9911796707
TMI Blog2016 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs. 1,71,24,320/-. In the course of assessment proceedings, the Assessing Officer (A.O.) observed that the assessee had sold two properties for Rs. 3.00 crores on 28/04/2008 and Rs. 1.5 crores on 14/10/2008 and claimed exemption of Rs. 1.00 crores u/s. 54EC of the Act in respect of two separate investments of Rs. 50.00 lakhs each in two different financial years. The AO was of the view that the assessee's claim for exemption of Rs. 1.00 crores under section 54EC of the Act was based on a wrong interpretation of the provisions of Section 54EC(1) of the Act, to a claim of double deduction of Rs. 1.00 crores over two financial years instead of Rs. 50.00 lakhs and consequently restricted the assessee's exemption under section54EC of the Act to Rs. 50.00 lakhs. The assessment was accordingly completed under section143(3) r.w.s. 147 of the Act vide order dated 28/03/2013. 2.2 Aggrieved by the order of assessment dated 28/03/2013 for assessment year 2009-10, the assessee preferred an appeal before the CIT(Appeals)-27, Mumbai challenging on both the technical issue -i.e., re-opening of the assessment for the assessment year 2009-10 under section 147/148 of the Act and also on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in this appeal. Since Grounds 1.1 and 1.2 are not being pressed before us, they are rendered infurctuous and are accordingly dismissed. 5. Ground No.3: Being general in nature, no adjudication is called for thereon. 6. Grounds no.2.1 to 2.3-Exemption u/s.54EC : 6.1.1. In these grounds (supra), the assessee assails the impugned order of the ld. CIT(A), in confirming the AO's action in restricting the assessee's claim for exemption u/s.54EC of the Act to Rs. 50 lakhs as against Rs. 1.00 crores claimed by the assessee, without appreciating the fact that the investment in specified Bonds under section 54EC of the Act was made in two different financial years. According to the assessee , the ld. CIT(A) has come to a wrong conclusion of restricting the assessee's exemption under section54EC of the Act to Rs. 50.00 lakhs only, by following the decision of the ITAT, Jaipur Bench in the case of Raj Kumar Jain & Sons (HUF)(supra), and in invoking the provisions of the amendment to sub-section (1) of section 54EC of the Act inserted by Finance (No.2) Bill, 2014, which is w.e.f. 1/04/2015 i.e. therefore, effective only for and from assessment year 2015-16. 6.1.2 The ld.AR con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of investment so made after 1/04/2007 in the specified asset by an assessee during any financial year does not exceed Rs. 50.00 lakhs. There is no cap placed on the investments to be made is specified Bonds. It was explained that as per the mandate of section 54 EC(1) of the Act, the time limit for investment is six months after sale of property and the benefit that flows from the first proviso is that, if the assessee makes an investment of Rs. 50 lakhs in any financial year, it would have the benefit of section 54 EC(1) of the Act and the assessee's claim cannot be denied . The Hon'ble Court observed that it was only after the amendment by Finance (No.2) Act, 2014 w.e.f. 1/04/2015, a second proviso was inserted after the existing proviso to sub-section (i) of the section 54 EC of the Act, that the investment made by an assessee in the specified Bonds, out of Capital Gains arising from the transfer of one or more original assets during the financial year in which the asset/assets are transferred and in the subsequent financial year does not exceed Rs. 50.00 lakhs. At para 5 to 11 of its order the Hon'ble Madras High Court held as under :- 5. The key issue that arises for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee makes the investment of Rs. 50,00,000/- in any financial year, it would have the benefit of Section 54EC(1) of the Act. 8. The legislature noticing the ambiguity in the above said provision, by Finance (No.2) Act, 2014, with effect from 1.4.2015, inserted after the existing proviso to sub-section (1) of Section 54EC of the Act, a second proviso, which reads as under: " Provided further that the investment made by an assessee in the long-term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees" 9. At this juncture, for better clarity, it would be appropriate to refer to the Notes on Clauses Finance Bill 2014 and the Memorandum explaining the provisions in the Finance (No.2) Bill, 2014, which read as under: "Notes on Clauses Finance Bill 2014: Clause 23 of the Bill seeks to amend section 54EC of the Income-tax Act relating to capital gain not to be charged on investment in certain bonds. The existing provisions contained in sub-section (1) of section 54EC provide that where capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years. 10. The legislature has chosen to remove the ambiguity in the proviso to Section 54EC(1) of the Act by inserting a second proviso with effect from 1.4.2015. The memorandum explaining the provisions in the Finance (No.2) Bill, 2014 also states that the same will be applicable from 1.4.2015 in relation to assessment year 2015-16 and the subsequent years. The intention of the legislature probably appears to be that this amendment should be for the assessment year 2015-2016 to avoid unwanted litigations of the previous years. Even otherwise, we do not wish to read anything more into the first proviso to Section 54EC(1) of the Act, as it stood in relation to the assessees. 11. In any event, from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
