M/S Areva T & D India Limited, 457, Anna Salai, Teynampet, Chennai-600 018, Rep. By Its Director, Treasury & Taxation L.v.srinivasan v. The Assistant Commissioner Of Income Tax, Company Circle-I(1), Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 24.09.2008CORAMTHE HONOURABLE MR. JUSTICE K.RAVIRAJA PANDIANANDTHE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA W.P. Nos.1524 & 11506 of 2007 and M.P.Nos.1 & 2 & 1 & 2 of 2007 W.P.No.1524 of 2007 M/s Areva T & D India Limited,457, Anna Salai, Teynampet,Chennai-600 018, rep. by itsDirector, Treasury & Taxation L.V.Srinivasan ...Petitioner Vs. 1.The Assistant Commissioner of Income Tax, Company Circle-I(1), Chennai. 2.Union of India, rep. by its Secretary,, Ministry of Finance, Government of India, North Block, New Delhi. 3.The Rural Electrification Corporation Ltd., rep. by its General Manager-Finance, Core-4 Scope Complex, No.7, Lodhi road, New Delhi-110 003.(R3 impleaded as per order dt.21.3.07 byKRPJ in WPMP No.3/07 in WP.1524/07) 4.The Central Board of Direct Taxes, rep. by its member/Director, Ministry of Finance, North Block, New Delhi.(R4 impleaded as per order dt.11.7.07 bySMKJ in MP.No.4/07 in WP.1524/07).. Respondents W.P.No.11506 of 2007 M/s Prasad Productions Pvt. Limited,rep. by its Director M.Paratpara Rao,registered Office 28, Arunachalam Road,Saligramam, Chennai-600 093... Petitioner https://hcservices.ecourts.gov.in/hcservices/ Vs. 1.The Union of India, rep. by Secretary to Government, Ministry of Finance, North Block, New Delhi. 2.The Central Board of Direct Taxes, Ministry of Finance,North Block, New Delhi. 3.The Deputy Commissioner of Income Tax, Media Circle,121, Nungambakkam High Road, Chennai-600 034. 4.The Rural Electrification Corporation Ltd., Core-3, Scope Complex, No.7, Lodhi road, New Delhi-110 003.... Respondents Prayer: These Writ Petitions are filed under Article 226 of theConstitution of India seeking for the relief of issuance of writ ofdeclaration declaring that the conditions occurring in thenotification No.380/2006 F.No.142/09/2006-TPL dated 22.12.2006 alongwith the words "subject to the following conditions, namely," issuedby the Central Board of Direct Taxes are ultra vires Section 54EC ofthe Income Tax Act, 1961 and arbitrary and violative of Articles 14and 265 of the constitution of India and consequently unenforceable. COMMON ORDER P.P.S.JANARTHANA RAJA, J. Writ petitions are filed by the petitioners seeking the reliefof issuance of writ of Declaration declaring that the conditionsoccurring in the notification No.380/2006 F.No.142/09/2006-TPL datedhttps://hcservices.ecourts.gov.in/hcservices/ 22.12.2006 along with the words "subject to the following conditions,namely," issued by the Central Board of Direct Taxes are ultra viresSection 54EC of the Income Tax Act, 1961 and arbitrary and violativeof Articles 14 and 265 of the constitution of India and consequentlyunenforceable. 2. Since the issue involved in both the writ petitions are oneand the same, they are taken up together and disposed of by a commonjudgment. 3. The brief facts are as follows: W.P.No.1524 of 2007:-The petitioner is a company incorporated under the Writ petitions are filed by the petitioners seeking the reliefof issuance of writ of Declaration declaring that the conditionsoccurring in the notification No.380/2006 F.No.142/09/2006-TPL datedhttps://hcservices.ecourts.gov.in/hcservices/ 22.12.2006 along with the words "subject to the following conditions,namely," issued by the Central Board of Direct Taxes are ultra viresSection 54EC of the Income Tax Act, 1961 and arbitrary and violativeof Articles 14 and 265 of the constitution of India and consequentlyunenforceable. 2. Since the issue involved in both the writ petitions are oneand the same, they are taken up together and disposed of by a commonjudgment. 