Ashok Sudam Dhore, Pune V. ITO, Ward 4(6), Pune

ITA 1055/PUN/2013

• Counselvise Citation: 105524514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Question of law; Condonation of delay
• Section: 143(3); 54F; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1055/PN/2013 (ASSESSMENT YEAR : 2007-08) ASHOK SUDAM DHORE, NEAR MARUTI MANDIR, OLD SANGVI, SR. NO.289/2, SANGVI, PUNE 411 027. PAN : ALWPD5227B . APPELLANT VS. INCOME TAX OFFICER, WARD 4 (6), PUNE. . RESPONDENT ASSESSEE BY : MR. S. N. PURANIK DEPARTMENT BY : MR. A. K. MODI DATE OF HEARING : 19-11-2014 DATE OF PRONOUNCEMENT : 30-12-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX-II, PUNE (IN SHORT THE COMMISSIONER) DATED 29.03.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 22.12.2009 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-T AX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL :- 1. COMMISSIONER'S ORDER U/S 263 IS WITHOUT JURISDI CTION AS HE HIMSELF AGREES THAT ISSUE IS DEBATABLE, (PARA 7.3) AND DISCUSSED VARIOUS CASES. APPELLANT PRAYS TO HOLD THAT ORDER U/S 263 IS BAD IN LAW. 2. WITHOUT PREJUDICE, APPELLANT PRAYS AND SUBMITS T HAT WHOLE OF THE LAND SOLD DOES NOT BELONG TO HIM BUT OF THREE B ROTHERS AND PARENTS OF WHICH PARTITION HAS BEEN AFFECTED IN 1993. THEREFOR E THE ASSESSMENT OF CAPITAL GAIN MAY BE EXCLUDED FROM APPELLANTS RETURN . 3. COMMISSIONER OF INCOME TAX HAS ERRED BOTH IN LAW AND ON FACTS, IN DIRECTING THE ASSESSING OFFICER TO RESTRI CT THE DEDUCTION/ EXEMPTION U/S 54F OF THE ACT. APPELLANT PRAYS THAT HE IS ELIG IBLE FOR DEDUCTION FOR WHOLE OF THE AMOUNT AS CLAIMED. ITA NO.1055/PN/2013 4. COMMISSIONER OF INCOME TAX HAS ERRED, IN OBSERVI NG THAT (PARA 7.1) 'ASSESSEE HAS CONSTRUCTED NOT JUST ONE R ESIDENTIAL HOUSE BUT 16 RESIDENTIAL HOUSES' AND FAILED TO CONSIDER THAT STI LL IT IS AN ONE HOUSE. 5. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 6. APPELLANT PRAYS FOR CONDONATION OF DELAY IN FILI NG APPEAL. 7. APPELLANT PRAYS TO ADD, ALTER, AMEND, MODIFY THE GROUND/S AND / OR WITHDRAW THE SAME DURING THE APPELLATE PRO CEEDINGS. 3. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE F OR THE ASSESSEE SUBMITTED THAT THE DELAY OF 11 MONTHS AND 8 DAYS IN FILING OF THE PRESENT APPEAL BE CONDONED AS THE DELAY WAS UNINTENTIONAL A ND FOR BONAFIDE REASONS. THE APPELLANT HAS FILED AN APPLICATION SEEKING COND ONATION OF DELAY IN FILING THE APPEAL, WHOSE RELEVANT PORTION READS AS UNDER : - I AM EDUCATED ONLY UP TO CLASS 8 TH IN MARATHI MEDIUM, AND DO NOT HAVE KNOWLEDGE OF INCOME TAX ACT 1961. MY INCOME FR OM SALARY IN PATHPEDHI IS TOO LOW TO AGREE TO THINK OF INCOME TAX ETC. HOW EVER, WHEN OUR PLOT OF LAND AT LOHGAON WAS SOLD TO LUNKAD INFRASTRUCTURE, I WAS TOLD THAT IT WILL ATTRACT INCOME TAX ON THE