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TMI Blog2016 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 24-8-2016 - SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER For The Appellant : Shri D.B. Sanghvi and Rakesh Sakaria For The Respondent : Ms Anu Kirishna Agarwal ORDER PER JASON P. BOAZ, A.M: This appeal by the assessee is directed against the order of the CIT(Appeals)-27, Mumbai dated 4/09/2014 for the assessment year 2009-10. 2. The facts of the case as emanate from the record are, briefly, as under:- 2.1 The assessee, an individual deriving income from capital gains and other sources, filed his return of income for the assessment year 2009-10 on 27/07/2009 declaring total income of ₹ 1,71,24,320/-. The return was processed under section 143(1) of the Income tax Act, 1961 (in short the Act ).On the basis of AIR information, the case was subsequently taken up for scrutiny by initiation of re-assessment proceedings under section 147 of the Act. In response to notice under section 148 dated 23/01/2013, the assessee filed a return of income on 11/02/2013 declaring income of ₹ 1,71,24,320/-. In the course of assessment proceedings, the Assessing Officer (A.O.) observed that the assessee had sold tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and the circumstances of the case, and in law, the reassessment was bad in law in as much as the requisite preconditions for initiating the reassessment proceedings as well completion thereof were not fulfilled. WITHOUT PREJUDCIE TO THE ABOVE 2.1 The Ld. CIT(A) erred in confirming the action of the A.O in confirming the deduction under section 54EC to ₹ 50 lacs, as against the deduction of ₹ 1 lac claimed by the Appellant under section 54EC of the Act. 2.2 The Ld. CIT(A) failed to appreciate that the investments in the bonds under section 54EC of the Act were made [Rs.50 lacs each] in two different accounting years. 2.3 It is submitted that in the facts and circumstances of the case, and in law, no such rejection of the claim was called for. 3. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. 4. Ground No.1.1 and 1.2 Initiation of re-assessment proceedings: 4.1 At the outset, the ld.AR for the assessee submitted, before the Bench, that these grounds 1.1 and 1.2 (supra), are not being pressed or urged by the assessee in this appeal. Since Grounds 1.1 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record; including the judicial decisions cited. The undisputed facts of the matter as emanate from the record is that the assessee in the year under consideration sold two properties on 28/04/2008 and 14/04/2008 and in its computation of income from capital gains claimed exemption for ₹ 1.00 crores under section 54EC of the Act in respect of two separate investments within the specified period in specified Bonds of ₹ 50 lakhs each in two different financial years i.e. one on 30/08/2008 and, the other on 9/04/2009. The authorities below were of the opinion that the exemption u/s.50EC of the Act is to be allowed only to the extent of ₹ 50.00 lakhs, and restricted allowance of the assessee s claim to ₹ 50.00 lakhs and disallowed the balance ₹ 50.00 lakhs. 6.3.2 We have had occasion to peruse the judicial pronouncements cited and placed reliance upon by the assessee . In the case of CIT vs. C. Jaichander (supra), Their Lordships were of the view that on a plain reading of section 54EC (1) of the Act, it restricts the time limit for the period of investment after the sale of property to six months. The first proviso to section 54EC(1) of the Act specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. 7. On a plain reading of the above said provision, we are of the view that Section 54EC(1) of the Act restricts the time limit for the period of investment after the property has been sold to six months. There is no cap on the investment to be made in bonds. The first proviso to Section 54EC(1) of the Act specifies the quantum of investment and it states that the investment so made on or after 1.4.2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees. In other words, as per the mandate of Section 54EC(1) of the Act, the time limit for investment is six months and the benefit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption on investment in Specified Bonds. The existing provisions contained in sub-section (1) of section 54EC of the Act provide that where capital gain arises from the transfer of a long-term capital asset and the assessee has, at any time within a period of six months, invested the whole or any part of capital gains in the long-term specified asset, out of the whole of the capital gain, shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial year shall not exceed fifty lakh rupees. However, the wordings of the proviso have created an ambiguity. As a result the capital gains arising during the year after the month of September were invested in the specified asset in such a manner so as to split the investment in two years i.e., one within the year and second in the next year but before the expiry of six months. This resulted in the claim for relief of one crore rupees as against the intended limit for relief of fifty lakhs rupees. Accordingly, it is proposed to insert a proviso in sub-section (1) so as to provide that the investment made by an assessee in the long- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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