Question: Whether an individual investor intending to avail the benefit of exemption u/s 54EC by way of investing in the RECL bonds can claim such benefit in the income tax return by way of parking such proceeds in the Capital Gains Account?
Answer by Dr Suresh Surana, Founder, RSM India: The Capital Gains Accounts Scheme, 1988 (hereinafter referred to as ‘the Scheme’) allows the taxpayers to claim the benefit of tax exemption under the Section 54 series (by way of depositing the amount of capital gains/ sale consideration in the capital gains account for investment in residential property) while furnishing their tax return for the relevant financial year in case where the taxpayer has not been able to make the required investment subject to certain conditions.
As such, the taxpayer can temporarily park his/her proceeds in the savings account as the investment in specified bonds needs to be made within 6 months from date of transfer of the capital asset and the taxpayer cannot transfer his/her proceeds to the SBI Capital Gain Account.
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Since practically such exemption cannot be claimed unless the capital gains arising from transfer of original asset is invested in specified bonds, it is assumed that such investment needs to be made before filing return of income in case the due date for furnishing tax return falls before the expiry of 6 months.
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