under :- "Clubbing of Minor's Income" "36. Section 64 of the Income-tax Act provided that in computing the total income of any individual, there shall be included all such income as arises directly or indirectly to a minor child of such individual from, - 9. We further find support from the decision of Bangalore Bench of this ITAT in the case of Baj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case was having such a house of his own, there was no difficulty in allowing his claim under section 54F of the Act. Only because minor is not having a house of his own, it cannot be said that he is not entitled for the benefits contemplated under this section. The business is carried on behalf of the minor by his parent. The CIT (A) in para 3 records that shares were held by assessee in Ramani Hotels Pvt. Ltd. bought on different dates between 1988 and 1993. Such shares were sold on 21.4.1994 for a consideration of Rs. 37,21,000. The capital gain worked out to Rs. 31,37,392, but, a residential house was bought for Rs. 31,99,000 in the name of assessee's minor son and it was claimed the benefit under section 54 of the Act. The income arises from the sale of the shares stood in the name of the assessee's minor son. If he could legally purchase and sell the shares through his father, the income realized from this sale also can be utilised for the purchase of the house property acting through his father. Merely because the income is clubbed with the income of the assessee's father, there is no meaning in saying that he is not entitled for the benefits contemplated under the section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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