SAME. I WAS TOLD BY PURCHASER OF LAND THAT IF THE HOUSE PROPERTY IS CONSTRUCTED FROM SALE PROCEEDS WITHIN T HREE YEARS, NO TAX IS PAYABLE ON GAIN USED FOR CONSTRICTION HOUSE. THEN I APPROACHED CA WHO ALSO CONFIRMED. IN FACT PLOT OF LAND WAS SOLD WITH A VIEW TO HAVE H OUSE WHEREIN MY FAMILY, FATHER, BROTHERS ETC. CAN LIVE TOGETHER. ACCORDINGLY HOUSE IS CONSTRUCTED AND MY RETURN OF I NCOME ACCORDINGLY FILED WAS ACCEPTED BY THE INCOME TAX OFFICER, U/S 1 43(3). HOWEVER COMMISSIONER PROPOSED REVISION FOR RE-VERIFICATION OF THE LEGAL ASPECTS. MY CA ATTENDED. I WAS TOLD THAT COMMISSIONER HAS SENT BACK ORDER TO ASSESSING OFFICER. I AM TOTALLY IGNORANT ABOUT INCOME TAX, MY CA PROBA BLY DON'T KNOW THE APPEAL CAN BE FILED AGAINST CIT'S ORDER OR MAY BE B ONAFIDE WAS UNDER BONAFIDE IMPRESSION THAT ASSESSING OFFICER CAN ALLO W THE CLAIM. APPEAL COULD HAVE BEEN FILED AGAINST ORDER OF CIT U /S 263, WAS BROUGHT TO MY AND MY CA'S NOTICE WHILE FILING APPEA L AGAINST ASSESSING OFFICER'S ORDER TO CIT(A). THERE WAS FURTHER DELAY TO RECEIVE LETTER FROM CA AS HE WAS OUT OF STATION FOR BANK BRANCH AUDITS ETC. T HE LETTER FROM CA IS ENCLOSED. I AM NOT IN ANY WAY BENEFITED BY DELAY. IT IS BONA FIDE CASE OF RELYING ON EXPERT I.E. MY CHARTERED ACCOUNTANT. I THEREFORE EARNESTLY AND HUMBLY REQUEST THE HONBL E BENCH TO KINDLY CONDON THE DELAY, AND ADMIT THE APPEAL FOR DECIDING ON MERITS FOR WHICH I WILL, ALWAYS, REMAIN OBLIGED. 4. THE BONAFIDES OF THE REASONS ADVANCED BY THE ASS ESSEE HAVE NOT BEEN ASSAILED BY THE REVENUE. THE REASONS ADVANCED HAVE ALSO BEEN AVERRED BY ITA NO.1055/PN/2013 WAY OF A DULY SWORN AFFIDAVIT DATED 10.04.2013, WHI CH IS PLACED ON RECORD. CONSIDERING THE REASONS ADVANCED, THE DELAY IS COND ONED. 5. BRIEFLY PUT, THE RELEVANT FACTS LEADING UP TO TH E PRESENT DISPUTE CAN BE SUMMARIZED AS FOLLOWS. THE ASSESSEE IS AN INDIVIDU AL WHO FILED HIS RETURN OF INCOME FROM ASSESSMENT YEAR 2007-08 ON 30.03.2009 D ECLARING TOTAL INCOME OF RS.1,67,590/-. THE RETURN OF INCOME, INTER-ALIA , INCLUDED A LONG TERM CAPITAL GAIN ON SALE OF LAND WHICH AMOUNTED TO RS.67,99,890 /-. AGAINST SUCH LONG TERM CAPITAL GAIN, ASSESSEE CLAIMED A DEDUCTION OF RS.67,29,218/- IN TERMS OF SECTION 54F OF THE ACT ON ACCOUNT OF CONSTRUCTION O F A NEW RESIDENTIAL HOUSE. THE BALANCE AMOUNT OF LONG TERM CAPITAL GAIN OF RS. 70,672/- WAS OFFERED FOR TAX AS A PART OF THE RETURNED INCOME OF RS.1,67,589 /-. THE RETURN OF INCOME SO FILED BY THE ASSESSEE WAS SUBJECT TO A SCRUTINY ASS ESSMENT BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT VIDE ORDER DATED 22.1 2.2009. IN THE SAID ASSESSMENT, THE TOTAL INCOME WAS ASSESSED AT THE RE TURNED INCOME OF RS.1,67,590/-. 