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TMI Blog2019 (12) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... rect the Assessing Officer to allow the deduction under Section 54EC of the Act for ₹ 1 crores as claimed by the assessee. The grounds of appeal of the assessee are according allowed. - ITA No.724/Del/2017 - - - Dated:- 29-11-2019 - Shri H.S. Sidhu, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Ms. Gargi Sethee, Adv., Shri Arta Trana Panda, Adv. For the Respondent : Shri Surender Pal, Sr.DR ORDER PER O.P. KANT, AM: This appeal by the assessee is directed against order dated 29.12.2016 passed by the learned Commissioner of Income Tax (Appeals)-10, New Delhi, [in short learned CIT(A) ] for assessment year 2013-14 raising following grounds: 1. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in upholding the order of assessing authority wherein she had made the addition of ₹ 50 lakhs by restricting the exemption u/s 54EC up to ₹ 50 lakhs out of total claim in respect of ₹ 1 Crore on investment in Bonds made within six months of sale of prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discussion, the Assessing Officer held that the grant of exemption under Section 54EC to the extent of ₹ 1 crore will vitiate the original intention of the legislature leading to discrimination amongst tax payers on the same issue. The Assessing Officer also relied on the proviso to sub-section (1) of Section 54EC and observed that intention of the legislature in inserting the said proviso to restrict the exemption to ₹ 50 lakhs in the financial year so that the benefit can be given to many small investors. The Assessing Officer also relied on the various judicial pronouncements on issue of interpretation of statute. Further, relying on the decision of the Tribunal, Jaipur Bench, in the case of ACIT Vs. Shri Raj Kumar Jain Sons (HUF), he restricted the deduction to the amount of ₹ 50 lakhs only. On further appeal, the learned CIT(A) also upheld the finding of the Assessing Officer observing as under: 4.1 I have carefully considered the written submissions of Ld. AR and assessment order passed by the Assessing Officer, the only issue involved is allowance of claim of exemption u/s. 54EC, which has been restricted by the Assessing Officer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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.] 4.1.2 From the proviso to section 54EC(1), it is evident that for claiming exemption under this section, the investment made in any financial year cannot exceed ₹ 50 lacs. The assessment order on the issue passed by the AO is crystal clear wherein it has clearly been established that the provisions of the Act cannot be interpreted to suit one s own purpose and it is well settled principle of interpretation that expression used in a statue should be construed according to the plain natural meaning of its language unless it is otherwise defined in the statute. Considering the facts of the case, it is evident that by interpreting the provisions of above section in a different way suitable to appellant s purpose, appellant claimed the deduction by spreading over the investment in the REC Bonds in two different financial years and exemptions under this section have been claimed at ₹ 1 crore on the ground that two financial years are involved for the purpose of investment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 54EC is available at ₹ 50,00 000/- and an assessee who sells his property between October to March can claim exemption of ₹ 50 lakh each in the current financial year and in the subsequent financial year. 4.1.5 Further, I am also in agreement with the observation of the AO that as per Explanatory Notes on the provisions of the Finance Act 2007, Government had decided to impose a ceiling on the quantum of investment that could be made in such bonds to ensure equitable distribution of benefits amongst prospective investors. Hence, AO has rightly held that the provision of limiting the exemption u/s 54EC by the Finance Act 2007 is inconsonance with the intention of the law. 4.1.6 Apart from the above, the intention of the law in restricting the claim of exemption u/s 54EC to the extent of ₹ 50 lakh also established from the fact that second proviso has been appended to above section w.e.f. 01.04.2015 wherein it is provided 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 fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer. For ready reference, the relevant provisions of Section 54EC of the Act is reproduced as under: Capital gain not to be charged on investment in certain bonds. 54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset 61[, being land or building or both,] (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the long-term specified asset 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 acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee per financial year. This has resulted in even distribution of benefit to public at large. Had the intention of the legislation was cap the total investment to ₹ 50,00,000/-, the amendment in statute would have prescribed the limit on deduction allowed under the section 54EC and not on investment allowed under section 54EC. Therefore, the interpretation of ITAT, Jaipur Bench in Shri Raj Kumar Jain Sons IIUF {supra), is misplaced, in total disregard to juagment of the higher authority (i.e. Honorable Madras High Court) which has elaborately discussed the issue involved, ambiguity of law and the provisions of latest amendments made to section 54EC by the Finance Act 2014 including the Notes on clauses - Finance Bill 2014 and Memorandum : Explaining the provisions in the Finance (No. 2) Bill, 2014; placing restriction on lent to ₹ 50 lakhs with effect from 01.04.2015 by inserting a second proviso, assessing officer has totally ignored his reply in as much as reliance placed on the judgment of the Honorable Madras High Court. The Honorable High of Madras has held as under:- 'The legislature has chosen to remove the ambiguity in the proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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