Arun Kumar B M vs ITO
The assessee is an individual and employee of M/s.Tata Consultancy Services Limited. During the relevant AY, the assessee sold a plot and declared Rs.83,102 as long term capital gains. The assessee had claimed the following claim of deductions:-
(i) deduction u/s 54F by depositing in the capital gains account scheme towards purchase of a new residential property
(ii) deduction u/s 54EC by investing in REC Bonds amounting to Rs.50 lakh each on 31.03.2013 and 31.07.2013, respectively, within six months from the date of transfer
The assessment was completed u/s 143(3). In the said assessment order, the claim of deduction u/s 54EC was restricted to Rs.50 lakh instead of Rs.1 crore claimed by the assessee. The Assessing Officer held that the assessee is required to invest Rs.50 lakh in REC Bonds in any financial year. The Assessing Officer also relied on the amendments made to section 54EC of the I.T.Act vide Finance Act, 2014 w.e.f. 01.04.2015.
As per the provisions of section 54EC(1) and its 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. The amendment in Finance (No.2) Act, 2014 relates to assessment year 2015-2016 [i.e. insertion of second proviso to section 54EC(1)] and the same applies prospectively for and from assessment year 2015- 2016. Since the assessee had invested Rs.1 crore in two different financial years and within six months from the date of transfer of the capital assets, the limit of Rs.50 lakh is per financial year. Hence, the assessee is eligible for deduction of Rs.1 crore u/s 54EC. In the result, the appeal filed by the assessee is allowed.