Brief of the case
ITAT Mumbai has held in the case of C.R. developments Vs. JCIT that time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. Assessee eligible for deduction under section 54EC on investment of Rs. 50 Lakh Each made in two Financial Year against same transaction.
Assessee earned LTCG of Rs. 1.04 Cr. on sale of shares. It claimed exemption of Rs. 1 Cr. u/s 54 EC and declared remaining amount as LTCG. It was found that assessee had invested 50 lacs on 31/3/09 and 50 lacs on 30/4/09. A.O. restricted assesse’s claim to extent of Rs. 50 lacs taking a view that it was the maximum limit prescribed in Section 54 EC and it is related to transaction only and not to different financial years. Tribunal however relied upon a decision of HC in another case to effect that time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by assessee cannot be denied. Therefore, assesse’s claim was allowed.
Assessee was engaged in business of construction and development .It showed three vacant flats/shops as stock in trade , in its books. A.O. estimated letting value of said shops and brought their notional income taxable in ‘Income From House Property’ u/s 23. It was contented that said flats were assesse’s ‘ trading assets’ , therefore could not be treated u/s 23.Tribunal upheld assessee’s contention and therefore held that income from sale of said flats would be taxable as ‘Business Income’ of assessee.
Facts of the case
Contention of Assesse
Held by CIT(A)
HELD by ITAT
HELD by ITAT
The issue is squarely covered by the decision of theThe Hon’ble Madras High Court in the case of CIT Vs. C. Jaichander & Sriram Indubal, wherein it was held that 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 under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to Rs.50,00,000/- is incorporated in Section 54EC(1) itself. However, the ambiguity had been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 2015-16 and the subsequent years. The High Court also clarified that the legislature has also removed the ambiguity by inserting second proviso to Section 54EC w.e.f.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 is to clarify that this amendment should be for the assessment year 2015-16 to avoid unwanted litigations of the previous years.
Thus, there was no merit found in appeal for disallowing claim of deduction u/s.54EC.