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Time limit for investments under Section 54EC

Though the press release is not available, its contents are available in Notification No.S.O.2146(E) dated December 22, 2006, published in Income Tax Reports (2007) 288 ITR (St.) 6 to the same effect, relaxing the time limit for all investments in bonds “to be issued by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), during the period from December 26, 2006 to March 31, 2007 (both days inclusive), as long-term specified asset” for the purposes of the said section (Sec. 54EC) subject to the further condition that it should not exceed Rs. 50 lakh. It may be seen from the above notification that investments made between December 26, 2006, and March 31, 2007, are specifically covered. The notification itself is good enough for the reader as he had deposited the same on January 24, 2007, falling between these dates though the deposit was beyond six months generally permitted by the statute. The press release explaining the notification is to the same effect but was apparently never officially released which explains its present non-availability. But the notification has an independent legal value more than any circular/ press release.

There was resistance to the power of the Board to limit the benefit to Rs. 50 lakh along with extension of time limit for deposit so that both these matters were made part of the statute by amendment to Sec. 54EC by the Finance Act, 2007, by inserting a proviso to Sec. 54EC(1) for purposes of limit of Rs. 50 lakh and by insertion of Explanation (b) and (ba) making it clear that there is a distinction between investments made during financial year 2006-07 under Explanation (b) and from April 1, 2007, under Explanation (ba) so that what was the subject matter of notification issued and press release/ circular not officially released became part of the statute. There was no other purpose in bringing these amendments.

These developments may be explained to the assessing officer since the very purpose of notification and amendments to law was to remove the hardship caused by non-availability of the bonds.

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