Sanjeet Rajendra Gugale, Pune V. Deputy Commissioner of Income tax, Pune

ITA 386/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9272 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 16-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Capital asset
• Section: 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.386/PUN/2017 / ASSESSMENT YEAR : 2013-14 SANJEET RAJENDRA GUGALE PLOT NO.5, NIRMAL BAUG, MUKTANGAN HIGH SCHOOL, PARVATI, PUNE 411009 PAN : AGDPG9744L . /APPELLANT VS. DCIT, CIRCLE-5, PUNE . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI MUKESH JHA, JCIT / DATE OF HEARING : 07.03.2018 / DATE OF PRONOUNCEMENT: 09.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-8, PUNE, DATED 29-11-2016 FOR THE ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UNDER: 1. THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN CONFIRMING THE DEDUCTION U/S.54EC TO RS.50 LAKHS, AS AGAINST T HE DEDUCTION OF RS. ONE CRORE CLAIMED BY THE APPELLANT U/S.54EC OF THE ACT. 2. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE INVE STMENTS IN THE BONDS U/S.54EC OF THE ACT WERE MADE RS.50 LAKHS EAC H IN TWO DIFFERENT FINANCIAL YEARS. 3. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, AND IN LAW, NO SUCH REJECTION OF THE CLAIM WAS CALLED F OR. 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE PRODUCTION AND TRADING OF FURNITURE AND INTERIOR DES IGN. ASSESSEE FILED THE RETURN OF INCOME DECLARING INCOME OF RS.63,24,200/-. DURING THE YEAR, ASSESSEE EARNED CAPITAL GAINS ON SALE OF LANDS. ON THIS ACCOUNT, THE ASSESSEE EARNED CAPITAL GAINS OF RS.1,46,10,643 /-. WHILE THE SUM OF RS.1 CRORE WAS INVESTED IN SPECIFIED NHAI BONDS IN TWO INSTALMENTS IN TWO FINANCIAL YEARS AND CLAIMED DEDUCTION U/S .54EC OF THE ACT. THE BALANCE OF GAINS WAS DULY OFFERED TO TAX AS PER THE PROVISIONS. THE SAID SUM OF RS. ONE CRORE WAS INVESTED BY THE ASSESSEE IN THE BONDS IN TWO INSTALMENTS OF RS.50 LAKHS EACH. RELE VANT DATES INCLUDES THAT THE LANDS WERE SOLD ON 08-12-2012 AND TH EREFORE, THE DUE DATE FOR INVESTMENT IN THE BONDS IS 07-06-2013, I.E. SIX MO NTHS FROM THE DATE OF TRANSFER OF ASSETS. ASSESSEE INVESTED RS.50 LAKHS ON 26-02- 2013 (A.Y. 2013-14) AND ANOTHER SUM OF RS.50 LAKHS WAS IN VESTED ON 27-05-2013 (A.Y. 2014-15), I.E. TWO FINANCIAL YEARS. ASSESSEE CLAIMED DEDUCTION U/S.54EC OF THE ACT IN RESPECT OF THE SAID INVES TMENT OF RS. ONE CRORE. RELYING ON THE PROVISIONS OF IST PROVISO T O SECTION 54EC OF THE ACT, LD. COUNSEL FOR THE ASSESSEE JUSTIFIED THE CLAIM AND EXPLAINED THAT THE EXPRESSION THAT THE INVESTMENT MADE. . . . . IN THE LONG TERM SPECIFIED ASSETS BY AN ASSESSEE DURING ANY FINA NCIAL YEAR DOES NOT EXCEED RS.50 LAKHS. THUS, THE ASSESSEE INTERPRETED THAT THE SAME DOES NOT PROVIDE ANY RESTRICTION FOR CLAIMING