2017 (6) TMI 602 - HC - Income Tax

Revision u/s 263 - eligibility to claim under Section 54F - Held that - A perusal of the impugned order would show that the respondent has set aside the order and directed the Assessing Officer to revisit the issue, as he, according to him, had faulted to take into account the fact that the subject flats had been purchased via two separate sale deeds, and had separate electricity meter connections. Accordingly, it appears that the respondent was unnecessarily burdened by the fact that the subject flats were purchased by two separate sale deeds and had separate electricity meter connections. The issue at hand, before the Assessing Officer, in opinion, was whether or not the subject flats form a single residential unit. The size of the flat, or, that they had separate electricity meter connections would not, necessarily, lead to a conclusion that they were two separate residential units. The Assessing Officer was required to look at other attendant circumstances, which included the survey report, in reaching a conclusion in the matter. Notably, what was available on record, was not only the survey report, but also the material provided by the concerned housing society. The survey report, as it appears, did advert to the fact that the subject flats formed a single residential unit. The Revenue has not assailed the survey report before me. Therefore, quite clearly, there was material available to the Assessing Officer to come to a possible view, if not, definite view that the subject flats formed a single residential unit. If, that be the conclusion, then, clearly, the respondent had no jurisdiction to initiate proceedings under Section 263 of the Act and thereupon, proceed to pass the impugned order. In view of the conclusion reached the preliminary objection taken by Ms.Hema Muralikrishnan, that the writ petition ought not to be entertained, would have to be rejected. It would be trite to say that an order passed without jurisdiction can be interfered with in Writ proceedings. The existence of an alternative remedy, as is articulated time and again by Court is not an absolute bar. Superior courts often relegate parties to alternative remedy by way of self-limitation. As a matter of fact the law, as declared by the Supreme Court, now, clearly, sets out that in appropriate cases, the writ court has jurisdiction to entertain a petition, even involving disputed questions of fact, notwithstanding the fact that they arise out of contractual obligations. Thus the impugned order is set aside. - Decided in favour of assessee.

Issues Involved:
1. Assumption of jurisdiction under Section 263 of the Income Tax Act, 1961.
2. Validity of the order dated 26.02.2016 passed by the respondent.
3. Deduction under Section 54F of the Income Tax Act, 1961.
4. Interpretation of "single residential unit" for tax exemption purposes.
5. Alternative remedy and jurisdiction of the writ court.

Issue-wise Detailed Analysis:

1. Assumption of jurisdiction under Section 263 of the Income Tax Act, 1961:
The petitioner challenged the order dated 26.02.2016 passed by the respondent under Section 263 of the Income Tax Act, 1961, arguing that it was contrary to law and beyond the prescribed period of limitation. The petitioner contended that the respondent had no jurisdiction to initiate proceedings under Section 263 since the Assessing Officer's view was a possible view and not erroneous.

2. Validity of the order dated 26.02.2016 passed by the respondent:
The order dated 26.02.2016 set aside the assessment order dated 31.03.2014 for AY 2008-2009. The petitioner argued that this amounted to an abuse of process of law as the subject flats had been converted into a single residential unit with the approval of the housing society, which was confirmed by a surveyor's report and a survey conducted by the Revenue. The Tribunal had not disturbed the finding that the flats formed a single residential unit, and thus, the respondent's order was unsustainable.

3. Deduction under Section 54F of the Income Tax Act, 1961:
The petitioner claimed deduction under Section 54F for the investment made in two adjacent flats, arguing that they formed a single residential unit. The Assessing Officer initially allowed this deduction, but in subsequent proceedings for AY 2009-2010, the deduction was disallowed on the grounds that the flats were separate units. The CIT(A) and the Tribunal, however, upheld the deduction, confirming that the flats were a single unit.

4. Interpretation of "single residential unit" for tax exemption purposes:
The core issue was whether the two adjacent flats purchased by the petitioner could be considered a single residential unit for the purpose of claiming deduction under Section 54F. The Tribunal, in its order dated 08.04.2015, addressed this issue and concluded that the flats formed a single residential unit. The Tribunal's decision was not challenged by the Revenue, and thus, the respondent could not revisit this issue under Section 263.

5. Alternative remedy and jurisdiction of the writ court:
The Revenue argued that the petitioner had an alternative remedy by way of appeal and that the writ petition should not be entertained. However, the court held that since the respondent's order was without jurisdiction, the writ petition was maintainable. The court emphasized that an order passed without jurisdiction can be interfered with in writ proceedings, and relegating the petitioner to an alternative remedy would be unfair.

Conclusion:
The court set aside the impugned order dated 26.02.2016, allowing the writ petition. The court concluded that the respondent had no jurisdiction to initiate proceedings under Section 263, as the Assessing Officer's view was a possible view supported by evidence. The court also rejected the preliminary objection regarding the alternative remedy, stating that the existence of an alternative remedy is not an absolute bar to entertaining a writ petition.

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