02 March 2012
As per provision, LTCG should be invested within 6 montths of transfer,subject to 50lacs in a FY. But if transfer occurred in Jan.12,LTCG amount is 1 crore, then wheather assessee can invest 50 lacs in FY-2011-12 in March-12 and another 50 lacs in FY-2012-13 in April -12.
In that case how assessee will show balance taxable amount of 50 lacs in FY-2011-12(by considering 50 lacs as investment in bond in FY-2011-12)?As his computation for FY 2011-12 will show 50 laca LTCG taxable ? Wheather assessee can use both section 54EC & 54F together ? 50 lacs in each 54EC & 54F .And if , amount of LTCG deposit in special deposit account before filling of return,can he claim exemption from tax?
03 March 2012
the ITAT in the case of ACIT v Raj Kumar Jain has negated this interpretation
The assessee is an HUF, filed return of income on 29.07.2008 declaring income of Rs. 17,12,693/-. During the year under consideration, the assessee sold the property for Rs. 2.47 Crores on 13.12.2007 and disclosed capital gain of Rs. 1,14,09,880/-. The assessee claimed deduction u/s 54EC in respect of Long Term Capital Gain amounting to Rs. 1.00 Crore i.e., invested in specified capital gain bond (Rs. 50.00 Lacs on 31.03.2008 + Rs. 50.00 Lacs was made on 10.06.2008). The only dispute is with regard to the next investment of Rs. 50 Lacs made on 10.06.2008, which was not considered by the AO by relying upon the Proviso below Sec.54EC which provided that investment in any financial year cannot exceed Rs. 50 Lacs. Hence, the AO was of the view that the assessee having made a claim of Rs. 1.00 Crore, exceeded the investment limit prescribed in the proviso and therefore, restricted the deduction upto Rs. 50 Lacs accordingly. The ITAT held as under It is true that Tribunal under law has no authority to decide the ultra virus provisions. However, whole construing the provision, one can definitely look into the facts as to whether the interpretation placed by the Tribunal is fairly applicable. The ld. DR during the course of proceedings before us has fairly contended that the interpretation which the ld. AR wants to place on the proviso to Section 54EC will enable the assessee to claim exemption of around Rs. 1.00 crore. In case, the transfer of assets has taken place from Ist Oct. to 31st March because the assessee will be able to invest Rs. 50.00 lacs in a financial year in which the transfer has taken place and Rs. 50.00 lacs in subsequent financial year. However, the assessee's who have earned the capital gain on transfer of assets from Ist April to 30th Sept. will be able to have deduction only of Rs. 50.00 lacs. We therefore, feel that assessee in the instant case is entitled to exemption of Rs. 50.00 lacs u/s 54EC and it is not the case where two interpretations of Section 54EC are possible. The earlier notification of the Govt. clearly suggested that the assessee's are entitled to the extent of Rs. 50.00 lacs u/s 54EC of the Act. Investment within 06 months is the investment for that financial year in which transfer has taken place. Hence, subsequent investment is to be considered as part of the investment of financial year in which transfer has taken place. We therefore, hold that the ld. CIT(A) was not justified in allowing deduction to the assessee to the extent of Rs. 1.00 crore u/s 54EC of the Act. We therefore, uphold the order of the AO. CA MANOJ GUPTA JODHPUR 09828510543
05 March 2012
Wheather assessee can use both section 54EC & 54F together ? 50 lacs in each 54EC & 54F .And if , amount of LTCG deposit in special deposit account before filling of return,can he claim exemption from tax?
CAclubindia