3. The brief facts are as follows: W.P.No.1524 of 2007:-The petitioner is a company incorporated under the Companies Act, 1956, engaged in the business of Transmission andDistribution including manufacturing relays, circuit breakers, powertransformers, distribution transformers and switch gear (Transmission& Distribution business (T & D business). Earlier the petitionercompany was also engaged in non T & D business comprising manufactureof industrial motors, pumps, fans and energy meters for a number ofyears. The name of the petitioner company until 22.09.2005 was AlstomLimited. Areva Group of companies acquired the T & D business ofAlstom group of companies world wide in January 2004. Areva T & D SA,France acquired in August 2005, the entire 66.35% shareholding in thepetitioner company which was earlier held by Alstom Holdings S.A.As per SEBI regulations, Areva T & D SA, France acquired further1,19,445 shares and thus Areva T & D SA now holds 2,65,83,845 sharesof the petitioner company. The ultimate parent company of thepetitioner company, namely Areva T & D SA is owned by the Governmentof France to the extent of 88% of the shareholding. After the takeover, since Areva desired to focus only on T & D business and sinceAlstom Group desirous of retaining its interest in the Non–T & Dbusiness, it was decided to reorganize and reconstruct the petitionercompany by transferring the non T & D business to its subsidiarycompany named Alstom Industrial Products Limited (AIPL). Theshareholding of the petitioner company in Alstom IndustrialProducts Limited was to be ultimately acquired by Alstom Group andthus the controlling interest of the subsidiary company would gettransferred to Alstom Group. Therefore, the Board of Directors ofthe petitioner company approved a scheme of arrangement underSections 391 and 394 of the Companies Act for reconstruction of thepetitioner company by transfer of its non T & D business as a goingconcern to its subsidiary for a consideration of Rs.41.3 crores.The said consideration for transfer was paid by issue of equityshares by the subsidiary to the petitioner company. The appointeddate for this transfer was fixed as 1st January, 2006 and the schemewas also approved by the High Court of Calcutta and the order wasreceived by the petitioner company on 11.08.2006. The effective dateof transfer was 14.08.2006, when the petitioner company filed form 21with Registrar of Companies, Kolkatta. The capital gains arising out https://hcservices.ecourts.gov.in/hcservices/ of the sale transaction worked out to Rs.11,96,95,469/- being thedifference between the sale consideration received for thetransaction and the net worth of the undertaking sold as prescribedunder Section 50B of the Income Tax Act. The relevant assessmentyear is 2006-2007 and the capital gain worked out toRs.10,18,67,615/- after setting off the long term capital loss of theearlier years amounting to Rs.1,78,27,854/-. W.P.No.11506 of 2007:- https://hcservices.ecourts.gov.in/hcservices/ of the sale transaction worked out to Rs.11,96,95,469/- being thedifference between the sale consideration received for thetransaction and the net worth of the undertaking sold as prescribedunder Section 50B of the Income Tax Act. The relevant assessmentyear is 2006-2007 and the capital gain worked out toRs.10,18,67,615/- after setting off the long term capital loss of theearlier years amounting to Rs.1,78,27,854/-. W.P.No.11506 of 2007:- 4. The petitioner is engaged in the business of filmproduction, distribution besides owing of studio and laboratory.The petitioner was a allottee/lessee and in possession ofindustrial Unit constructed on lease hold plot No.6 situated inBlock FC of sector 126A, within New Okhla Industrial Development Area(Noida) District Gautam Nagar, Uttar Pradesh admeasuring 16571 sq.mtsand a covered area of 2389.54 sq.mts. The said industrial leasehold plot was allotted in favour of the petitioner by lease deeddated 21.03.1988 and duly registered in the office of the SubRegistrar, Noida. The said Noida authority granted permission to thepetitioner to transfer the lease hold rights of the said property infavour of M/s Bennett Coleman Company Limited by Transfer MemorandumNo.10271 dated 17.11.2006. The petitioner, by agreement dated21.12.2006, has transferred the lease hold rights of the saidproperty in favour of Bennett Coleman and Company for a total saleconsideration of Rs.42.13 crores. Out of this, Rs. 41.63 crores wastowards sale of land and Rs.50 lakhs was towards sale of building.The capital gain arising out of the transaction worked out toRs.40,00,14,349 being the difference between the considerations. Sothe taxable capital gains for the assessment year 2007-2008 workedout to Rs.39,50,14,349/-. Both the petitioners decided to invest thecapital gains in the bonds for the purpose of availing benefit ofexemption under Section 54EC of the Act. Section 54EC deals withcapital gains not be to be charged on investment in certain bonds.The benefit of tax exemption is only with respect of long termcapital gains invested in the bonds which are redeemable afterthree years and issued by the National