COMMISSIONER OF INCOME TAX Vs. VIJAY M.MAHTANEY

JUDGEMENT

(1.) The above Tax Case (Appeal) is filed at the instance of the Revenue against the order of the Income-tax Appellate Tribunal for the assessment year 2003-04 by raising following substantial question of law:

(2.) Aggrieved by the same, the assessee went on appeal before the Income-tax Appellate Tribunal. The Tribunal pointed out that even though Section 45(1) does not specify Section 54EC as had been done by erstwhile Sections 54, 54A, 54B, 54EA, 54EB and 54F, yet, going by the import of Sections 54EC(1)(a) and (b), the assessee was entitled to take advantage of the said provisions even before working out Section 70. Pointing out to the scheme of Sections 45 to 55A which provide for the computation of capital gains, the Tribunal held that effect has to be given first to the provision of capital gains as given under the above scheme and then apply the provisions of Section 70. It viewed that Section 70 would come into play only when the capital gains have been computed in accordance with the provisions contained in Sections 45 to 55A. Irrespective of whether Section 54EC(1) is found in Section 45 or not, in terms of Section 54EC, the effect of it cannot be ignored, as the investment in REC bonds takes the capital gains out of the charging provision. Since the amount invested in REC bonds does not enter into the computation at all, the revision done was not sustainable in law. Consequently, the Tribunal set aside the order of the Commissioner of Income-tax (Appeals). Aggrieved by this, present appeal has been filed by the Revenue.

(3.) Before going into the contentions raised herein, the relevant provisions of Sections 45(1), 54EC and 70 of the Income-tax Act, relevant to the assessment years, have to be noted, which read as follows:-