9911796707
TMI Blog2015 (2) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... 54E of the Act specifically provide that where capital gain arising on transfer of long term capital asset is invested or deposited in the manner prescribed by the Government at the relevant time in the specified asset, the assessee shall not be charged to capital gain tax. Our view is squarely covered by the decision from Hon’ble jurisdictional High Court in the case of ACE Builders (P.) Ltd. (2005 (3) TMI 36 - BOMBAY High Court). - Decided against revenue. Disallowance on account restricted exemption available to only ₹ 50 lakh u/s 54EC - Held that:-Section 54EC (1) of the Act restrict the time limit for the period of investment after the property was sold to six month and there was no cap on the investment to be made in bonds, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law the Ld. CIT(A) erred in allowing the deduction u/s 54EC on the investment of Short Term Capital Gain arising from the sale of depreciable asset, by relying on the decision of the Hon'ble Bombay High Court in the case of CIT v/s Ace Builders (P) Ltd 144 Taxman 855 (Bom), ignoring that the decision in that case was not accepted on merit and SLP was not filed due to low tax effect. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in allowing the deduction u/s 54EC on the investment of Short Term Capital Gain arising from the sale of depreciable asset, ignoring that though the asset sold is a Long Term Capital Asset, the gain arising is deemed to be Short Term Capital Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany declared income of ₹ 3,060/- in his return filed on 31st October, 2009. The assessee sold a flat at maker tower, Cuffe Parade, Mumbai. The assessee offered capital gain of ₹ 92,47,752/- and claimed deduction u/s 54EC of the Act, investing ₹ 1,00,00,000/- (Rs.50 lakh before 31/03/2009 and remaining ₹ 50 lakh after 31/03/2009 in the bonds prescribed u/s 54EC of the Act). The Assessing Officer rejected the claim of the assessee by disallowing the exemption u/s 54EC of the Act and computed the taxable capital gain amounting to ₹ 92,47,752/-. 2.3. On appeal, before the ld. Commissioner of Income tax (Appeals), the claim of the assessee was examined and by placing reliance upon the decision from Hon ble juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the new flat within prescribed time limit for ₹ 1,69,21,367/-, thus, the net capital gain was ₹ 92,47,752/-. The assessee invested ₹ 1,00,00,000/- in purchasing the new property and making investment u/s 54EC of the Act, thus, the tax payable under the capital gains remains nil. The assessee invested ₹ 50 lakh u/s 54EC in National Highway Authority of India bonds and remaining ₹ 50 lakh in bonds of Rural Electrification Corporation Ltd. Section 50 and Section 54EC are independent provisions. Section 54E does not make any distinction between depreciable asset and non-depreciable asset, therefore, exemption available to depreciable asset u/s 54E cannot be denied by referring to fiction created u/s 50 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also fortified by the decision in Ms. Leelawati M. Sayani vs ITO (2014) 49 taxman.com 579 (Mum. Tribunal) and Aspi Ginwala, Shree Ram Engineering Mfg. Industries vs ACIT (2012) 20 taxman.com 75 (Ahd.), Mrs Rati Anil Virwani (ITA No.817/Mum/2013) order dated 10/12/2014 and Dr. (Mrs.) Sudha S.Trivedi vs ITO (ITA No.6040 6186/Mum/2007) order dated 20/02/2009. In view of these facts and judicial pronouncements discussed hereinabove, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income tax (Appeals), thus, appeal of the Revenue is dismissed. 3. Now we shall deal with the Cross Objection preferred by the assessee. So far as, the ground of the assessee is that full relief u/s 54EC of the Act was not granted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment is six month and the benefit that flows from the first proviso is that if the assessee makes the investment of ₹ 50 lakh in any financial year, it would have benefit of section 54EC (1) of the Act. However, the ambiguity, if any, was removed by the legislature with effect from 01/04/2015. Identical ratio was laid down in Ms. Leelawati M. Siyani vs ITO (ITA No.6619/Mum/2013). Thus, the Assessing Officer is directed to examine the claim of the assessee and allow the exemption up to ₹ 1 crore if the investment is found to be made within six month in two different financial years. Accordingly, the cross objection of the assessee is allowed for statistical purposes. Finally, the appeal of the Revenue is dismissed and the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