Highways Authority of Indiaor by the Rural Electrification Corporation Limited on or after01.04.2006. There is no limitation for the investment. However theCentral Government later issued a notification No.380/2006F.No.142/2006-TPL dated 22.12.2006 restricting the investment inbonds to a sum of Rs.50 lakhs per person. As per the abovenotification, a person, who are entitled to the benefit under Section54EC of the Act, the value is restricted to a sum of Rs.50 lakhs.Aggrieved by the same, both the writ petitioners have filed the writpetitions seeking for issuance of writ of declaration, declaringthat the conditions occurring in the notification No.380/2006F.No.142/09/2006-TPL dated 22.12.2006 along with the words "subjectto the following conditions, namely," issued by the secondrespondent herein are ultra vires Section 54EC of the Income Taxhttps://hcservices.ecourts.gov.in/hcservices/ Act, 1961 and arbitrary and violative of Articles 14 and 265 of theconstitution of India and consequently unenforceable. Act, 1961 and arbitrary and violative of Articles 14 and 265 of theconstitution of India and consequently unenforceable. 5.Both the petitioners have challenged the conditionsincorporated in the above impugned notification and contended thatit is ultra vires of Section 54EC of the Act. The said notificationis contrary to the benefit conferred under Section 54EC of the Act.If the assessee makes investment which arise out of the investmenti.e. long-term capital asset, the whole amount is exempted fromtaxation. By this notification, the assessees' exemption limit isrestricted. Therefore the learned counsel appearing for thepetitioner contended that the conditions incorporated in the saidnotification are ultra vires Section 54EC of the Act. The saidnotification is arbitrary and violative of Article 14 of theConstitution of India creating an invidious distinction between theassessees similarly situated and governed by the same assessmentyear, effecting the same type of transaction and being subjected toan identical gain. The denial of the benefit of the provisions ofSection 54EC of the Act to the petitioners by the notification isplainly irrational and discriminatory. The petitioners furthercontended that the notification takes away the exemption which isconferred under Section 54EC of the Act. Therefore, the impugnednotification issued by the Central Government is illegal andwithout any basis and justification. Hence, the same has to bequashed. Learned counsel for the petitioners relied on number ofjudgments of the Supreme Court reported in 1993 Supp. (1)Supreme Court Cases 55 (COMMISSIONER OF INCOME TAX, CALCUTTA VS M/SBRITISH PAINTS INDIA LIMITED); 1961 AIR Supreme Court 552( K.T.MOOPIL NAIR VS STATE OF KERALA); STATE OF ANDHRA PRADESH VSNALLARAJA REDDY (1967 AIR Supreme Court 1458); NEW MANEK CHOWK SPN.WVG. MILLS VS. AHAMADABAD MUNICIPALITY (1967 air Supreme Court 1801);STATE OF KERALA VS. HAJI K.KUTTY NAHA (1969 AIR Supreme Court 378);KHANDIGE SHAM BHAT VS ARI ITO (1963 AIR Supreme Court 591);R.L.MARWAHA VS. UNION OF INDIA (1987 (4) Supreme Court Cases 31);S.K. DUTTA ITO VS. LAWARENCE SINGH (1968 AIR Supreme Court 658);COMMISSIONER OF INCOME TAX VS. B.C.SRINIVASA SETTY (1981 (2) SupremeCourt Cases 460) and DEEPAK SIBAK VS, PUNJAB UNIVERSITY (1989 (2)Supreme Court Cases 145) to support their claim. 6. Learned counsel appearing for the respondents filed counterand denied the allegations and vehemently contended that thenotification issued under Section 54EC of the Income Tax Act, 1961is not ultra vires the said provisions of Section 54 EC. It wasfurther contended that Section 54EC envisages the investor to investthe capital gains on sale of long term capital assets in specifiedassets to be eligible to claim exemption. The Finance Act, 2006restricted the scope and limited the meaning of 'long term specifiedasset' to bonds notified by the Government of India and issued byNational Highways Authority of India and Rural ElectrificationCorporation with a view to channelise funds towards focuseddevelopment of roads. He further contended that the limitation was https://hcservices.ecourts.gov.in/hcservices/ https://hcservices.ecourts.gov.in/hcservices/ imposed with a view to ensure equitable distribution of benefitamongst the prospective investors and therefore, the restriction isreasonable and justifiable. Further there was also amendment toexplanation (b) of the Section 54 EC. The proviso has also beeninserted to validate the bond and notified before April, 2007 withthe conditions specified in the notification, under the provision ofclause b as they stood immediately before the amendment of FinanceAct l 2007. It comes into effect retrospectively from 01.04.2006.Therefore, the learned counsel has vehemently submitted that thepresent writ petition is only to challenge the conditions enumeratedin the notification which is now incorporated in the section itselfby the retrospective amendment and therefore, the writ petitionsbecome infructuous and are liable to be dismissed. 