ITAT AHMEDABAD
Smt. Dakshaben R. Patel v/s. ACIT
IT APPEAL NO. 2803 (AHD.) OF 2011
[ASSESSMENT YEAR 2008-09]
MAY 31, 2012
ORDER
T.R. Meena, Accountant Member
This is appeal arises out of order of CIT(A)-II, Baroda, order dated 01.09.2011 for assessment year 2008-09. The effective grounds of appeal are as under:-
“1. The Ld. Commissioner of Income Tax (A)-II, Baroda has erred in law and in facts in confirming the action of Ld. AO in the disallowance of exemption claimed u/s 545EC of Rs. 50,00,000/- with respect to investment made in REC Bonds on the ground that the such investment was made 8.1/2 months prior to date of transfer of the property subjected to capital gains. The impugned rejection of the deduction claimed is devoid of the principles relating to the grant of exemption u/s. 54EC and hence it is prayed that the claim as made by the appellant may kindly be granted.
2. The Ld. Commissioner of Income Tax (A)-II, Baroda has erred in law and in facts in not appreciating the fact that the provisions of sec. 54EC are for granting exemptions and benefits to the assessee and, therefore, ought to be construed accordingly considering the overall objectives of the provisions and also the circumstances leading to such investments prior to the date of transfer. The claim of the appellant deserves to be allowed on this consideration and may be accordingly directed.”
2. First and second grounds are against granting of exemption under Section 54EC of the IT. Act on investment made in REC Bonds. The A.O. observed that the assessee has claimed exemption u/s 54EC(1) of Rs. 50 lakh against the long turn capital gain. The date of sale of the property was 13.02.2008 and the date of purchase of REC Bond was 30.11.2007 (wrongly mention in the assessment order as 31.05.2008). The REC Bond was purchased 2 and ½ months prior to the date of sale of property. The Assessing Officer observed that as per Section 54EC(1) where the capital gain arises from the transfer of long term capital assets 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 assets, he shall be eligible for the claim of exemption as per Section 54EC. Since the investment was made before the date of transfer, the Assessing Officer disallowed the claim of exemption u/s 54EC of Rs. 50 lakh.
