Section 54 EC

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arihant (Querist)
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21 December 2010 According to section 54 EC Investment made with in 6 month in specified security. my query is I have made the application for investment before due date ie before 6 month but fund withdraw from my bank statement after due date and got the certificate after due date, whether I will get 54 EC exemption or not.and if yes then on what basis and case law i will get the exemption

CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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21 December 2010 Nope, i think u wont get exemption benefit..., for e.g., a director has to get qualified shares within 2 months of his appointment, that means he shud get his name registered, Mere application of shares is not sufficient..... So in ur case as well, i think, its reqd to make investment within 6 months...

CA Dhiraj Ramchandani

CA Dhiraj Ramchandani (Expert)
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21 December 2010 Rather keep this query open for some other expert to reply properly....

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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23 July 2025 Your Situation Recap:
You made the application for 54EC bonds within 6 months of the date of transfer ✅

However, the funds were debited and the bonds were allotted after the 6-month deadline ❌

You're asking: Will I get exemption under Section 54EC?

🧾 Legal Position & Interpretation:
Section 54EC says:

"The capital gain shall not be charged to tax if the assessee has invested the capital gain within a period of six months after the date of transfer in the long-term specified asset..."

✅ Key word: “invested” — not “allotted” or “debited.”

✔️ What Courts/Tribunals Have Held:
CIT v. C. Jaichander (Madras HC) – [2014] 52 taxmann.com 387 (Madras)

Held: If the application is made within the 6 months, the delay in allotment or payment clearance by issuer should not deny exemption.

This case supports the view that the date of application is the relevant date, not the date of allotment or debit of funds.

Smt. Nayana P. Dedhia v. ITO (ITAT Mumbai)

Held in favor of assessee, saying that delay on part of bond-issuing authority should not prejudice the assessee, if the intent and action to invest were timely.

CBDT Circular No. 791, dated 2 June 2000 (analogous)

Suggests that delays beyond assessee’s control should not result in denial of exemption.

✅ Conclusion:
Based on case law and fair interpretation:

Yes, you should be eligible for Section 54EC exemption if the application was submitted within 6 months, even if allotment or debit happened later.

You can support your claim with:

Proof of application date

Acknowledgment from bond issuer (NHAI/REC)

Case law: CIT v. C. Jaichander (Madras HC, 2014)

🔐 Tip:
If you are filing returns and claiming exemption under 54EC in this situation, attach a note in the computation explaining the above with dates and reference to the Jaichander ruling.

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