THE DEDUCTION SO L ONG AS THE INVESTMENT HAS NOT EXCEEDED A SUM OF RS.50 LAKHS IN THE FINANCIAL YEAR. IN THE INSTANT CASE, ASSESSEE COMPLIED WITH THE SAID REST RICTION OF INVESTING RS.50 LAKHS IN A FINANCIAL YEAR AND HOWEVER UTILIZED TWO FINANCIAL YEARS FOR INVESTMENT IN THE SPECIFIED BONDS. FURTHE R, REFERRING TO THE SECOND PROVISO RESTRICTING THE MAXIMUM CEILING OF RS .50 LAKHS IN ANY OF THE FINANCIAL YEARS WHICH HAS COME INTO THE STATUTE ONLY BY FINANCE (NO.2) ACT, 2014. W.E.F.01-04-2015, LD. AR SUBMITTED THA T 3 THESE PROVISIONS ARE INAPPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, REJECTING THE SAME, AO RESTRICTED THE DE DUCTION TO ONLY RS.50 LAKHS ONLY AND DENIED THE BENEFIT TO THE O THER LOT OF INVESTMENT OF RS.50 LAKHS MADE IN THE FINANCIAL YEAR RELEVANT TO THE A.Y. 2014-15. 4. DURING THE FIRST APPELLATE PROCEEDINGS, THIS ISSUE WAS A GITATED BY THE ASSESSEE. THE EXPRESSION THAT THE INVESTMENT MADE. . . . . IN THE LONG TERM SPECIFIED ASSETS BY AN ASSESSEE DURING ANY FINA NCIAL YEAR DOES NOT EXCEED RS.50 LAKHS WAS DISCUSSED AT LENGTH BEFORE THE ORDER OF THE AO WAS CONFIRMED BY THE CIT(A) DISMISSING THE APPEAL OF THE ASS ESSEE. IN PARA NO.8, CIT(A) DISCUSSED THE TRIBUNAL ORDERS IN THE CAS E OF ACIT VS. RAJKUMAR JAIN & SONS (HUF) 19 TAXMANN 27, CIT VS. C. JAICHA NDER 370 ITR 0579 (MAD.), CIT VS. PODAR CEMENT PVT. LTD. 226 IT R 625, CIT VS. GOLD COIN HEALTH FOOD PVT. LTD., GODREJ & BOYCE MFG. CO. LTD. VS. DCIT AND ANOTHER 328 ITR 0081 AND CIT VS. APAR INDUS TRIES LTD. 323 ITR 0411 BEFORE REJECTING THE ARGUMENTS OF THE ASSESSE E. ALTHOUGH THE CIT(A) ACKNOWLEDGED THE FAVOURABLE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF C. JAICHANDER 370 ITR 0579 (MAD.) THE CIT(A) HYPERTECHNICALLY DISTINGUISHING THE JUDGMENT STATING THAT THE SAID JUDGMENT IS MERELY RELEVANT FOR THE LEGAL PROPOSITION ON THE PROSPECTIVE NATURE OF THE AMENDMENT TO SECTION 54EC OF THE ACT. R EFERRING TO THE CLARIFICATORY AMENDMENTS BROUGHT IN BY THE FINANCE (NO.2) AC T, 2014, CIT(A) ATTRIBUTED THE SAME TO THE THEN EXISTING PROVISIONS OF IST PROVISO BEFORE DISMISSING THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFO RE US WITH THE GROUNDS EXTRACTED ABOVE. 6. BEFORE US, IT IS THE CASE OF ASSESSEE BEFORE US THAT THE EXPRESSION THAT THE INVESTMENT MADE. . . . . IN THE LONG TERM SPECIF IED ASSETS BY AN 4 ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED RS .50 LAKHS DOES NOT TAKE AWAY THE RIGHT OF THE ASSESSEE TO INVEST THE CAPITAL GAINS IN SUBSEQUENT FINANCIAL YEARS. FURTHER, REFERRING TO THE AME NDMENTS, LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE JUDGMENT IN T HE CASE OF C. JAICHANDER (SUPRA) HAS CLEARLY ESTABLISHED THE PRINCIPLE ALLOWIN G THE ASSESSEE TO MAKE A CLAIM OF DEDUCTION U/S.54EC OF THE ACT ACCEPTING