Capital gains exemption on investment in Specified Bonds to be restricted to `50 lakhs [Section54EC] [W.e.f. A.Y. 2015-16]
The existing provisions contained in section 54EC(1) provide that where capital gain
arises from the transfer of a long-term capital asset and the assessee has, within a period
of six months, invested the whole or part of capital gains in the long-term specified asset, the proportionate capital gains so invested in the long-term specified asset, out of the whole of the capital gain, shall not be charged to tax. The proviso to the said sub-section provides that the investment made in the long-term specified asset during any financial year shall not exceed `50,00,000.
However, the wordings of the proviso have created an ambiguity. As a result the capital gains
the year after the month of September were invested in the specified asset in such a manner so as to split the investment in two years i.e., one within the year and second in the next year but before the expiry of six months. This resulted in the claim for relief of ` 1 crore as against the intended limit for relief of `50,00,000.
There are contrary judgments in this regard.Some of the judgmentare as under:
The proviso to section 54EC provides that the investment made in a long term specified asset by an assessee "during any financial year" should not exceed `50 lakhs. It is clear that if the assessee transfers his capital asset after 30th September of the financial year he gets an opportunity to make an investment of`50 lakhs each in two different financial years and is able to claim exemption upto `1 crore under section 54EC.