6. SUBSEQUENTLY, THE COMMISSIONER INVOKED HIS REVIS IONARY JURISDICTION U/S 263 OF THE ACT AND AS PER HIS EXAMINATION OF RECORD OF PROCEEDINGS, THE ASSESSING OFFICER WRONGLY ALLOWED ASSESSEES CLAIM FOR EXEMPTION U/S 54F OF THE ACT. AS PER THE COMMISSIONER, ASSESSEES CLAIM FOR DEDUCTION U/S 54F OF THE ACT WAS WRONGLY ALLOWED BECAUSE THE HOUSE PROPE RTY CONSTRUCTED BY THE ASSESSEE ACTUALLY CONSISTED OF 4 FLOORS EACH HAVING 4 APARTMENTS (2BHK) OTHER THAN THE GROUND FLOOR. THUS, AS PER THE COMM ISSIONER, ASSESSEE HAD INDEED CONSTRUCTED NOT ONE RESIDENTIAL HOUSE BUT 16 RESIDENTIAL HOUSES. AS PER THE COMMISSIONER, THE REQUIREMENT OF SECTION 54 F OF THE ACT WAS THAT EXEMPTION SHALL BE GRANTED IF ASSESSEE CONSTRUCTS WITHIN THE PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET, ANY RESIDENTIAL HOUSE . ACCORDING TO THE COMMISSIONER, IN THIS CASE, ASSESS EE HAD CONSTRUCTED MORE THAN ONE RESIDENTIAL HOUSE IN THE FORM OF 16 INDEPE NDENT RESIDENTIAL HOUSES ITA NO.1055/PN/2013 AND THEREFORE THE CLAIM WAS WRONGLY ALLOWED BY THE ASSESSING OFFICER. THEREFORE, AFTER ALLOWING THE ASSESSEE AN OPPORTUNI TY OF BEING HEARD HE HELD THAT THE ASSESSING OFFICER GROSSLY ERRED IN ALLOWING TO THE ASSESSEE DEDUCTIO N U/S 54F AS HAD BEEN CLAIMED IN THE RETURN OF INCOME . AS PER THE COMMISSIONER, THE ABOVE ERROR ON THE PART OF THE AS SESSING OFFICER HAD RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDI CIAL TO THE INTERESTS OF THE REVENUE. THEREFORE, HE SET-ASIDE THE ASSESSMEN T ORDER AND RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER IN ORDER TO ENABLE HIM TO DECIDE AS TO WHICH SINGLE RESIDENTIAL HOUSE OUT OF 16 RESI DENTIAL HOUSES WOULD BE ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. HE DIRE CTED THE ASSESSING OFFICER TO DETERMINE THE ADMISSIBLE DEDUCTION U/S 54F OF THE A CT AND DISALLOW THE EXCESS DEDUCTION ALLOWED IN THE ASSESSMENT ORDER 22.12.200 9 (SUPRA). AGAINST SUCH A DIRECTION OF THE COMMISSIONER, ASSESSEE IS IN APP EAL BEFORE US. 7. THE SUM AND SUBSTANCE OF THE DISPUTE, IN THE PRE SENT CASE RELATES TO ASSESSEES CLAIM FOR DEDUCTION U/S 54F OF THE ACT W ITH RESPECT TO THE CONSTRUCTION OF A NEW RESIDENTIAL HOUSE. THE STAND OF THE COMMISSIONER IS THAT THE NEW RESIDENTIAL BUILDING CONSTRUCTED BY TH E ASSESSEE CONSISTED OF SEVERAL INDEPENDENT RESIDENTIAL FLATS AND THEREFORE THE COST INCURRED ON CONSTRUCTION OF THE ENTIRE BUILDING AS SUCH WOULD N OT BE ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. THE EMPHASIS OF THE COMMISSION ER IS THAT SECTION 54F OF THE ACT REQUIRES THAT THE INVESTMENT SHOULD BE IN C ONSTRUCTION OF A RESIDENTIAL HOUSE, WHEREAS IN THE CASE OF THE ASSESSEE, SEPARA TE 16 RESIDENTIAL UNITS HAVE BEEN CONSTRUCTED AND THUS CONSTRUCTION OF SUCH MULTIPLE UNITS IN A SINGLE BUILDING WOULD NOT QUALIFY TO BE REGARDED AS A RES IDENTIAL HOUSE WITHIN THE MEANING OF SECTION 