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TMI Blog2017 (6) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... cer 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. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioner, evidently, in order to avail of the benefit of Section 54F of the Act, took a decision to invest the amount received, in two residential flats located in the Olumpus building situate in Altamount Road, Cumbulla Hill, Mumbai (hereafter collectively referred to as "flats"). These were flats bearing No.607 and 612. The flats were, admittedly, adjacent to each other, in as much as they were located cheek to jowl. 2.4. In so far as flat No.612 was concerned, since, the original owner of the flat had passed away and the rights in the flat had devolved on the legal heir of the original owner by way of transmission under Section 29 of the Maharashtra Co-operative Societies Act, 1960 (in short "the 1960 Societies Act"), the sale could not be effectuated for a period of one year. 2.5. Having regard to this legal provision, a request was made to the housing society, in which, the said flat was located for issuance of a No Objection Certificate (in short "NOC"). Consequently, an NOC qua flat No.612, was issued on 11.04.2006. 2.6. The petitioner, thus, got executed two separate sale deeds with respect to the subject flats. In so far as flat No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng observations, and sustained the claim made by the petitioner: "..... With regard to the merits of the case the assessee vide letter dated 09.07.2013 submitted that the assessee had sold the shares of the Royal Images Direct Marketing Private Limited shares on 05.05.2007. Annual Return filed by the said company to the ROC reflecting the above fact has already been submitted at the time of assessment. A copy of the same has been attached with this letter for your reference. This being the case for purchase of the flats by the assessee on 23.05.2006 and 16.01.2007 is well within the limits of one year, as prescribed by the sub section Section (sic) 54F of the Income Tax Act, 1961. For the above reasons, the deduction allowed under Section 54F cannot be withdrawn. The details provided by the assessee were verified and the assessee's claim is found to be in order. ....." 4. While the aforesaid proceedings were on, the petitioner in the interregnum, filed his return for the AY 2009-2010, whereby, he declared the sale of the second tranche of shareholding in RIDM, for a total consideration of ₹ 11,24,14,809/-. 4.1. To be noted, it is the petitioner's case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.ITA 1899/Mds/2013, pertaining to AY 2008-2009 and, for statistical purposes, partly allowed the appeal, bearing No.ITA 1900/Mds/2013, pertaining to AY 2009-2010. 5.2. Interestingly, in the said order, the Tribunal, broadly, adverted to three aspects, in so far as the claim of the petitioner under Section 54F of the Act was concerned. The first aspect related to the investment made by the petitioner in the flats. The second aspect, which the Tribunal dealt with was the investment made by the petitioner in the sum of ₹ 6.10 Crores in the Capital Gains Account, maintained with the Bank of India. The third aspect, which, the Tribunal referred to in the said order, was the sum of ₹ 40 lakhs paid by the petitioner for purchasing an immovably property, in Alibaug, in District, Rajgad, Maharashtra (in short Alibaug property). 5.3. A perusal of the observations made in the Tribunal's order would show that the Assessee had constructed a residential house on the aforementioned Alibaug property in and about July 2011, which was funded from the investment made in the Capital Gains Account. The petitioner appears to have claimed exemption under Section 54 of the Act, to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed as pieces and parcels of agricultural land. 6. I must indicate herein that there has been much debate on the aspect as to whether or not the Tribunal had reopened the issue with regard to the flats, in which, the petitioner had made investment and claimed deduction under Section 54F of the Act. In other words, the debate centered around the point as to whether the Tribunal had closed the issue by sustaining the stand of the petitioner that two adjoining flats formed a single residential unit, and not two separate units, as contended by the Revenue. 6.1. The Revenue did not rest with the outcome of the Tribunal proceedings and accordingly, issued a Show Cause Notice dated 15.12.2015 (in short "SCN") to the petitioner under Section 263 of the Act. This SCN raised a red flag with regard to the petitioner's claim for deduction under Section 54F of the Act to the tune of ₹ 4,88,78,900/, which was the amount invested by the petitioner in the aforementioned flats. 6.2. The petitioner filed a response to the same. The respondent, after considering the reply of the petitioner, proceeded to pass the impugned order on 26.02.2016, whereby, he set aside the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was a possible view, and therefore, the proceedings taken out under Section 263 of the Act would not be sustainable, as it could not be held that the view taken by him was erroneous. In other words, according to the learned counsel, unless, the twin conditions provided in Section 263 of the Act, are fulfilled; which are : that the order passed by the Assessing Officer is, both erroneous and prejudicial to the interest of the Revenue, no order can be passed under the said provision. 