SHRI SHASHIN MANIBHAI PATEL,AHMEDABAD vs. THE ACIT(INTL. TAXN.), BARODA

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ITA 3603/AHD/2015Status: DisposedITAT Ahmedabad01 January 2018AY 2011-123 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the Rs. 50 lakh cap on re-investment for Section 54EC deduction was introduced by the Finance Act, 2014, effective from April 1, 2015. Since the assessment year in question is 2011-12, this amendment was not applicable. The tribunal followed the Madras High Court's decision in CIT vs. C. Jaichander.

What were the facts?

The assessee sold a capital asset and invested Rs. 1 crore in NHAI bonds within six months of the transfer to claim Section 54EC deduction. The lower authorities restricted the deduction to Rs. 50 lakhs, citing a cap on re-investment.

What were the issues?

Whether the Rs. 50 lakh investment cap under Section 54EC was applicable for the assessment year 2011-12, prior to the amendment by the Finance Act, 2014.

Which sections of the Income-tax Act were involved?

Section 54EC

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH AHMEDABAD

Hearing: 04.01.2018

PER S. S. GODARA, JUDICIAL MEMBER

This assessee’s appeal for assessment year 2011-12, arises against the CIT(A)-13, Ahmedabad’s order dated 29.10.2015, in case no. CIT(A)- 13/Ahd/152/2014-15, upholding Assessing Officer’s action restricting Section 54EC deduction claim of Rs.50lacs each invested on 30.11.2010 and 13.04.2011 totaling to Rs.1crore to Rs.50lacs only, in proceedings u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961, hereinafter ‘the Act’. Heard both the parties. Case file perused.

ITA No. 3603/Ahd/2015 (Shri Shashin Manibhai Patel vs. ACIT) - 2 - A.Y. 2011-12 2. Relevant facts are in a very narrow compass. This assessee jointly sold the capital asset in question in the relevant previous year on 26.10.2010 for Rs.6,60,00,000/-. His 1/3rd share therein was of Rs.2,20,00,000/-. He thereafter invested Rs.1crore (supra) in NHAI bonds to claim Section 54EC deduction. Both the lower authorities declined the same on the ground that the said statutory provision caps the re-investment amount to Rs.50lacs only. They therefore restrict assessee’s claim to Rs.50lacs to disallow the remaining equal amount. We find no force in this approach. Hon’ble Madras high court’s judgment in CIT vs. C. Jaichander (2015) 370 ITR 579 (Madras) has admittedly upheld a co-ordinate bench’s decision that such a deduction claim of Rs.50 lacs each spread over to two financial years but falling within six months of the capital asset’s transfer in question is very much allowable. We further take not of the fact that the legislature has inserted second proviso to Section 54EC (1) introducing the above cap on re-investment quantum by the Finance (Act No.2), 2014 w.e.f. 01.04.2015 whereas we are dealing with assessment year 2011-12. This is not the Revenue’s case that the above amendment carries any retrospective operation. We therefore reject Mr. Kabra’s vehement contentions supporting the impugned disallowance. The assessee’s sole substantive ground is accepted.

5.

This assessee’s appeal is allowed. [Pronounced in the open Court on this the 8th day of January, 2018.]

Sd/- Sd/- (AMARJIT SINGH) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 08/01/2018 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद /

ITA No. 3603/Ahd/2015 (Shri Shashin Manibhai Patel vs. ACIT) - 3 - A.Y. 2011-12

DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।

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