RS.50 LAKHS OF THE CAPITAL GAINS IN SUBSEQUENT ASSESSMENT YEARS. FURTHER, REFERRING TO THE AMENDED PROVISIONS OF SECTION 54 EC OF THE ACT, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INTERPRE TATION OF THE AO AND THE CIT(A) ARE LEGALLY UNSUSTAINABLE AS THE SAID AMEND MENT IS MERELY PROSPECTIVE IN NATURE IN BOTH IN LANGUAGE AND IN SPIRIT. THE SUBSEQUENT AMENDMENTS CANNOT BE APPLIED TO THE EVENTS OF THE PAST WHEN IT COMES TO THE CLAIM OF DEDUCTIONS WHICH CONSTITUTE S A BENEFICIARY PROVISION. 7. ON THE OTHER HAND, THE CASE OF THE REVENUE REVOLVES AROUND THE LITERAL INTERPRETATION OF THE SAID EXPRESSION THAT THE INVESTMENT MADE. . . . . . . IN THE LONG TERM SPECIFIED ASSETS BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED RS.50 LAKHS. 8. WE HEARD BOTH THE PARTIES ON THIS LEGAL ISSUE AND PER USED THE ORDERS OF THE REVENUE AND OTHER ORDERS OF THE TRIBUNAL CITED BY THE CIT(A) IN GENERAL AND THE JUDGMENT OF MADRAS HIGH COUR T IN THE CASE OF C. JAICHANDER (SUPRA) IN PARTICULAR. IT IS AN ADMITTED FACT TH AT THE SECOND PROVISO TO SECTION 54EC OF THE ACT HAS COME INTO STATUTE SUBSEQUENT TO THE A.Y. 2013-14. THE APPLICABILITY OF THESE PROVISIONS TO THE ASSESSMENT YEAR UNDER CONSIDERATION IS RULED OUT IN VIEW OF THE JUDGMENT OF MADRAS HIGH COURT IN THE CASE OF C. JAICHANDER (SUPRA). ITO VS. SMT. BALA R. VENKITACHALAM 71 TAXMANN.COM 219 (PUNE -TRIB.), ITO VS. MS. RANIA FALEIRO 33 TAXMANN.COM 611 (PANAJI-TRIB.) AND OTHER 5 CASES HAVE BEEN RELIED ON BY THE ASSESSEE AND ALL OF T HEM SUPPORTS THE CASE OF THE ASSESSEE. 8.1 REGARDING THE CORE ISSUE ON HAND, IT IS OUR VIEW THAT THE PROVISIONS OF THE IST PROVISO NEEDS TO BE INTERPRETED IND EPENDENT OF THE CONTENTS OF THE 2 ND PROVISO, WHICH OPERATES PROSPECTIVELY ONLY. THEREFORE, CONSIDERING THE JUDGMENT OF HONBLE MADRAS HIG H COURT IN THE CASE OF C. JAICHANDER (SUPRA), WE ARE OF THE VIEW THAT T HE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION U/S.54EC OF THE ACT ON THE ENTIRE INVESTMENT OF RS.1 CRORE IN THE NHAI BONDS MADE IN TWO FINANCIAL YEARS. 8.2 FURTHER, WE FIND THIS VIEW IS SUPPORTED BY THE ORDER O F TRIBUNAL IN THE CASE OF ITO VS. SMT. BALA R. VENKITACHALAM ITA NO.321/PUN/2015 FOR A.Y. 2010-11, DATED 30-06-2016 WHERE SIMILAR ISSUE OF ALLOWABILITY OF DEDUCTION IN RESPECT OF THE CAPITAL GA INS INVESTED IN TWO FINANCIAL YEARS CAME UP FOR ADJUDICATION AND THE APP EAL OF THE REVENUE WAS DISMISSED. THE FINDING GIVEN BY THE TRIBUNAL IN PARA NO.9 IS EXTRACTED AS UNDER : 9. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAI NST THE CLAIM OF DEDUCTION UNDER SECTION 54EC OF THE ACT, UNDER WHIC H DEDUCTION IS PROVIDED AGAINST THE INCOME FROM LONG TERM CAPITAL GAINS IN CASE THE INVESTMENT IS MADE IN SPECIFIED ASSETS WITHIN TIME FRAME OF SIX MONTHS FROM THE DATE OF SALE OF ASSET. THE SAID SECTION AL SO PROVIDES A CAP ON THE INVESTMENT TO BE MADE IN THE BONDS TO THE EXTENT OF RS.50 LAKHS IN ANY FINANCIAL YEAR. AS PER THE MANDATE OF THE SAID SECT ION AND THE PROVISO THEREUNDER, WHERE THE ASSESSEE MAKES AN INVESTMENT OF RS.50 LAKHS IN THE SPECIFIED BONDS WITHIN TIME FRAME OF SIX MONTHS FROM THE DATE OF SALE, IN ANY FINANCIAL YEAR, THEN THE BENEFIT OF SAID SEC TION IS TO BE ALLOWED TO THE ASSESSEE. IN CASE, THE PERIOD OF SIX MONTHS FAL LS WITHIN TWO FINANCIAL YEARS, THEN THE QUESTION WHICH ARISES FOR ADJUDICAT ION IS WHETHER THE ASSESSEE CAN CLAIM THE AFORESAID DEDUCTION UNDER SE CTION 54EC OF THE ACT TO THE EXTENT OF RS.50 LAKHS IN EACH OF THE FINANCI AL YEAR TOTALING RS.1 CRORE, WHERE THE INVESTMENT IS MADE IN THE AFORESAI D BONDS IN TWO FINANCIAL YEARS SEPARATELY BUT WITHIN PERIOD OF SIX MONTHS FROM THE DATE OF SALE OF ASSETS. THIS ISSUE AROSE FOR CONSIDERATI ON BEFORE THE HONBLE HIGH COURT OF MADRAS IN CIT VS. C. JAICHANDAR (SUPR A) AND LATER IN CIT VS. COROMANDEL INDUSTRIES LTD. (2015) 370 ITR 586 ( MAD) HAVE LAID DOWN THAT THE EXEMPTION GRANTED UNDER THE PROVISO TO SEC TION 54EC(1) OF THE ACT SHOULD BE CONSTRUED NOT TRANSACTIONWISE BUT FINANCI AL YEAR WISE, WHEREIN IF THE ASSESSEE WAS ABLE TO INVEST SUM OF RS.50 LAK HS EACH IN TWO DIFFERENT FINANCIAL YEARS, WITHIN PERIOD OF SIX MON THS FROM THE DATE OF TRANSFER OF CAPITAL ASSETS, THE SAID DEDUCTION WAS ALLOWABLE TO THE ASSESSEE. THE HONBLE HIGH COURT OF MADRAS IN CIT V S. C. JAICHANDAR 6 (SUPRA) HAS HELD THAT AS PER THE MANDATE OF SECTION 54EC(1) OF THE ACT, TIME LIMIT FOR INVESTMENT IS SIX MONTHS AND BENEFIT THAT FLOWS FROM THE FIRST PROVISO IS THAT IF THE ASSESSEE MAKES INVESTM ENT OF RS.50 LAKHS IN ANY FINANCIAL YEAR, IT WOULD HAVE BENEFIT OF SECTIO N 54EC(1) OF THE ACT. THE HONBLE HIGH COURT FURTHER HELD THAT HOWEVER, T O REMOVE THE AMBIGUITY IN THE ABOVE SAID PROVISIONS, LEGISLATURE BY FINANCE (NO.2) ACT, 2014 W.E.F. 01.04.2015 HAD INSERTED PROVISO AFTER E XISTING PROVISO TO SUB- SECTION (1) OF SECTION 54EC OF THE ACT. THE SECOND PROVISO, AS PER WHICH THE INVESTMENT MADE BY THE ASSESSEE IN LONG TERM CA PITAL GAINS SPECIFIED ASSETS OUT OF CAPITAL GAINS ARISING FROM TRANSFER O F ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL YEAR IN WHICH THE ORIG INAL ASSET OR ASSETS ARE TRANSFERRED AND IN SUBSEQUENT FINANCIAL YEARS, DOES NOT EXCEED RS.50 LAKHS. THE SAID AMENDMENT WAS HELD TO BE APPLICABLE FROM ASSESSMENT YEAR 2015-16 AND SUBSEQUENT ASSESSMENT YEARS. THE H ONBLE HIGH COURT THUS, CATEGORICALLY HELD THAT THE INVESTMENT MADE O N OR AFTER 01.04.2007 IN LONG TERM SPECIFIED ASSETS BY AN ASSESSEE DURING ANY FINANCIAL YEAR SHOULD NOT EXCEED RS.50 LAKHS. OWEVER, THE BENEFIT THAT FLOWS FROM THE PROVISO WAS THAT WHERE THE ASSESSEE MAKES INVESTMEN T OF RS.50 LAKHS IN ANY FINANCIAL YEAR, IT COULD HAVE THE BENEFIT OF SE CTION 54EC(1) OF THE ACT. APPLYING THE AFORESAID PROPOSITION TO THE FACTS OF THE PRESENT CASE, WHERE THE ASSESSEE HAD INVESTED RS.50 LAKHS IN REC BONDS I.E. SPECIFIED ASSETS AS PROVIDED UNDER SECTION 54EC OF THE ACT ON 28.02. 