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March 2015

Capital gain- Long term- Investment in capital gains bonds- Section 54EC- A. Ys. 2008-09 and 2009-10- Assessee is entitled to exemption in respect of investment of Rs. 50 lakh each in two different financial years within the time limit

By K. B. Bhujle Advocate
Reading Time 1 mins
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CIT vs. C. Jaichander; 370 ITR 579 (Mad):

Assessee
sold a property for a consideration of Rs. 3,46,50,000/- and invested
Rs. 1 crore out of the sale proceeds in capital gains bonds in two
financial years 2007-08 and 2008-09 Rs. 50 lakh each within the
prescribed time limit of six months. For the A. Y. 2008- 09 the
Assessing Officer held that the assessee could take the benefit of
investment in specified bonds upto a maximum of Rs. 50 lakh only u/s.
54EC(1) of the Incometax Act, 1961. The Tribunal held that the exemption
granted under the proviso to section 54EC(1) should be construed not
transaction-wise but financial year-wise. If an assessee was able to
invest a sum of Rs. 50 lakh each in two different financial years,
within the period of six months from the dated of transfer of the
capital asset, it could not be said to be inadmissible. Accordingly, the
Tribunal allowed the assessee’s claim.

On appeal by the Revenue, the Madras High Court upheld the decision of the Tribunal and held as under:

“The
assessee was entitled to exemption of Rs. 1 crore u/s. 54EC, in respect
of investment of Rs. 50 lakh each made in two different financial
years”

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