Section 54EC of the Income Tax Act
Income-tax Act, 2025: s.85
Section 54EC of the Income-tax Act, 1961 corresponds to section 85 (Capital gains not to be charged on investment in certain bonds) of the Income-tax Act, 2025.
Read section 85 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 54EC is Sunil Kumar Agarwal v. CIT (372 ITR 83), cited in 159 of the 476 judgments on BharatTax that turn on this section.
Leading authorities on Section 54EC
The Assessing Officer is duty-bound to refer the valuation of property to the Departmental Valuation Officer under Section 50C(2) when an assessee disputes the stamp duty valuation or if there is a discrepancy between the actual sale consideration and the guideline value. This reference is mandatory, even if not explicitly requested by the assessee, to ensure a realistic fair market value and avoid injustice.
Amortization claimed on capitalized leasehold land, which is reported as an asset in the balance sheet, is an allowable deduction for income-tax purposes.
Payment received for refraining from carrying on a competitive business is treated as a capital receipt. High Courts may misinterpret prior Supreme Court judgments like Gillanders Arbuthnot & Co. Ltd. in their decisions.
Income from a new industrial undertaking cannot be recomputed by setting off carry forward unabsorbed depreciation or depreciation allowance from previous years if there were no carry forward losses from the prior year to be set off against the current year's income.
Decisions of the Tribunal, including Special Benches, that have followed earlier decisions in the assessee's own case or the case of Hero Exports v. CIT, are binding on coordinate benches, especially when the revenue cannot controvert the findings. This principle of consistency is applied to allow additional grounds of appeal.
Premium paid for obtaining a lease on land is a capital expenditure, even if paid in annual installments.
The exemption under section 54F(1) of the Income-tax Act, 1961, is available for capital gains arising from the transfer of a long-term capital asset that is not a residential house.
The dismissal of a Special Leave Petition (SLP) by the Supreme Court does not, in itself, constitute a judgment affirming the High Court's decision. It signifies that the Supreme Court did not find sufficient grounds to interfere with the High Court's findings.
Tribunals need not reproduce the detailed and reasoned findings of the Commissioner of Income-Tax (Appeals) if they concur with the CIT(A)'s view. This procedural rule prevents unnecessary repetition of detailed analysis.