54F OF THE ACT. 8. AN IDENTICAL CONTROVERSY HAS BEEN CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE SHRI NARSING GOPAL PATIL AND O THERS VIDE ITA NO.1544/PN/2012 AND OTHERS DATED 31.05.2013. THE T RIBUNAL CONSIDERED THE ITA NO.1055/PN/2013 JUDGEMENTS OF THE (I) HONBLE DELHI HIGH COURT IN T HE CASE OF CIT VS. GITA DUGGAL, (2013) 257 CTR 208 (DELHI); AND, (II) HONB LE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. D. ANANDA BASAPPA, (2009) 309 I TR 329 (KAR.), WHICH WERE DIRECTLY ON THE POINT. FOLLOWING THE AFORESAI D TWO JUDGEMENTS, IT WAS HELD THAT THE EXPRESSION A RESIDENTIAL HOUSE APPEARING IN SECTION 54F(1) OF THE ACT IS NOT TO BE UNDERSTOOD TO MEAN THAT ASSESSEE IS TO ACQUIRE A SINGLE RESIDENTIAL UNIT. IN OUR VIEW, THE AFORESAID DECISION OF THE T RIBUNAL IN THE CASE OF SHRI NARSING GOPAL PATIL AND OTHERS (SUPRA) WHICH HAS BE EN RELIED UPON BY THE ASSESSEE BEFORE US, CLEARLY COVERS THE CONTROVERSY IN FAVOUR OF THE ASSESSEE. 9. NEVERTHELESS, WE MAY REFER TO THE FOLLOWING DISC USSION IN THE ORDER OF THE HONBLE DELHI HIGH COURT THE IN CASE OF GITA DU GGAL (SUPRA), WHICH HAS BEEN RENDERED IN THE CONTEXT OF SECTION 54/54F OF T HE ACT :- WHAT IN EFFECT THE ASSESSING OFFICER HAD DONE WAS TO REJECT THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 54/54F OF THE ACT IN RESPECT OF THE HOUSE/UNITS IN THE FIRST AND SECOND FLOORS HOLD ING THAT THEY WERE SEPARATE AND INDEPENDENT RESIDENTIAL UNITS HAVING SEPARATE E NTRANCES AND CANNOT BE CONSIDERED AS ONE UNIT TO ENABLE THE ASSESSEE TO CL AIM THE DEDUCTION. THIS WAS DISAPPROVED BY THE CIT(APPEALS) ON THE BASIS OF THE JUDGEMENT OF THE KARNATAKA HIGH COURT (SUPRA) AND HIS DECISION WAS A PPROVED BY THE TRIBUNAL. THE TRIBUNAL EXPRESSED THE VIEW THAT THE WORDS A R ESIDENTIAL HOUSE APPEARING IN SECTION 54/54F OF THE ACT CANNOT BE CO NSTRUED TO MEAN A SINGLE RESIDENTIAL HOUSE SINCE UNDER SECTION 13(2) OF THE GENERAL CLAUSES ACT, A SINGLE INCLUDES PLURAL. IT IS THE CORRECTNESS OF THE ABOVE THAT IS QUESTION ED BY THE REVENUE AND IT IS CONTENDED THAT THE INTERPRETATION PLACED BY T HE TRIBUNAL GIVES RISE TO A SUBSTANTIAL QUESTION OF LAW. THE ASSESSEE STRONGLY RELIES UPON THE JUDGEMENT OF THE KARNATAKA HIGH COURT (SUPRA) WHICH, IT IS ST ATED, HAS BECOME FINAL, THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE SAID DECISION HAVING BEEN DISMISSED BY THE SUPREME COURT AS REPORTED IN THE ANNUAL DIGEST OF TAXMAN PUBLICATION. THE JUDGEMENT OF THE KARNATAKA HIGH COURT SUPPORTS THE CONTENTION OF THE ASSESSEE. AN IDENTICAL CONTENTION RAISED BY THE REVENUE BEFORE THAT COURTS WAS REJECTED IN THE FOLLOWING TE RMS : A PLAIN READING OF THE PROVISION OF SECTION 54(1) OF THE INCOME-TAX ACT DISCLOSES THAT WHEN AN INDIVIDUAL-ASSESSEE OR HINDU UNDIVIDED FAMILY- ITA