Section 54 EC Exemption

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This query is : Resolved

NIRVISH (Querist)

08 May 2009 If the capital asset is sold on 28/02/2009 and LTCG of Rs. 1,20,00,000/- is there and the Investment is made in the specified bond on 25/03/2009 of Rs.50,00,000/- and on 05/04/2009 another Rs. 50,00,000/- is been invested in the same bond then in that case what will be the exemption amount u/s 54 EC and what will be the taxable income of the assessee if the return is filed before due date??

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

09 May 2009 Investing Rs.50lakhs more than once,as per the pattern in the query raised, would mean that the law gives an additional benefit for those who postpone the transaction to the last quarter of the financial year.So,according to me,that would be an unfair conclusion by giving a stretching to the words'during a financial year'appearing in the proviso to section 54EC. To conclude,the ceiling of Rs.50lakhs should be considered in the light of capital gains for the year. Any other view would be adventurist,inviting risk of rejection from the side of revenue authorities.
However,this is not a professional opinion and is only my understanding put up in this forum for further deliberations.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

13 May 2009 PY and FY words are having different meaning in the IT Act. The proviso of section puts a cap on the investment in a particular FY which can not be construed as cap on the exemption limit.
The intention of law is very much clear by granting full exemption vide clause (a) of ss 1 of S 54EC. Any restriction on exemption if any intended the phrase " whole of such capital gain" would be followed by "subject to maximum Rs 50.00" Lacs or otherwise.

No denial for further investment in the next year.

Hence you may claim exemption of 50+50=100 lacs.