7. Heard the learned counsel appearing on either side andperused the materials available on record. 8. Section 54 EC of the Income Tax Act, 1961 is introduced bythe Finance Act, 2001 with effect from 01.04.2001. As per theprovision, if the amount of long term capital gain arises from thetransfer is invested in the long-term specified asset, then thepetitionercompanyneednot pay capital gains tax. Explanation (b) defines "Long-termspecified asset", which reads as follows: (i)On or after the 1st day of April, 2000, by theNational Bank for Agriculture and Rural Developmentestablished under Section 3 of the National Bank forAgriculture and Rural Development Act, 1981 (61 of 1981)or by the National Highways Authority of India constitutedunder Section 3 of the National Highways Authority ofIndia Act, 1988 (68 of 1988);(ii)On or after the 1st day of April, 2001, by the RuralElectrification Corporation Limited, a company formed andregistered under the Companies Act, 1956(1 of 1956);(iii) on or after the 1st day of April, 2002, by theNational Housing Bank established under sub-section (1) ofsection 3 of the National Housing Bank Act, 1987 (53 of1987) or by the Small Industries Development Bank of Indiaestablished under sub-section (1) of section 3 of the SmallIndustries Development Bank of India Act, 1989 (39 of1989)".From a reading of the above, it is clear that long-term specifiedasset means any bond redeemable after three years and issued on orafter the 01.04.2000 by the National Bank for Agriculture and RuralDevelopment established under Section 3 of the National Bank forAgriculture and Rural Development Act, 1981 or by the NationalHighways Authority of India constituted under Section 3 of theNational Highways Authority of India Act, 1988 or on or after the1st day of April, 2001, by the Rural Electrification CorporationLimited, a company formed and registered under the Companies Act,1956 and on or after the 1st day of April, 2002, by the Nationalhttps://hcservices.ecourts.gov.in/hcservices/ Housing Bank established under sub-section (1) of section 3 of theNational Housing Bank Act, 1987 (53 of 1987) or by the SmallIndustries Development Bank of India established under sub-section(1) of section 3 of the Small Industries Development Bank of IndiaAct. There is no limitation imposed for the purpose of theinvestment. Any amount invested in the bonds issued by the aboveauthorities is exempted from the purview of the capital gains. Housing Bank established under sub-section (1) of section 3 of theNational Housing Bank Act, 1987 (53 of 1987) or by the SmallIndustries Development Bank of India established under sub-section(1) of section 3 of the Small Industries Development Bank of IndiaAct. There is no limitation imposed for the purpose of theinvestment. Any amount invested in the bonds issued by the aboveauthorities is exempted from the purview of the capital gains. 9. Subsequently, the Section 54EC of the Act was amended bythe Finance Act 2006, which reads as follows:"Explanation:- For the purposes of this section.--(a) "cost", in relation to any long-term specified asset,means the amount invested in such specified asset out ofcapital gains received or accruing as a result of thetransfer of the original asset;(b) "long-term specified asset" means any bond,redeemable after three years and issued on or after the1st day of April, 2006.-(i) By the National Highways Authority of Indiaconstituted under Section 3 of the National HighwaysAuthority of India Act, 1988(68 of 1988) and notified bythe Central Government in the Official Gazette for thepurposes of this section; or(ii) by the Rural Electrification Corporation Limited, acompany formed and registered under the Companies Act,1956(I of 1956), and notified by the Central Governmentin the Official Gazette for the purposes of this section."From this amendment it is clear that the tax benefit under Section54EC of the Act is not available on long-term capital gains whichare invested on or after April 1, 2006, in the bonds of National Bankfor Agriculture & Rural Development, National Housing Bank and SmallIndustries Development Bank of India. Because of the amendment, thetax benefit under the said Section is available thereafter only onthose long-term capital gains which are invested on or after April 1,2006, in the bonds of Rural Electrification Corporation Limited andNational Highways Authority of India and which are notified by theCentral Government in the Official Gazette. 