NO.1055/PN/2013 ASSESSEE SELLS A RESIDENTIAL BUILDING OR LANDS APPU RTENANT THERETO, HE CAN INVEST CAPITAL GAINS FOR PURCHASE OF RESIDENTIA L BUILDING TO SEEK EXEMPTION OF THE CAPITAL GAINS TAX. SECTION 13 OF T HE GENERAL CLAUSES ACT DECLARES THAT WHENEVER THE SINGULAR IS USED FOR A WORD, IT IS PERMISSIBLE TO INCLUDE THE PLURAL. THE CONTENTION OF THE REVENUE IS THAT THE PHRASE A RESIDENTIAL HOUSE WOULD MEAN ONE RESIDENTIAL HOUSE AND IT DOES NOT AP PEAR TO THE CORRECT UNDERSTANDING. THE EXPRESSION A RESIDENTI AL HOUSE SHOULD BE UNDERSTOOD IN A SENSE THAT BUILDING SHOULD BE OF RE SIDENTIAL IN NATURE AND A SHOULD NOT BE UNDERSTOOD TO INDICATE A SING ULAR NUMBER. THE COMBINED READING OF SECTIONS 54(1) AND 54F OF THE I NCOME-TAX ACT DISCLOSES THAT, A NON RESIDENTIAL BUILDING CAN BE S OLD, THE CAPITAL GAIN OF WHICH CAN BE INVESTED IN A RESIDENTIAL BUILDING TO SEEK EXEMPTION OF CAPITAL GAIN TAX. HOWEVER, THE PROVISO TO SECTION 5 4 OF THE INCOME-TAX ACT, LAYS DOWN THAT IF THE ASSESSEE HAS ALREADY ONE RESIDENTIAL BUILDING, HE IS NOT ENTITLED TO EXEMPTION OF CAPITA L GAINS TAX, WHEN HE INVESTS THE CAPITAL GAIN IN PURCHASE OF ADDITIONAL RESIDENTIAL BUILDING. THIS JUDGEMENT WAS FOLLOWED BY THE SAME HIGH COURT IN THE DECISION IN CIT V. SMT. K. G. RUKMINIAMMA [2010] 196 TAXMAN/[2010] 8 T AXMANN.COM 121 (KAR.). THERE COULD ALSO BE ANOTHER ANGLE. SECTION 54/54F U SES THE EXPRESSION A RESIDENTIAL HOUSE. THE EXPRESSION US ED IS NOT A RESIDENTIAL UNIT. THIS IS A NEW CONCEPT INTRODUCED BY THE ASSE SSING OFFICER INTO THE SECTION. SECTION 54/54F REQUIRES THE ASSESSEE TO AC QUIRE A RESIDENTIAL HOUSE AND SO LONG AS THE ASSESSEE ACQUIRES A BUILDING, WH ICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVERAL UNITS WHICH CAN, IF THE NEED ARISES, BE CONVENIENTLY AND INDEPENDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTI ON SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN THESE SECTIONS WHICH REQUIRE TH E RESIDENTIAL HOUSE TO BE CONSTRUCTED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE FOR THE RESIDENTIA L USE AND NOT FOR COMMERCIAL USE. IF THERE IS NOTHING IN THE SECTION WHICH REQUI RES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SEEMS TO US THAT THE INCOME TAX AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORDING TO HIS PLANS AND REQUIREMENTS. MOST OF THE HOUSES ARE CONSTRUCTED ACCORDING TO NEEDS AND REQUIREMENTS AND EVEN COMPULSIONS. FOR INSTANCE, A PERSON MAY CONSTRUCT A RESIDENTIAL HOUS E IN SUCH A MANNER THAT HE MAY USE THE GROUND FLOOR FOR HIS OWN RESIDENCE AND LET OUT THE FIRST FLOOR HAVING AN INDEPENDENT ENTRY SO THAT HIS INCOME IS A UGMENTED. IT IS QUITE COMMON TO FIND SUCH ARRANGEMENTS, PARTICULARLY POST -REQUIREMENT. ONE MAY BUILD A HOUSE CONSISTING OF FOUR BEDROOMS (ALL IN T HE SAME OR DIFFERENT FLOORS) ITA NO.1055/PN/2013 IN SUCH A MANNER THAT AN INDEPENDENT RESIDENTIAL UN IT CONSISTING OF TWO OR THREE BEDROOMS MAY BE CARVED OUT WITH AN INDEPENDEN T ENTRANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARRANGE FOR HIS CHILDRE N AND FAMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMENT WHICH CAN B E MUTUALLY SUPPORTIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH A MANNER THAT I N CASE OF A FUTURE NEED HE MAY BE ABLE TO DISPOSE OF A PART THEREOF AS AN INDE PENDENT HOUSE. THERE MAY BE SEVERAL SUCH CONSIDERATIONS FOR A PERSON WHILE C ONSTRUCTING A RESIDENTIAL HOUSE. WE ARE THEREFORE, UNABLE TO SEE HOW OR WHY THE PHYSICAL STRUCTURING OF THE NEW RESIDENTIAL HOUSE, WHETHER IT IS LATERAL OR VERTICAL, SHOULD COME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HO USE. WE DO NOT THINK THAT THE FACT THAT THE RESIDENTIAL HOUSE CONSIST OF SEVE RAL INDEPENDENT UNITS CAN BE PERMITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION UNDER SECTION 54/54F. IT IS NEITHER EXPRESSLY NOR BY NECE SSARY IMPLICATION PROHIBITED. [UNDERLINED FOR EMPHASIS BY US] 10. THE HONBLE DELHI HIGH COURT, AFTER REFERRING W ITH APPROVAL AN EARLIER JUDGEMENT OF THE HONBLE KARNATAKA HIGH COURT IN TH E CASE OF D. ANANDA BASAPPA (SUPRA) EXPLAINED THAT SECTION 54F OF THE A CT REQUIRES THE ASSESSEE TO ACQUIRE A RESIDENTIAL HOUSE AND SO LONG AS THE ASSESSEE ACQUIRES A BUILDING, WHICH MAY BE CONSTRUCTED IN A MANNER SO A S TO CONSIST OF SEVERAL UNITS WHICH CAN, IF THE NEED ARISES BE USED AS INDE PENDENT UNITS AS RESIDENCES THE REQUIREMENT OF SECTION 54F OF THE ACT SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THE AFORESAID DECISIONS OF THE HONBLE DELHI HIGH COURT AS WELL AS THE HONBLE KARNATAKA HIGH COURT SUPPORT THE STAND OF THE ASSESSEE IN THE PRESENT CASE. 11. AT THIS STAGE, THE DISCUSSION IN PARA 6 OF THE IMPUGNED ORDER REVEALS THAT ASSESSEE HAD RELIED ON THE JUDGEMENT OF THE HO NBLE KARNATAKA HIGH COURT AND OTHER DECISIONS BEFORE THE COMMISSIONER. THE COMMISSIONER, HOWEVER, HAS NOT FOLLOWED THE JUDGEMENT OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF D. ANANDA BASAPPA (SUPRA) ON THE GRO UND THAT THERE ARE CONTRARY DECISIONS. IN THIS CONTEXT, HE HAS REFERR ED TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SUSHILA M. JHAVERI (2007) ITA NO.1055/PN/2013 107 ITD 327. THE SAID DECISION HAS BEEN RENDERED I N A COMPLETELY DIFFERENT CONTEXT. THE TRIBUNAL WAS CONSIDERING EXEMPTION UN DER SECTIONS 54 AND 54F OF THE ACT, WHERE ASSESSEE HAD REINVESTED TOTAL SAL E CONSIDERATION IN PURCHASING TWO INDEPENDENTLY LOCATED RESIDENTIAL FL ATS. IT WAS HELD THAT ASSESSEE WAS ENTITLED TO EXEMPTION IN RESPECT OF IN VESTMENT IN ONLY ONE FLAT. THE PRESENT CASE STANDS ON A COMPLETELY