Exemption u/s 54EC shall not be allowed when Investment has not been made during Period of limitation provided u/s 54EC: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that exemption under Section 54EC of the Income Tax Act, 1961 shall not be allowed when the investment has not been made during the period of limitation provided under Section 54EC of the Income Tax Act.

The original assessment was completed under Section 143(3) of the Income Tax Act by assessing the total income at Rs. 2,44,769/-. The assessment was reopened under Section 147 of the Income Tax Act after recording the reasons for the same and statutory notices under Section 148 of the Income Tax Act were issued and served upon the assessee.

The Assessing Officer (AO) further observed that the assessee has claimed exemption under Section 54EC of the Income Tax Act on the ground that he has invested Rs. 73.50 lakhs in the NABARD Bond. The AO was of the opinion that the assessee has not invested within 6 months from the date of the transfer.

It is the contention of the Revenue that the transfer took place when the partnership Deed was executed by which the assets were transferred as capital contribution i.e. on 2.4.2004. Therefore, the period of limitation for the purpose of investment in Bonds should start from 2.4.2004 and as the assessee purchased bonds on 30.8.2005 the same is beyond the permissible period.

The Two-member bench comprising of H.L. Karwa (President) and N.K. Billaiya (Accountant member) held that since the investment was beyond the permissible range, the assessee’s investment cannot be considered under the provisions of Section 54EC of the Income Tax Act.

The assessee has not made an investment during the period of limitation provided under Section 54EC of the Income Tax Act therefore, the CIT(A) has rightly denied the exemption under Section 54EC of the Income Tax Act. Therefore, the bench does not find any reason to tamper with the findings of the CIT(A), accordingly, the assessee’s appeal was dismissed.

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