10. Both the petitioners wanted to invest in the said bonds.But at that time there was no availability of notified bonds in themarket. Therefore, it was not possible to make any investment bythe petitioners. Representations were made by the assessees to theCentral Board of Direct Taxes. Two more notifications in Nos.963 and964 dated 29.06.2006 were issued specifying the bond amount, whichreads as follows: "By notification No.S.O.963(E), dated June 29,2006, theCentral Government has notified the bonds for an amountof rupees one thousand five hundred crores (redeemableafter three years) to be issued by the National HighwaysAuthority of India constituted under Section3 of the https://hcservices.ecourts.gov.in/hcservices/ National Highways Authority of India Act, 1988 (68 of1988) during the financial year 2006-07 as "long-termspecified asset" for the purpose of Section 54EC.S.O.964(E). In exercise of the powers conferred by sub-clause (ii) of clause (b) of the Explanation to section54EC of the Income-tax Act, 1961 (43 of 1961), theCentral Government herby notifies the bonds for anamount of rupees four thousand five hundred crores(redeemable after three years) to be issued by theRural Electrification Corporation Limited, a companyformed and registered under the Companies Act, 1956 (1of 1956), during the financial year 2006-07 as ‘long-term specified asset’ for the purpose of the saidsection. " https://hcservices.ecourts.gov.in/hcservices/ National Highways Authority of India Act, 1988 (68 of1988) during the financial year 2006-07 as "long-termspecified asset" for the purpose of Section 54EC.S.O.964(E). In exercise of the powers conferred by sub-clause (ii) of clause (b) of the Explanation to section54EC of the Income-tax Act, 1961 (43 of 1961), theCentral Government herby notifies the bonds for anamount of rupees four thousand five hundred crores(redeemable after three years) to be issued by theRural Electrification Corporation Limited, a companyformed and registered under the Companies Act, 1956 (1of 1956), during the financial year 2006-07 as ‘long-term specified asset’ for the purpose of the saidsection. " 11.The Central Board issued another circular inF.No.142/09/2006-TPL, dated 30.06.2006 extending the time limit formaking investments under Section 54EC of the Act, after taking intoconsideration of the representation as well as the non-availabilityof the capital gain bonds. In Paragraph 6 of the Circular reads asfollows:"With a view to removing the hardship caused to taxpayers, the Central Board of Direct Taxes, in exercise ofpowers conferred by clause © of sub-section (2) ofsection 119 of the Income-Tax Act, 1961, hereby ordersthat the limitation of six months for making theinvestment under Section 54EC of capital gains arisingfrom the transfer of a long-term capital asset, isextended-(i) upto 30th September, 2006 in case of persons wherethe long-term capital asset was transferred between 29thSeptember, 2005 and 31st December, 2005 (both dates inclusive);(ii) upto 31st December, 2006 in case of persons wherethe long-term capital asset was transferred between 1stJanuary, 2006 and 30th June, 2006 (both dates inclusive)." 12. Subsequently, the Central Government also issued anothernotification No.380 of 2006 F.No.142/09/2006-TPL dated 22.12.2006,which reads as follows:" S.O.2146(E) (1) In exercise of the powers conferred bysub-clause (II) of clause (b) of the explanation tosection 54EC of the Income-Tax Act, 1961, the CentralGovernment notifies the bonds for an amount of Rupeesthree thousand five hundred crores to be issued by theRural Electrification Corporation Limited, a companyformed and registered under the Companies Act, 1956 duringthe period from 26.12.2006 to 31.03.2007 as "long-termspecified asset" for the purpose of the said sectionsubject to the following conditions, namely:- https://hcservices.ecourts.gov.in/hcservices/ (i) a person who has made an investment of an