The Central Board of direct taxes has come up with a good news for the assessees in this new year. The board has issued a circular on 6th January, 2023 wherein the timelines provided for making investments for claiming exemptions under Section 54 to 54GB of the Act, have been extended in some cases to 31st March, 2023.

The Income arising from capital gains in various situations qualify for exemption, in case the said capital gains are invested in either a new residential house by purchasing the same within a period of two years or by constructing the same within a period of three years. Similarly there are provisions for exemption of taxability of capital gains in case the same are invested in the capital gains exemption bonds issued by NHAI and REC within a period of six months from the transfer of the original asset.

The CBDT circular number 1 dated 06.01.2023 provides that in cases where the last date of compliance under Section 54 to 54GB of the Act, was between 1st April, 2021 and 28th February, 2022 then the same may be completed on or before 31.03.2023. That means all cases where the assessee wanted to avail exemption under Section 54 to 54 GB of the Act and the last dates for the same expired between 01st April, 2021 to 28th February, 2022 then an additional window has been allowed to acquire the asset or the bonds as the case may be before 31st March 2023 and avail the benefit of exemption under the relevant section.

The said circular although is definitely welcome and for the benefit of the assessee but the same still leaves a number of questions unanswered.

As we are aware the effect of Covid in India was primarily during the period April, 2020 to April, 2021 wherein due to various lockdowns and other restrictions the free movement of the general public was restricted as well as the general decision-making was deferred by everyone. It defies logic to give benefit to the assessee where the last date was expiring between 1st  April, 2021 to 28th February, 2022 and leaving out the period 2020-21 wherein major impact of pandemic was witnessed by the country. It is difficult to decipher as to why the assessees who were most affected in previous years relevant to Assessment Year 2017-18 and Assessment Year 2018 – 19 have not been given the benefit of this extension whereas the same seems to be available with respect to Assessment Year 2019 – 20 to Assessment Year 2022 – 23.

Moreover the extension would further create issues regarding the manner in which this benefit in accordance with the Circular number 1 dated 06.01.2023 can be claimed. The Income Tax Returns for all the aforesaid years for which the benefit is available now in accordance with the circular have already been filed and there is no window available for filing any revised returns. In addition to extending the time the CBDT should also look as to how the benefit of this exemption can be availed and under which provision.