Section 54EC — the law in short
What the courts have decided on section 54EC, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v C. Jaichander
High CourtHelps taxpayerSuperseded by amendment
I sold property in February and put Rs.50 lakh into bonds in March and another Rs.50 lakh in June, both within six months. Can I claim section 54EC on the whole Rs.1 crore?
Yes, for transfers before the 2014 amendment. The Madras High Court held that section 54EC(1) fixes a six month window for investment, while the first proviso caps investment at Rs.50 lakh in any financial year. Read together, an assessee who invests Rs.50 lakh in each of two financial years, both within six months of the transfer, gets the exemption on the full Rs.1 crore. The Court declined to read the ceiling into the sub-section itself. Parliament closed the gap by a second proviso inserted by the Finance (No. 2) Act, 2014 with effect from 1 April 2015, so the answer is different from assessment year 2015-16 onwards.
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Sunil Kumar Agarwal v CIT
High CourtHelps taxpayer
The AO adopted the stamp duty value and I never asked for a DVO reference. Can he do that?
No. Where the stamp duty valuation exceeds the stated consideration, the Assessing Officer must refer the valuation to the DVO under s.50C(2), and must do so even where the assessee never asked. Recording the Sub-Registrar's value in the deed does not show that the seller accepted it, because the stamp duty burden falls on the purchaser.
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CIT v Cello Plast
High CourtCuts both ways
The 54EC bonds weren't on sale before my six months ran out. Have I lost the exemption?
No. Where the specified bonds were genuinely unavailable on the last date of the six-month window, the time limit stands effectively extended and an investment made as soon as the bonds became available qualifies under section 54EC.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.