Case Law Details
ITO Vs Smt. Saraswati Ramanathan (ITAT Delhi)
The assessee is an individual. During the previous year relevant to the assessment year 2004-05 she sold 500 shares of ITC Ltd. for Ea.5,43,125 and credited the proceeds to her bank account with ICICI Bank, Gurgaon. She had inherited the shares from her husband who passed away on 1-4-1993. She invested Rs. 5,00,000 out of the sale proceeds in Rural Electrification Bonds- REC 54EC Series III on 24-3-2004. The investment was in the joint names of herself, being the first name, and her son A.R. Sridhar. She claimed exemption from capital gains tax under Section 54EC which was negatived by the Assessing Officer on the ground that the investment in the bonds was in the joint names which is not permitted under the above section under which it is the assessee who has to invest the gains in her own name. The CIT(A) however held that there is no such requirement in the section and the assessee having invested the sale proceeds of the shares in the REC bonds without any contribution from her son the section was complied with and the exemption cannot be denied. He further noted that the assessee was 69 years old and it was merely a matter of convenience on her part and to ensure that there would be no hassles in future that she made the investment in the joint names, her name being the first name and the son’s name being second.
ITAT agreed with the view taken by the CIT(A) that the assessee is eligible for the exemption under Section 54EC. I further find that the Mumbai bench, ITAT has held in the case of JCIT v. Smt. Armeda K. Bhaya (2005), 95 ITD 313 (copy filed) that for the purpose of Section 54 of the Act, it is sufficient compliance with the section that the assessee purchased the new flat in the names of himself, his father and mother and that it was not the requirement of the section that the new flat should be in the assessee’s exclusive name. It was held that the main condition of the section was that the sale consideration should be invested in the new house. I respectfully follow the ratio of the above decision. I accordingly confirm his order and dismiss the appeal filed by the revenue with no order as to costs.
In the following decisions also, exemption has been allowed to the assessee for investment in the sole/joint name with wife :
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I hv a property in my 2 son name
1st holder is out of india and issued general Power of attorney her mother name
Last week i was sale that property
Now i want to capital gain Investment in govt bond
Itis possible to deposit in bond by both son name
My mobile 9892499554
Pls sir reply asap
Thanking you
Dhorajiwala
I have following queries on 54EC bonds. Kindly suggest:
1. One can buy Capital Gain bonds with in 6 months of receiving sale money. So, the money
received will be lying in bank SB account or short term FDs till it is invested in Capital Gain
Bonds (54EC bonds) & will earn some interest. Will the interest clubbed with the annual income of the person for taxation purpose?
2. The upper limit for investment in Capital Gain bonds is 50L annually or for bonds from
one company i.e. can one buy bonds for 30L from one company and say for 30L from
another company?
3. If the limit on investment in Bonds is 50L, what can be done if Capital Gain is more than
50L? I am aware that limit 50L is for one FY but up to 1Cr can be invested total in 2 consecutive years if limit on 6 months can be maintaiened which is possible if
money is received from sale between Oct & March (of next FY). But if it is received before
October then 6 month limit can not be maaintained over 2 FYs. So, what to do in this case if LTCG > 50L?
4. As per my knowledge REC and NHAI offer Capital Gain bonds (54EC). In one of the posts
above it is mentioned that these are issued by Nabard,NHAI. What is Nabard? Is this
company authorized to issue 54EC bond?
Thanking all. RAKESH