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TMI Blog2023 (12) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... term capital asset and same was invested in specified assets, exemption under Section 54EC could not be denied on account of the fact that deeming fiction of short term capital gain was created - The aforesaid decision has also been followed by Ahmedabad Tribunal in the case of DCIT M/s. Liva Healthcare Ltd. [ 2019 (1) TMI 210 - ITAT AHMEDABAD] Whether benefit u/s 54EC of the Act is available in case the assessee invested a sum of Rs. 50 lakhs in two Financial Years? - As decided in C. Jaichander [ 2014 (11) TMI 54 - MADRAS HIGH COURT] held that where assessee invested a sum of Rs. 50 lakhs each in two different Financial Years, within a period of six months from date of transfer of capital asset, he was eligible for deduction u/s 54EC - The facts in this cases were that the assessee sold a property vide sale agreement dated 18.02.2008 and invested a sum of Rs. 1 crores out of sale proceeds in certain bonds in two Financial Years 2007-08 and 2008-09. AO held that assessee could take benefit of investment in said Bonds to a maximum of Rs. 50 lakhs only under Section 54EC(1) and accordingly, held that the other sum of Rs. 50 lakhs invested over and above ceiling prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Appeal of assessee allowed . - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Appellant : Ms. Urvashi Sodhan, Advocate For the Respondent : Shri Ashok Kumar Suthar, Sr. D.R. ORDER PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) (in short Ld. CIT(A) ), National Faceless Appeal Centre, (in short NFAC ), Delhi in DIN Order No. ITBA/NFAC/S/250/2023-24/1053710437(1) vide order dated 14.06.2023 passed for the Assessment Year 2014-15. 2. The assessee has raised the following grounds of appeal:- 1. The Ld. CIT (A) has erred in confirming the disallowance of deduction u/s. 54EC of the Act amounting to Rs. 50,00,000/- made by A.O. The addition so confirmed is incorrect and illegal both on and law, and be deleted. 2. The Ld. CIT(A) has erred in enhancing the Income of the appellant by disallowing the bonafide deduction claimed amounting to Rs. 50,00,000/- u/s. 54EC of the Income Tax Act, 1961 by treating it as short term capital gain. Ld. CIT(A) failed to appreciate that although provisions of Section 50 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.12.2013 and therefore, the assessee is a eligible only for benefit of investments made in REC Bonds amounting to Rs. 50 lakhs on 31.03.2014, which has been made within the prescribed time limit of six months from the date of transfer i.e. 16.12.2013. But the investment made in REC Bonds on 30.06.2014 of Rs. 50 lakhs is not within the prescribed time limit of six months from the date of transfer i.e. from 16.12.2013. Further, the Assessing Officer held that the legislature intends to allow maximum deduction of Rs. 50 lakhs under Section 54EC of the Act. This ambiguity has been clarified vide amendment brought w.e.f. 01.04.2014, which is only clarificatory in nature and would apply to the impugned assessment year as well. Accordingly, the Assessing Officer made an addition of Rs. 50 lakhs on account of excess claim of deduction under Section 54EC of the Act. 4. In appeal, Ld. CIT(A) further enhanced the income of the assessee by holding that the assessee is not eligible for deduction even for the sum of Rs. 50 lakhs which were invested in REC Bonds on 31.03.2014, for the reason that to be eligible for deduction under Section 54EC of the Act, the capital asset must be a long term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee submitted that in terms of General Clauses Act, 1897 period of six months as mentioned in Section 54EC has to be recorded as six British Calendar months. For this proposition, the Counsel for the assessee reliance on the case of Alkaben B. Patel vs. ITO 43 taxmann.com 333 (Ahmedabad Trib.) (SB) . Accordingly, it was submitted that with respect to all the above issues, in the case of the assessee, benefit of Section 54EC of the Act cannot be denied, looking into instant facts. 6. In response, Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A) in their respective orders. The Ld. D.R. submitted that the amendment dated 01.04.2015 has made the position very clear and it has been specifically provided that the maximum limit of investment is Rs. 50 lakhs only under Section 54EC of the Act. Further, it is also an accepted fact that the asset sought to be transferred was a depreciable asset and hence in view of the deeming provision of Section 50 of the Act, the asset which was transferred was a short term capital asset and hence the benefit of Section 54EC of the Act was not available to the assessee on sale of such asset. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption under section 54EC could not be denied on account of fact that deeming fiction of short-term capital gain was created under section 50 - Held, yes [Para 7] [In favour of assessee] 20. In this case, assessee transferred an asset held by it for more than 36 months i.e. a long term capital asset and invested an amount of Rs. 50 lakhs in bonds issued by NHAI which is long term specified asset as per clause (b) sub clause (i) of the explanation to section 54EC. 21. In the above said case, in similar circumstances, Hon ble Gujarat High court granted relief in favour of the assessee. Therefore, in such circumstances, we do not want to interfere in the order passed by the ld. CIT(A). In our considered opinion, ld. CIT(A) has passed detailed and reasoned order and same does not require any kind of interference at our end. Therefore, same is dismissed. 22. In the result, appeal filed by the Revenue is dismissed. 8. On the second issue whether benefit under Section 54EC of the Act is available in case the assessee invested a sum of Rs. 50 lakhs in two Financial Years, the High Court of Madras in the case of CIT vs. C. Jaichander 53 taxmann.com 466 (Madras) he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue fails to dispute all these developments on judicial side. We therefore find no reason to interfere with the learned CIT(A) s order accepting assessee s deduction claim u/s.54EC of the Act. 6. This Revenue s appeal is accordingly dismissed. 9. Further, the ITAT Ahmedabad in the case of DCIT vs. M/s. Saintfoin Enterprises LLP in ITA No. 2076/Ahd/2016 has held that the amendment brought in the statute is w.e.f. 01.04.2015 and is not applicable retrospectively for prior years. The ITAT made the following observations while passing the order:- 6. Drawing support from various judicial decisions, the ld. CIT(A) directed the A.O. to allow the claim of deduction in respect of investment in bonds to the tune of Rs. 50 lacs. 7. Aggrieved by this, the revenue is before us. The ld. D.R. could not bring any factual or legal error in the findings of the ld. CIT(A). The Co-ordinate Bench in the case of Aspin Ginwala and Shree Ram Engg. Mfg. Industries 52 SOT 16, 20 taxmann.com 75 on identical facts has held as under:- The appellant sold properly on 22.10.2007 and computed long-term capital gains. The section 54EC investment was required to he made within 6 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned A.Y. 2014-15, as it stood at the relevant time, if the assessee made investment in REC Bonds for Rs. 50 lakhs each, the assessee would be eligible for deduction under Section 54EC of the Act, provided both the investments were made within a period of six months as prescribed under 54EC of the Act. In the present case, the assessee had sold the asset under consideration on 16.12.2013, whereas the second investment in REC Bond was made on 30.06.2014. In the case of Alkaben B. Patel vs. ITO 43 taxmann.com 333 (Ahmedabad Trib.) (SB) , the ITAT Ahmedabad Tribunal Special Bench held that in terms of General Clauses Act, 1897 the period of six months mentioned in Section 54EC has to be recorded as six British Calendar months. The issue for consideration before ITAT Special Bench was that whether for the purpose of Section 54EC, the period of investments should be calculated as six months after the date of transfer or to be reckoned as 180 days from date of transfer . The ITAT held that the term month is not defined in the Act and therefore, as per the definition of the term month as per General Clauses Act, 1897 shall mean of month recognized according to the Britis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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