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5. Though there were several issues, which were the subject matter of assessment, in this appeal, we are concerned with the disallowance under Section 54EC of the Act.

6. During the course of scrutiny assessment, a questionnaire was issued to the assessee calling for certain clarifications. The assessee, by their letter dated 23.7.2009, stated that they had transferred their non Transmission and Distribution business (non T & D business) to their subsidiary company namely M/s.Alstom Industrial Products Limited and that the entire non T & D business was transferred for a total consideration of Rs.413 million being the fair value of the non T & D business as determined by the valuers by their joint report dated 05.1.2006. The assessee further stated that the net worth of the undertaking worked out to Rs.29,33,04,531/-, that the capital gains arising out of the transfer worked out to Rs.11,96,95,469/-, that after setting off the long term capital loss of the earlier years amounting to Rs.1,78,27,854/-, the taxable capital gains for the assessment year worked out to Rs.10,18,67,615/- and that the assessee did not pay any capital gains tax since the entire capital gains were to be invested in Tax Savings Bonds as notified under Section 54EC of the Act. http://www.judis.nic.in

7. Without prejudice to the above mentioned submissions, with regard to exemption from capital gains tax under the provisions of Section 54EC of the Act, the assessee stated that the transfer should not suffer any capital gains tax at all, referred to Section 50B of the Act and relied upon the decision of the Mumbai Bench of the Tribunal in the case of Avaya Global Connect Ltd. Vs. ACIT, Mumbai [reported in 2008-TIOL-415-ITAT-MUM].

9. The Assessing Officer considered the said submissions and held that the assessee had agreed that the transfer of the non T & D business to its subsidiary was a transfer as per the provisions of Section 50B of the Act, that the assessee approached the relevant Bond Issuing Authorities for the purpose of Section 54EC of the Act in order to claim deduction on the same and that since the bond required by the assessee was not allocated to the assessee as per the http://www.judis.nic.in amendment to Section 54EC of the Act, the assessee had not invested the said amount during the current year. It has been further stated that challenging the Notification of the Government dated 22.12.2006, before this Court, the assessee filed a writ petition, which was dismissed and the special leave petition filed before the Hon’ble Supreme Court was also dismissed on 04.5.2009 vide SLP.No.9694 of 2009.

19. With the above submissions, the assessee stated that the taxable capital gains for the assessment year in question worked out to Rs.10,18,67,615/-, but they did not pay any capital gains tax since the entire capital gains were to be invested in tax saving bonds as notified under Section 54EC of the Act.

20. Though such a stand was taken, there was a road block for the assessee as a Proviso was inserted in Section 54EC of the Act by the Finance Act, 2007 with effect from 01.4.2007 fixing the outer limit for investment as Rs.50 lakhs. This necessitated the assessee to approach this Court by filing a writ petition, which was dismissed and the special leave petition filed before the Hon’ble Supreme Court against that was also dismissed. In fact, the dismissal of the writ petition can have no impact on the present assessment. This is so because the assessee took a stand that they did not pay capital gains http://www.judis.nic.in tax because they were to invest the same in the tax saving bonds as notified under Section 54EC of the Act. However, on account of the monetary restrictions, the assessee was not issued with the requisite bonds. Further, in the submissions before the Assessing Officer, the assessee took an alternate plea. We have held that such an alternate plea can be raised and it can be even a plea, which is mutually contradictory to the earlier plea, as it is a question of law, which requires to be considered.