DIFFERENT F OOTING INASMUCH AS THE RESIDENTIAL BUILDING CONSTRUCTED BY THE ASSESSEE IS AT A SINGLE LOCATION AND NOT AT INDEPENDENT LOCATIONS. SIMILARLY, THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI KRISHNA GOPAL NAGPAL V S. DCIT, 82 TTJ (PUNE) 481 REFERRED BY THE COMMISSIONER IS ALSO IN A DIFFE RENT CONTEXT. ON THE OTHER HAND, THE JUDGEMENTS OF THE HONBLE DELHI AND THE K ARNATAKA HIGH COURTS ARE DIRECTLY ON THE POINT, AND NO CONTRARY DECISION OF ANY HIGH COURT HAS BEEN BROUGHT-OUT BY THE REVENUE. EVEN IF IT IS TO BE TA KEN THAT THERE ARE CONTRARY DECISIONS, AS ASSERTED BY THE COMMISSIONER, IT ONLY GOES TO SHOW THAT THE ISSUE SOUGHT TO BE RAISED BY THE COMMISSIONER IN TH E COURSE OF HIS EXERCISE OF JURISDICTION U/S 263 OF THE ACT IS A DEBATABLE ISSU E ON WHICH TWO VIEWS WERE POSSIBLE. OSTENSIBLY, AS NOTED BY US EARLIER, THE JUDGEMENTS OF THE HONBLE DELHI AND THE KARNATAKA HIGH COURTS SUPPORT THE STA ND OF THE ASSESSEE WITH REGARD TO THE CLAIM OF EXEMPTION U/S 54F OF THE ACT , WHICH STOOD ALLOWED AT THE ASSESSMENT STAGE. THE MOOT POINT IS AS TO WHETHER IN SUCH A SITUATION WHERE TWO VIEWS WERE POSSIBLE DOES INVOKING OF SECTION 26 3 OF THE ACT BY THE COMMISSIONER IS JUSTIFIED. 12. IT IS A SETTLED LAW THAT AN ISSUE ON WHICH TWO VIEWS ARE POSSIBLE, AND THE ASSESSING OFFICER HAS FOLLOWED ONE OF THEM, IT CANN OT BE A SUBJECT-MATTER OF CONSIDERATION BY THE COMMISSIONER WHILE EXERCISING HIS REVISIONARY JURISDICTION U/S 263 OF THE ACT. THE HONBLE SUPREME COURT IN T HE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC) HAS AL SO APPROVED THAT WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TA KEN ONE OF THE VIEWS WITH WHICH THE COMMISSIONER DOES NOT AGREE, SUCH ORDER O F THE ASSESSING OFFICER ITA NO.1055/PN/2013 CANNOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO TH E INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS F OUND TO BE UNSUSTAINABLE IN LAW. IN THE PRESENT CASE, HAVING REGARD TO THE JUD GEMENTS OF THE HONBLE DELHI AND KARNATAKA HIGH COURTS, IT CANNOT BE SAID THAT T HE VIEW TAKEN BY THE ASSESSING OFFICER OF ALLOWING EXEMPTION U/S 54F OF THE ACT UNDER THE GIVEN FACTS AND CIRCUMSTANCES IS UNSUSTAINABLE IN LAW. T HEREFORE, IN OUR VIEW, THE COMMISSIONER WAS DENUDED FROM EXERCISING HIS REVISI ONARY JURISDICTION U/S 263 OF THE ACT HAVING REGARD TO THE FACTS AND CIRCU MSTANCES OF THE PRESENT CASE. RESULTANTLY, THE IMPUGNED ORDER OF THE COMMI SSIONER IS SET-ASIDE AND THE ASSESSMENT ORDER DATED 22.12.2009 (SUPRA) QUA T HE ALLOWANCE OF EXEMPTION U/S 54F OF THE ACT IS HEREBY RESTORED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH DECEMBER, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-II, PUNE; 4) THE DR B BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE