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TMI Blog2015 (1) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - ITA No. 1055/PN/2013 - - - Dated:- 30-12-2014 - Shri G. S. Pannu And Shri R. S. Padvekar,JJ. For the Petitioner : Mr. S. N. P uranik For the Respondent : Mr. A. K. Modi ORDER Per G. S. Pannu, AM The captioned appeal by the assessee is directed against 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-tax Act, 1961 (in short the Act ) pertaining to the assessment year 2007-08. 2. In this appeal, assessee has raised the following Grounds of Appeal :- 1. Commissioner's order U/s 263 is without jurisdiction as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer. I am totally ignorant about Income Tax, my CA probably don't know the appeal can be filed against CIT's Order or may be bonafide was under bonafide impression that Assessing Officer can allow 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 Appeal 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. the letter from CA is enclosed. I am not in any way benefited by delay. It is bonafide case of relying on expert i.e. my Chartered Accountant. I therefore earnestly and humbly request the Hon ble 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 assessee have not been assailed by the Revenue. The reasons advanced have also been averred by way of a duly sworn affidavit dated 130 .04.2013, which is placed on record. Considering the reasons advanced, the delay is condoned. 5. Briefly put, the relevant facts leading up to the present dispute can be summarized as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to enable him to decide as to which single residential house out of 16 residential houses would be eligible for deduction u/s 54F of the Act. He directed the Assessing Officer to determine the admissible deduction u/s 54F of the Act and disallow the excess deduction allowed in the assessment order 22.12.2009 (supra). Against such a direction of the Commissioner, assessee is in appeal before us. 7. The sum and substance of the dispute, in the present case relates to assessee s claim for deduction u/s 54F of the Act with respect to the construction of a new residential house. The stand of the Commissioner is that the new residential building constructed by the assessee consisted of several independent residential flats and therefore the cost incurred on construction of the entire building as such would not be eligible for exemption u/s 54F of the Act. The emphasis of the Commissioner is that section 54F of the Act requires that the investment should be in construction of a residential house , whereas in the case of the assessee, separate 16 residential units have been constructed and thus construction of such multiple units in a single building would not qualify to be regarde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 terms : 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 assessee sells a residentia6l building or lands appurtenant thereto, he can invest capital gains for purchase of residential building to seek exemption of the capital gains tax. Section 13 of the 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 appear to the correct understanding. The expression a residential house should be understood in a sense that building should be of residential in nature and a should not be understood to indicate a singular number. The combined reading of sections 54(1) and 54F of the Income-tax Act discloses that, a non residential building can be sold, the capital gain of which can be invested in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing 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 house. We do not think that the fact that the residential house consist of several 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 necessary implication prohibited. [underlined for emphasis by us] 10. The Hon ble Delhi High Court, after referring with approval an earlier judgement of the Hon ble Karnataka High Court in the case of D. Ananda Basappa (supra) explained that section 54F of the Act 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 as to consist of several units which can, if the need arises be used as independent units as residences the requirement of section 54F of the Act should be taken to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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, 243 ITR 83 (SC) 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 and Karnataka High Courts, 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 ..... 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