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Exemption Granted u/s 54EC For Investment Made After Delay of Over Six Months

The saying “rules are not set in stone”, exists for a reason. Our world is governed by rules to prevent wrong doings. However, as the saying goes “there are exceptions to every rule”. Income Tax laws exist to govern the citizens by preventing corruption, tax evasion and hoarding of black money. A country runs on the tax revenue collected from its citizens. Otherwise, the government will find it difficult to take care of the basic needs of its citizens. However, from time to time there will exist cases of citizens having genuine reasons in tax related issues. Such was the case of the assessee who appealed to the Karnataka HC to appeal the order of the CBDT who rejected her claim for exemption u/s 54EC.

U/s 54EC, gains arising from the transfer of any capital assets are exempt if the person within six months invests the capital gain in a long-term bond, as specified, for a minimum period of three years. The assessee in this case, had sold her immovable property and due to genuine reasons of hardship was unable to invest the gains within the specified time. The CBDT had disregarded her case as they found her reason to be invalid. Therefore, the assessee appealed to the Karnataka HC and stated her genuine reasons. The main point debated was the term “genuine hardship’, which means not fake, counterfeit, real, not pretending. The Karnataka HC found the assessees “genuine hardship” valid and reversed the order of the CBDT, allowing the assesse to invest her capital gains and claim exemption u/s 54EC.