amountaggregating more than fifty lakhs rupees in thebonds notified as 'long-term specified asset by theCentral Government for the purposes of section 54ECof the Income-Tax Act, 1961 in the Official Gazettevide notification number S.O.963(E) dated 26.06.2006or notification number S.O.564(E) dated 29.06.2006shall not be allotted any bonds notified as 'long-term specified asset' by this notification. (ii) a person who is not covered by clause (i),shall not be allotted the bonds notified as 'long-term specified asset' by this notification, for anyamount which exceeds the amount of fifty lakhsrupees as reduced by the aggregate of theinvestment, if any, made by him in the bondsnotified as 'long-term specified asset' by theCentral Government for the purposes of section 54ECof the Income-tax Act 1961.In the Official Gazettevide notification number S.O.963(E), dated29.06.2006 or notification number S.O.964(E) dated 29.06.2006." (ii) a person who is not covered by clause (i),shall not be allotted the bonds notified as 'long-term specified asset' by this notification, for anyamount which exceeds the amount of fifty lakhsrupees as reduced by the aggregate of theinvestment, if any, made by him in the bondsnotified as 'long-term specified asset' by theCentral Government for the purposes of section 54ECof the Income-tax Act 1961.In the Official Gazettevide notification number S.O.963(E), dated29.06.2006 or notification number S.O.964(E) dated 29.06.2006." From bare reading it is clear that notification is issued underthe power conferred by sub clause II of clause (b) of Explanation toSection 54EC of the Act. The Central Government further notifies thebonds to be issued by the Rural Electrification Corporation Limitedduring the period from 26th day of September, 2006 to 21st March,2007 for an amount of Rs.3500 crores. The said bonds is considered as'long term capital asset' for the purpose of section. Notificationimposed two conditions."(1) No more bonds will be issued to any person, if hehas already made an investment of an amount aggregatingmore than Rs.50 lakhs in the bonds already notified innotification No.963-E dated 29.06.2006 or 964-E dated29.06.2006.(2) Persons not covered under the first condition, noperson is alloted any bonds notified as 'long termcapital asset' which exceeds 50 lakhs as reduced by theaggregate investment, if any, made by him in the bondsnotified as 'long term specified asset'. " Aggrieved by these conditions, these writ petitions challenging thesaid impugned notification as ultra vires of Section 54EC of the Act,have been filed. 13. In the meanwhile, the section 54 EC was once again amendedby the Finance Act of 2007 with retrospective effect from 01.04.2006,which reads as follows: "Explanation: For the purposes of this section,- (a) "cost", in relation to any long-term specified asset,means the amount invested in such specified asset out of https://hcservices.ecourts.gov.in/hcservices/ Aggrieved by these conditions, these writ petitions challenging thesaid impugned notification as ultra vires of Section 54EC of the Act,have been filed. 13. In the meanwhile, the section 54 EC was once again amendedby the Finance Act of 2007 with retrospective effect from 01.04.2006,which reads as follows: "Explanation: For the purposes of this section,- (a) "cost", in relation to any long-term specified asset,means the amount invested in such specified asset out of https://hcservices.ecourts.gov.in/hcservices/ capital gains received or accruing as a result of thetransfer of the original asset;(b)"long-term specified asset' for making any investmentunder this section during the period commencing from the1st day of April, 2006 and ending with the 31st day ofMarch, 2007 means any bond, redeemable after three yearsand issued on or after the 1st day of April, 2006, but onor before the 31st day of March, 2007,-(i) by the National Highways Authority of Indiaconstituted under Section 3 of the National HighwaysAuthority of India Act, 1988(68 of 1988); or (ii) by the Rural Electrification Corporation Limited, acompany formed and registered under the Companies Act,1956(I of 1956), and notified by the Central Government in theOfficial Gazette for the purposes of this section withsuch conditions (including the condition for providing alimit on the amount of investment by an assessee in suchbond) as it thinks fitProvided that where any bond has been notified beforethe 1st day of April, 2007, subject to the conditionsspecified in