7.1. In support of his submissions, learned counsel for the petitioner relied upon the following judgements : (i).Malabar Industrial Co. Ltd. V. CIT, [2000] 243 ITR 83 (SC); (ii).CIT V. Max India Ltd., [2007] 295 ITR 282 (SC); (iii).CIT V. Mepco Industries Ltd., [2007] 294 ITR 121 (Mad); (iv).CIT V. Sak Soft Ltd., [2008] ITR 63 (Mad); (v).CIT V. K.G.Denim Ltd., [2009] 180 Taxman 590 (Mad); and (vi).CIT V. PVP Ventures Ltd., [2014] 101 DTR 161 (Mad). 8. As against the aforesaid, Ms.Hema Muralikrishnan, made the following submissions : (i). That an alternative remedy, by way of appeal, was available to the petitioner, and therefore, this writ petition ought not to be entertained. (ii). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ussion, if, I were to come to the conclusion that the respondent had the necessary leeway, in the given facts and circumstances, to exercise power under Section 263 of the Act. It is only if I come to a different conclusion, would I be required to deal with this objection. Accordingly, in order to adjudicate upon the matter, the following admitted facts are required to be noticed : 9.2. The petitioner had sold his shares held in RIDM, in three tranches over a period spanning between 2007-2008 and 2009-2010. 9.3. 70% of the shareholding in RIDM was sold on 05.05.2007, for a total consideration of ₹ 22,42,72,478/-. 9.4. The petitioner had purchased the subject flats on two separate dates, Flat No.607 was purchased on 23.05.2006, while flat No.612 was purchased on 16.01.2017. These flats were purchased, quite clearly, within preceding one year of the sale of the shares, resulting in generation of capital gains. The record shows that flat No.607 was sold for a sum of ₹ 1.67 Crores, while flat No.612 was sold for a sum of ₹ 3 Crores. 9.5. The petitioner had claimed a deduction under Section 54F of the Act in the sum of ₹ 4,88,78,900/-, against admitted long t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e very same conclusion, which is that the deduction allowed under Section 54F of the Act, via the order dated 22.12.2010, could not be withdrawn. The relevant observations made, in this regard, have already been extracted hereinabove by me. 9.10. While the Revenue preferred appeals to the Tribunal vide CIT (A)'s common order dated 29.07.2013, qua AY 2008-2009 and 2009-2010, it initiated proceeding under Section 263 of the Act, against the Assessing Officer's order dated 31.03.2014. Notably, the issue pertaining to the tenability of the petitioner's claim for deduction under Section 54F of the Act arose in both proceedings. 10. The Tribunal, therefore, while adjudicating upon the appeals preferred by the Revenue for both AYs, i.e., AY 2008-2009 and 2009-2010, was required to deal with the issue, which is, as to whether the subject flats formed one single residential unit. 11. The fact that this issue came before the Tribunal is quite evident, if, one were to peruse the paragraph 9 of the impugned order dated 08.04.2015. For the sake of convenience, the same is extracted hereafter : "..... 9. In the remand report, it was stated by the Assessing Officer that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f competent Authority for construction of residential property for treating the assessee's agricultural land as residential area." (emphasis is mine) 11.1. A perusal of the aforesaid extract would show that the Tribunal was considering, not only the issue as to whether or not the subject flats formed one residential unit, but also, was looking at the investment made by the petitioner in the Alibaug property, on which, a residential structure had been built by him. 11.2. Furthermore, a perusal of paragraph 8 of the Tribunal's order would also establish that it was also examining the petitioner's claim that he had invested ₹ 6.10 crores in a Capital Gains Account scheme via the Bank of India. This aspect is evident from the perusal of the following extract of the Tribunal's order dated 08.04.2015 : ".... 8. We have heard both the parties and perused the orders of the authorities below. In our opinion, the Assessing Officer mixed up with the investment on two flats at Mumbai. the Commissioner of Income-tax (Appeals) observed that the assessee has earned capital gains on sale of shares during the year under consideration and deposited the same in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Alibaug property. 12.2. The issue with regard to the claim of deduction under Section 54F of the Act, (which arose, as correctly argued on behalf of the Revenue, in its appeal filed qua A.Y. 2009-2010), was not remanded for reconsideration, as the same had already been considered in AY 2008-2009. This is quite evident upon perusing paragraph 10 of the Tribunal's order. The relevant observations made, in this regard, have already been extracted hereinabove by me. 12.3. Having regard to the aforesaid, in my view, the Tribunal in its wisdom, thought it fit not to entertain the appeal of the Revenue, with regard to its challenge laid to the deduction claimed by the petitioner vis-a-vis the subject flats under Section 54F of the Act. 12.3. Therefore, in my opinion, since, the Revenue did not assail the order of the Tribunal dated 08.04.2015, the respondent could not have exercised powers under Section 263 of the Act to revisit the issue once again, by setting aside the order dated 31.03.2014, passed by the Assessing Officer under Section 143(3) read with Section 147 of the Act. 13. Furthermore, according to me, as correctly argued by Mr.Senthil, on behalf of the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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