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TMI Blog2014 (1) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... initely eligible to claim exemption upto Rs. 1 Crore – Following Aspi Ginwala Shree Ram Engg. & Mfg. Industries v. Asstt. CIT [2012 (4) TMI 195 - ITAT AHMEDABAD] - Claim of the assessee for exemption upto Rs. 1 Crore has to be allowed in accordance with Section 54EC of the Act – Decided in favour of Assessee. - IT Appeal NO. 1950 (MDS.) OF 2012 - - - Dated:- 31-1-2013 - ABRAHAM P. GEORGE AND V. DURGA RAO, JJ. For the Appellant : R. Vijayaraghavan. For the Respondent : Smt. Vidisha Kalra. ORDER:- PER : Abraham P. George In this appeal filed by the assessee, its grievance is that the CIT(Appeals) confirmed the restriction of her claim of exemption of Rs. 1 Crore under Section 54EC of Income-tax Act, 1961 (in short 'the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments under Section 54EC of the Act with effect from 1.4.2007. Accordingly, investments had to be made within six months from the date of transfer of capital asset. Assessee, here, had made investment of Rs. 50 lakhs on 27.2.2008 in REC Bonds and another Rs. 50 lakhs on 30.6.2008 in NHAI Bonds. Since the statute pegged the investment for which exemption was allowable in an assessment year to Rs. 50 lakhs, the second sum of Rs. 50 lakhs invested on 30.6.2008, as per the A.O., was not eligible for deduction under Section 54EC of the Act. Taking this view, A.O. curtailed the exemption claimed by the assessee under Section 54EC, pro rata to 50 lakhs investment made in REC Bonds. 3. In her appeal before CIT(Appeals), argument of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvested in REC and NHAI Bonds in two different financial years, but within six months from the date of transfer of the capital asset. Therefore, ceiling mentioned under proviso to Section 54EC(1) would apply separately for two investments. Assessee, according to him, was therefore, eligible for exemption of the whole sum of Rs. 1 crore under proviso to Section 54EC(1) of the Act. 5. Per contra, learned D.R. submitted that the Explanatory Memorandum to Finance Act, 2007 which introduced proviso to Section 54EC(1) was clear in that limitation placed was for ensuring equitable distribution of available exempt assets so that all assessees could take advantage of it. Maximum exemption that could be given was Rs. 50 lakhs for each transaction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not less than the capital gain arising from the transfer of the original asset, the whole of such capital gain shall not be charged under section 45; (b) If the cost of the long-term specified asset is less than the capital gain arising from the transfer of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of acquisition of the long-term specified asset bears to the whole of the capital gain, shall not be charged under section 45: Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees"." 8. The first condition mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonds. Accordingly, the said section has been amended so as to provide for a ceiling on investment by an assessee in such long-term specified assets. Investments in such specified assets to avail exemption under section 54EC, on or after the 1st day of April, 2007 will not exceed fifty lakh rupees in a financial year." Last sentence of the Explanatory Memorandum clearly states that the exemption for investment cannot exceed Rs. 50 lakhs in a financial year. Therefore, if the assessee is able to keep the six months' limit from the date of transfer of capital asset, but, still able to place investment of Rs. 50 lakhs each in two different financial years, we cannot say that the restrictive proviso will limit the claim to Rs. 50 lakhs only. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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