SHIVKUMAR MIRCHANDANI,MUMBAI vs. ITO 16(2)(2), MUMBAI

At the outset of hearing, ld. Authorized Representative did not press ground no.1. So, same is dismissed as not pressed.

The issue before is with regards to restricting assessee’s claim u/s.54EC in respect of investment in NHAI of Rs.10,00,00,000/- to Rs.50,00,000/-. Assessee is an individual deriving income from long term capital gain on sale of property, bank interest and dividend income. The return of income for A.Y. 2008-09 was filed on 14.05.2009 declaring total income of Rs.1,06,392/- and return was assessed u/s.143(3) of the Act. During assessment proceedings, Assessing Officer observed that assessee earned long term capital gain on sale of property amounting to Rs.97,68,255/-. The said property was sold on 15th November, 2007. Assessee invested Rs.50 lacs in NHAI bonds on 19th March 2008 and another Rs.50 lacs in NHAI bonds on 31st May, 2008. Thus, assessee claimed entire long term capital gain as exemption u/s. 54EC of the Act. In original return of income, long term capital gain was shown as nil. Assessee’s case was reopened. As stated above, the second investment in NHAI bond was made on 31st May 2008. The said investment was required to be made well within the 6 months from the end on month in which property was sold. Assessing A.Y. 08-09 [Mr. Shivkumar Mirchandani vs.ITO] Page 3 Officer completed assessment u/s.143(3) r.w.s.147 of the Act restricting the exemption u/s.54EC of the Act to Rs.50 lacs inter alia stating that as per provisions of Section 54EC, assessee was entitled to maximum deduction of Rs.50 lacs for investment made in a particular financial year instead of Rs.1 crore as claimed by assessee. Same was disallowed and CIT(A) confirmed the same.

Before us, ld. Authorized Representative drew our attention to the decision of Hon’ble Madras High Court in case of CIT vs. C. Jaichander [2015] 370 ITR 579 (Mad.), wherein it was held as under: “The assessee sold a property for a sale consideration of Rs.3,46,50,000 and invested Rs.1 crore out of the sale proceeds in certain bonds in two financial years, namely, Rs.50 lakhs in Rural Electrification Corporation Bonds in the financial year 2007-08 and Rs. 50 lakhs in National Highways HAI Bond in the financial year 2008-09. The Assessing Officer, for the assessment year 2008-09, held that the assessee could take the benefit of investment in specified bonds up to a maximum of Rs. 50 lakhs only under section 54EC(1) and accordingly, held that the other sum Rs. 50 lakhs invested over and above the ceiling prescribed did not qualify for exemption. The Commissioner (Appeals) confirmed the order of the Assessing Officer. The Tribunal held that the exemption granted under the proviso to section 54EC(1) should be construed not transaction-wise but financial year-wise. If an assessee was able to invest a sum of Rs. 50 lakhs each in two different financial years, within a period of six months from the date of transfer of the capital asset, it could not be said to be inadmissible. On appeals:

As a result, appeal filed by assessee is allowed.