2015 (1) TMI 1056 - AT - Income Tax

Tribunal restores Assessing Officer's order granting exemption for construction of multiple units

The Tribunal set aside the Commissioner's order under Section 263, restored the Assessing Officer's original order allowing the exemption under Section ... Revision u/s 263 - jurisdiction of CIT(A) challenged - claim of exemption u/s 54F allowed by AO - debatable issue - Held that:- It is a settled law that an issue on which two views are possible, and the Assessing Officer has followed one of them, it cannot be a subject-matter of consideration by the Commissioner while exercising his revisionary jurisdiction u/s 263 of the Act. The Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, (2000 (2) TMI 10 - SUPREME Court) has also approved that where two views are possible and the Assessing Officer has taken one of the views with which the Commissioner does not agree, such order of the Assessing Officer cannot be treated as erroneous or pre9ju dicial to the interests of the Revenue unless the view taken by the Assessing Officer is found to be unsustainable in law. In the present case, having regard to the judgements of the Hon’ble Delhi [2013 (3) TMI 101 - DELHI HIGH COURT] and Karnataka High Courts [2008 (10) TMI 99 - KARNATAKA HIGH COURT], it cannot be said that the 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. Therefore, in our view, the Commissioner was denuded from exercising his revisionary jurisdiction u/s 263 of the Act having regard to the facts and circumstances of the present case. Resultantly, the impugned order of the Commissioner is set-aside and the assessment order dated 22.12.2009 (supra) qua the allowance of exemption u/s 54F of the Act is hereby restored. - Decided in favour of assessee. Issues Involved:1. Jurisdiction of the Commissioner under Section 263 of the Income-tax Act, 1961.2. Assessment of capital gains from the sale of land.3. Eligibility for deduction under Section 54F of the Income-tax Act.4. Definition and interpretation of 'a residential house' under Section 54F.5. Condonation of delay in filing the appeal.Issue-wise Detailed Analysis:1. Jurisdiction of the Commissioner under Section 263:The assessee argued that the Commissioner's order under Section 263 was without jurisdiction as the issue was debatable. The Tribunal noted that an issue on which two views are possible cannot be a subject of revision under Section 263. The Supreme Court's decision in Malabar Industrial Co. Ltd. vs. CIT was cited, which states that if the Assessing Officer has taken one of the possible views, the Commissioner cannot treat the order as erroneous or prejudicial to the interests of the Revenue. The Tribunal concluded that the Commissioner was not justified in invoking Section 263 since the view taken by the Assessing Officer was sustainable in law.2. Assessment of Capital Gains:The assessee claimed that the land sold did not solely belong to him but was jointly owned by his family, and hence, the capital gains should not be assessed in his return. This issue was part of the grounds of appeal but was not the primary focus of the Tribunal's detailed analysis.3. Eligibility for Deduction under Section 54F:The primary dispute was whether the assessee's construction of multiple residential units within a single building qualified for deduction under Section 54F. The Commissioner contended that the construction of 16 residential units did not qualify as 'a residential house' under Section 54F. The Tribunal, however, referred to precedents from the Delhi and Karnataka High Courts, which held that the term 'a residential house' could include multiple units within a single building.4. Definition and Interpretation of 'a Residential House':The Tribunal emphasized that the term 'a residential house' should not be narrowly interpreted to mean a single unit. Citing the Delhi High Court in CIT vs. Gita Duggal and the Karnataka High Court in CIT vs. D. Ananda Basappa, the Tribunal noted that a building consisting of multiple units could still be considered 'a residential house' for the purposes of Section 54F. The Tribunal concluded that the assessee's construction of 16 residential units within a single building met the requirements of Section 54F.5. Condonation of Delay in Filing the Appeal:The assessee sought condonation for the delay of 11 months and 8 days in filing the appeal, citing a lack of knowledge about income tax laws and reliance on his Chartered Accountant. The Tribunal found the reasons for the delay to be bona fide and unassailed by the Revenue. Consequently, the delay was condoned.Conclusion:The Tribunal set aside the Commissioner's order under Section 263, restored the Assessing Officer's original order allowing the exemption under Section 54F, and allowed the assessee's appeal. The Tribunal held that the construction of multiple residential units within a single building qualifies for deduction under Section 54F, and the Commissioner was not justified in revising the Assessing Officer's order on this issue. The appeal was allowed, and the order was pronounced in open court on December 30, 2014.