2010 I.E. IN FINANCIAL YEAR 2009-10 AND RS.22,50,000/- ON 30.04.2010 I.E. IN FINANCIAL YEAR 2010-11 AS AGAINST THE CAPITAL GAINS ARISING OF RS. 72,49,401/- ON THE TRANSFER OF LONG TERM CAPITAL GAINS I.E. SALE OF SH ARES ON 21.01.2010 FALLING IN FINANCIAL YEAR 2009-10, THE ASSESSEE IS ENTITLED TO THE BENEFIT PROVIDED BY THE PROVISO UNDER SECTION 54EC OF THE A CT AND CONSEQUENTLY, THE ORDER OF CIT(A) MERITS TO BE UPHELD. DISMISSING THE GROUNDS OF APPEAL RAISED BY THE REVENUE, THE APPEAL OF THE REVENUE IS DISMISSED. SIMILAR VIEW WAS FOLLOWED BY THE TRIBUNAL IN THE CASES OF SHR I BIMAL DESAI AND SMT. KINNA PATEL ITA NOS. 40 AND 41/PUN/ 2016 FOR THE A.Y. 2012-13 DATED 31-10-2017. CONTENT OF PARA NOS. 10 TO 12 ARE RELEVANT AND THE SAME ARE EXTRACTED BELOW FOR THE SAK E OF COMPLETENESS OF THIS ORDER : 10. SIMILAR ISSUE OF CLAIM OF DEDUCTION UNDER SECTI ON 54EC OF THE ACT AROSE BEFORE THE PUNE BENCH OF TRIBUNAL IN THE CASE OF ITO VS. SMT. BALA R. VENKITACHALAM (SUPRA) AND RELYING ON THE RATIO L AID DOWN BY THE HONBLE HIGH COURT OF MADRAS IN CIT VS. C. JAYCHAND ER (SUPRA) AND LATER IN CIT VS. COROMANDEL INDUSTRIES (2015) 370 ITR 586 (MAD), THE TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCT ION UNDER SECTION 54EC OF THE ACT. THE TRIBUNAL ALSO REFERRED TO THE AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 01.04.2015 BY W HICH PROVISO WAS INSERTED AFTER EXISTING PROVISO TO SECTION 54EC(1) OF THE ACT, WHICH WAS REFERRED TO BY THE HONBLE HIGH COURT OF MADRAS AND IT WAS HELD BY THE HONBLE HIGH COURT THAT SECOND PROVISO WAS HELD TO BE APPLICABLE FROM ASSESSMENT YEAR 2015-16 AND SUBSEQUENT ASSESSMENT Y EARS. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER:- 9. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAI NST THE CLAIM OF DEDUCTION UNDER SECTION 54EC OF THE ACT, UNDER W HICH DEDUCTION IS PROVIDED AGAINST THE INCOME FROM LONG TERM CAPIT AL GAINS IN CASE THE INVESTMENT IS MADE IN SPECIFIED ASSETS WITHIN T IME FRAME OF SIX MONTHS FROM THE DATE OF SALE OF ASSET. THE SAID SE CTION ALSO PROVIDES A CAP ON THE INVESTMENT TO BE MADE IN THE BONDS TO THE 7 EXTENT OF RS.50 LAKHS IN ANY FINANCIAL YEAR. AS PE R THE MANDATE OF THE SAID SECTION AND THE PROVISO THEREUNDER, WHERE THE ASSESSEE MAKES AN INVESTMENT OF RS.50 LAKHS IN THE SPECIFIED BONDS WITHIN TIME FRAME OF SIX MONTHS FROM THE DATE OF SALE, IN ANY FINANCIAL YEAR, THEN THE BENEFIT OF SAID SECTION IS TO BE ALL OWED TO THE ASSESSEE. IN CASE, THE PERIOD OF SIX MONTHS FALLS WITHIN TWO FINANCIAL YEARS, THEN THE QUESTION WHICH ARISES FOR ADJUDICATION IS WHETHER THE ASSESSEE CAN CLAIM THE AFORESAID DEDUCT ION UNDER SECTION 54EC OF THE ACT TO THE EXTENT OF RS.50 LAKH S IN EACH OF THE FINANCIAL YEAR TOTALING RS.1 CRORE, WHERE THE INVES TMENT IS MADE IN THE AFORESAID BONDS IN TWO FINANCIAL YEARS SEPARATE LY BUT WITHIN PERIOD OF SIX MONTHS FROM THE DATE OF SALE OF ASSET S. THIS ISSUE AROSE FOR CONSIDERATION BEFORE THE HONBLE HIGH COU RT OF MADRAS IN CIT VS. C. JAICHANDAR (SUPRA) AND LATER IN CIT VS. COROMANDEL INDUSTRIES LTD. (2015) 370 ITR 586 (MAD) HAVE LAID DOWN THAT THE EXEMPTION GRANTED UNDER THE PROVISO TO SECTION 54EC (1) OF THE ACT SHOULD BE CONSTRUED NOT TRANSACTIONWISE BUT FINANCI AL YEAR WISE, WHEREIN IF THE ASSESSEE WAS ABLE TO INVEST SUM OF R S.50 LAKHS EACH IN TWO DIFFERENT FINANCIAL YEARS, WITHIN PERIO D OF SIX MONTHS FROM THE DATE OF TRANSFER OF CAPITAL ASSETS, THE SA ID DEDUCTION WAS ALLOWABLE TO THE ASSESSEE. THE HONBLE HIGH COURT OF MADRAS IN CIT VS. C. JAICHANDAR (SUPRA) HAS HELD THAT AS PER THE MANDATE OF SECTION 54EC(1) OF THE ACT, TIME LIMIT FOR INVESTMEN T IS SIX MONTHS AND BENEFIT THAT FLOWS FROM THE FIRST PROVISO IS TH AT IF THE ASSESSEE MAKES INVESTMENT OF RS.50 LAKHS IN ANY FINANCIAL YE AR, IT WOULD HAVE BENEFIT OF SECTION 54EC(1) OF THE ACT. THE HO NBLE HIGH COURT FURTHER HELD THAT HOWEVER, TO REMOVE THE AMBIGUITY IN THE ABOVE SAID PROVISIONS, LEGISLATURE BY FINANCE (NO.2) ACT, 2014 W.E.F. 01.04.2015 HAD INSERTED PROVISO AFTER EXISTING PROV ISO TO SUB- SECTION (1) OF SECTION 54EC OF THE ACT. THE SECOND PROVISO, AS PER WHICH THE INVESTMENT MADE BY THE ASSESSEE IN LONG T ERM CAPITAL GAINS SPECIFIED ASSETS OUT OF CAPITAL GAINS ARISING FROM TRANSFER OF ONE OR MORE ORIGINAL ASSETS, DURING THE FINANCIAL Y EAR IN WHICH THE ORIGINAL ASSET OR ASSETS ARE TRANSFERRED AND IN SUB SEQUENT FINANCIAL YEARS, DOES NOT EXCEED RS.50 LAKHS. THE SAID AMENDMENT WAS HELD TO BE APPLICABLE FROM ASSESSMENT YEAR 2015-16 AND SUBSEQUENT ASSESSMENT YEARS. THE HONB LE HIGH COURT THUS, CATEGORICALLY HELD THAT THE INVESTMENT M ADE ON OR AFTER 01.04.2007 IN LONG TERM SPECIFIED ASSETS BY AN ASSE SSEE DURING ANY FINANCIAL YEAR SHOULD NOT EXCEED RS.50 LAKHS. HOWEVER, THE BENEFIT THAT FLOWS FROM THE PROVISO WAS THAT WHERE THE ASSESSEE MAKES INVESTMENT OF RS.50 LAKHS IN ANY FINANCIAL YE AR, IT COULD HAVE THE BENEFIT OF SECTION 54EC(1) OF THE ACT. AP PLYING THE AFORESAID PROPOSITION TO THE FACTS OF THE PRESENT C ASE, WHERE THE ASSESSEE HAD INVESTED RS.50 LAKHS IN REC BONDS I.E. SPECIFIED ASSETS AS PROVIDED UNDER SECTION 54EC OF THE ACT ON 28.02.2010 I.E. IN FINANCIAL YEAR 2009-10 AND RS.22,50,000/- O N 30.04.2010 I.E. IN FINANCIAL YEAR 2010-11 AS AGAINST THE CAPIT AL GAINS ARISING OF RS.72,49,401/- ON THE TRANSFER OF LONG TERM CAPI TAL GAINS I.E. SALE OF SHARES ON 21.01.2010 FALLING IN FINANCIAL Y EAR 2009-10, THE ASSESSEE IS ENTITLED TO THE BENEFIT PROVIDED BY THE PROVISO UNDER SECTION 54EC OF THE ACT AND CONSEQUENTLY, THE ORDER OF CIT(A) MERITS TO BE UPHELD. DISMISSING THE GROUNDS OF APP EAL RAISED BY THE REVENUE, THE APPEAL OF THE REVENUE IS DISMISSED . 11. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE H IGH COURT OF MADRAS, WHICH UNDOUBTEDLY, IS NOT THE JURISDICTIONA L HIGH COURT BUT THE SAID VIEW HAS PERSUASIVE VALUE AND HAS BEEN APPLIED BY THE PUNE BENCH OF TRIBUNAL IN ANOTHER CASE AND HENCE, WE FIND NO M ERIT IN THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD. ACCORDI NGLY, WE REVERSE THE FINDINGS OF THE CIT(A) AND HOLD THAT THE AMENDMENT BY THE FINANCE (NO.2) ACT, 2014 W.E.F. 01.04.2015 BY WHICH PROVISO HAS BE EN INSERTED AFTER THE 8 PROVISO TO SECTION 54EC(1) OF THE ACT IS TO BE APPL IED PROSPECTIVELY FROM ASSESSMENT YEAR 2015-16 ONWARDS. ACCORDINGLY, THE YEAR UNDER APPEAL BEING ASSESSMENT YEAR 2012-13, THE ASSESSEE IS ENTI TLED TO CLAIM THE DEDUCTION UNDER SECTION 54EC OF THE ACT AT RS.1 CRO RE I.E. ON ACCOUNT OF INVESTMENT MADE IN THE FINANCIAL YEAR IN WHICH THE ASSET WAS SOLD AT RS.50 LAKHS AND FURTHER DEDUCTION OF RS.50 LAKHS WH ICH WAS MADE IN THE SUBSEQUENT FINANCIAL YEAR, THOUGH WITHIN PERIOD OF SIX MONTHS FROM THE DATE OF SALE OF ASSET. ACCORDINGLY, WE ALLOW THE C LAIM OF ASSESSEE AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION UNDER SECTION 54EC OF THE ACT AT RS.1 CRORE. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, ALLOWED. 12. IN THE CASE OF BIMAL DESAI, THE FIRST GROUND OF APPEAL IS IDENTICAL TO THE GROUND OF APPEAL NO.1 RAISED IN SMT. KINNA PATE L AND APPLYING THE SAME PRINCIPLE, WE HOLD THAT THE ASSESSEE IS ENTITL ED TO CLAIM DEDUCTION UNDER SECTION 54EC OF THE ACT AT RS.1 CRORES. 8.3 FROM THE ABOVE, IT IS EVIDENT THAT THE EXPRESSION ANY FINANCIAL YEAR IS EXPLAINED AS INCLUDING MORE THAN ONE FINANCIAL YEAR FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF C. JAICHANDER (SUPRA) AND THE ORDER OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SMT. BALA R. VENKITACHALAM 71 TAXMANN.COM 219 (PUNE-TRIB.) WERE RIGHTLY RELIED WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEES. THEREFORE, THE REASONING GIVEN BY THE CIT(A) IN OUR OPINION IS UNSUSTAINABLE IN LAW. IN VIEW OF THE ABOVE, WE ARE OF THE O PINION THAT THE ORDER OF CIT(A) IS REQUIRED TO BE REVERSED. ACCORDING LY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH DAY OF MARCH, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 09 TH MARCH, 2018 9 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-8, PUNE 4. CIT-8, PUNE 5. , , B BENCH PUNE; 6. / GUARD FILE.