Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Benefit Of Section 54EC Is Qua Asset Or Qua Financial Year?

QUERY: Section 54EC caps exemption at Rs. 50 lakhs, whether caps of Rs. 50 lakhs:

(a) Is applicable qua assets sold?

(b) Whether assessee can claimed exemption only in one year

(c) Whether limit of Rs. 50 lakhs is applicable to each financial year, if yes, then can assessee invest Rs. 50 lakhs in two financial years, falling within a period of six months after date of transfer?
ANSWER: (a) No, section applies to assets sold during the year and not the qua asset.

(b) The exemption should be claimed in the year in which long-term gain arises and invested in long-term specified assets within six months from the date of transfer.

(c) Even though, within six months falls, in two financial years the assessee is entitled to claim Rs. 50 lakhs in each financial year as per the following decisions:

(i) ASPI Ginwala & Ors v. ACIT [52 SOT 16 (Ahd.)](Trib)

(ii) ITO v. Mrs. Chetana H. Trivedi [24 Taxmann.com 175 (Mum.)(Trib)

(iii) Yahya E. Dhariwala [17 Taxmann.com 159 (Mum.)(Trib)

(iv) ITO v. Rania Faleiro [33 Taxmann.com 611 (Panaji) (Trib)


(i) ACIT v. Rajkumar Jain & Sons (HUF)

However, the Finance (No. 2) Act, 2014 w.e.f. assessment year 2015-16 has inserted second provisio to restrict a deduction of Rs. 50 lakhs, whether invested in one or two financial years.

Posted in Income-tax
2 comments on “Whether Benefit Of Section 54EC Is Qua Asset Or Qua Financial Year?
  1. Gangan says:

    Long term capital gain rs10lakhs ,sale on 10th October 2016,time limit to invest in bonds sec54EC

  2. S Kumar says:

    An Assesee sells a house property and dies before he could invest on Bond under 54EC. Can the Registered Assesee purchase Bond on behalf of the deceased in order to minimise incidence of CG Tax on the deceased ?

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