the notification, by the Central Governmentin the Official Gazette under the provisions of Clause (b)as they stood immediately before their amendment by theFinance Act, 2007, such bond shall be deemed to be a bondnotified under this clause. ."It is clear from the amendment that "long term specified asset" meansany bond redeemable after three years and issued on or after01.04.2006 but on or before 31.03.2007. Investments have to be madeduring the period commencing from 01.04.2006 and ending on31.03.2007. The bonds are to be issued by the National HighwaysAuthority of India constituted under Section 3 of the NationalHighways Authority of India Act, 1988 or by the RuralElectrification Corporation Limited, a company formed andregistered under the Companies Act, 1956. Further it also enablesthe Central Government to notify in the Official Gazette for thepurpose of this Section with such conditions including the conditionfor providing a limit on the amount of investment by the assessee insuch bonds. It means that the Central Government can notify theconditions as it thinks fit. Proviso has also been inserted afterclause (b) for the purpose of validating the bonds notified before1st April, 2007 under the provisions of clause (b) as they stoodimmediately before the amendment by the Finance Act. The saidamendment takes effect retrospectively from 01.04.2006. By thisamendment the impugned notification dated 22.12.2006 with conditionsissued earlier, is deemed to be a bond notified under this amendedprovision. It is to be noted that another proviso was also insertedafter sub-section (1) of 54 EC of the Act, which reads as follows:-"Provided investment on or after 01.04.2007 in the 'longterm specified asset' by the assessee during the end of thefinancial year does not exceed Rs.50 lakhs. " https://hcservices.ecourts.gov.in/hcservices/ https://hcservices.ecourts.gov.in/hcservices/ By this amendment by Finance Act of 2007, the Central Governmentlimited the investment made on or after 01.04.2007 in the specifiedlong term asset by the assessee during the end of the financial yearto Rs.50 lakhs and the same has come into effect from 01.04.2007.From both the amendments it is clear that the intention of thelegislature is to limit the investment in the 'long term specifiedasset' to Rs.50 lakhs. The present writ petitions have been filedbefore the amendment of the above provisions. It challenges thenotification dated 22.12.2006 on the ground that it is ultra vires ofprovision of Section 54EC of the Act. The power to limit on theamount of investment by an assessee in bonds is now incorporated inthe section itself. By the proviso to Explanation(b), the bondnotified before 01.04.2007 with condition is deemed to be a bondnotified under the amended provision. In view of the subsequentamendment, the prayer in the writ petition becomes infructuous. Inthese circumstances, when the main prayer in these writ petitionsfail, the other arguments advanced with decisions relating to theviolation of Articles 14 and 265 of the Constitution of India neednot be considered. 14. For the foregoing reasons, we are of the view that thechallenge to the impugned notifications dated 22.12.2006, has becomeinfructuous. Accordingly, the writ appeals are liable to bedismissed and the same are dismissed. No costs. We make itclear that we are not expressing any opinion on the other argumentsadvanced by the learned counsel appearing for the appellant.Consequently, connected miscellaneous petitions are also dismissed. Raa Sd/Asst.Registrar /true copy/ Sub Asst.Registrar To 1.The Assistant Commissioner of Income Tax, Company Circle-I(1), Chennai. Company Circle-I(1), Chennai. 2.The Secretary,Union of India, Ministry of Finance, Government of India, North Block, New Delhi. Ministry of Finance, Government of India, North Block, New Delhi. 3.The Central Board of Direct Taxes, Ministry of Finance, North Block, New Delhi. https://hcservices.ecourts.gov.in/hcservices/ 4.The Deputy Commissioner of Income Tax, Media Circle, 121, Nungambakkam High Road, Chennai-600 034. Media Circle, 121, Nungambakkam High Road, Chennai-600 034. + 2 ccs to Mr. Pushya Sitaraman, Sr Standing Counsel for Income TaxDepartment, SR Nos.54719 & 51717Department, SR Nos.54719 & 51717 + 2 ccs to Mr. A. Palaniappan, Advocate SR No. 54734 + 1 cc to Mr. Joseph Prabhakar, Advocate SR No. 54633 + 2 cc to Mr. A. Sathiyaseelan, Advocate SR No. 54830 & 54757 Order in W.P. Nos. 1524 & 11506 of 2007 JSV(CO)SR/3.10.2008