Enhanced compensation - applicability of sec. 54ec

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Vinod (Querist)
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21 September 2013 Dear Sir,

Whether an assessee is eligible for exemption u/s 54EC in case of enhanced compensation received after 10 years of transfer, if he deposit in capital gain bonds within 6 months of receipt of enhanced compensation ?

Please share your views.

Thanks in advance...

vinodaca74@gmail.com

Aalok Chhaperwal

Aalok Chhaperwal (Expert)
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21 September 2013 When we read Sec 45 (5) and Sec 54 EC simultaneously, Sec 54 EC prescribed the time limit for investment as with in six months from the date of transfer of the original long term asset to avail the exemption. It specifies date of transfer only from which period of six months is calculated.
and according to Sec 45 (5) - in case the compensation is enhanced or further enhanced by the Court, Tribunal or other authority, the capital gains shall be chargeable to tax in the year when the enhanced compensation is received.

Therefore in your case, Capital gain is taxable although amount received is invested in capital gain bonds with in six months.

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