ABDUL GAFFAR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner has sought for quashing the order dt. 21st Jan. , 2004 passed by the 2nd respondent-CIT, Mysore, vide Annex. 'd', the revised assessment order dt. 27th July, 2004 passed by the 1st respondent-ITO, Mysore, vide Annex. 'e' and the order dt. 8th July, 2. 005 passed by the 3rd respondent-Tribunal, Bangalore Bench, Bangalore, vide Annex. 'k' to the writ petition. He also prayed this Court to declare that the provisions of Section 54f of the IT Act, 1961 ("the Act' for short), as they stood in the year 2000-01 as ultra vires to the Constitution of india.

(2.) THE orders Annexs. D and E have merged into the appellate order vide Annex. K. As against annex. K, the petitioner has got alternative and efficacious remedy of appeal to the Division bench of this Court under Sections 260a and 260b of the Act. As the alternative and efficacious remedy is provided to the petitioner for challenging the order Annex. K, I decline to entertain this writ petition insofar as it relates to the first prayer as made in the writ petition is concerned.

(3.) REGARDING validity of Section 54f of the Act, as it stood in the year 2000-01, the challenge is made to Section 54f on the ground that the said section and its proviso are vague and are discriminatory inasmuch as they apply only for the asst yr. 2000-01. The relevant portion of section 54f of the Act as it stood in the year 2000-01 reads thus : section 54f, Capital gain on transfer of certain capital not to be charged in case of investment in residential house.-- (1) Subject to the provisions of Sub-section (4), where in the case of an assessee being an individual or an HUF, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed a residential house (hereinafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under Section 45; (b) If the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under Section 45 : provided that nothing contained in this sub-section shall apply where the assessee owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head 'income from house property', other than the new asset. The challenge to the provisions that it is vague, cannot be sustained. The provision clearly contemplates exemption in respect of non-residential house. This would mean that the assessee would be entitled to claim exemption in respect of sale proceeds derived from the sale of second site if the same is invested in the development of first residential house. But by putting up a second dwelling house in that premises out of the sale proceeds derived from the sale of second site would disentitle the assessee from claiming relief under Section 54f of the Act. The policy of permitting exemption in respect of one dwelling house is vested in the Central Government. This policy legislated cannot be said to be vague, inasmuch as, it is definitive in character. The contention of the learned counsel for the petitioner that in subsequent years exemption under section 54f of the Act was extended to two residential houses and therefore, depriving during the asst. yr. 2000-01 of such an exemption by extending it. to one residential house is discriminatory, violative of the fundamental rights and ultra vires of the Constitution of India, also cannot be accepted. The Central Government is empowered to have its own policy for allowing exemption. Each assessment year is an independent unit. The liability to tax and the exemptions provided in each assessment year may be different. This is entirely in the realm of parliamentary discretion and policy. The objects and reasons for granting and withholding of exemption may vary from time to time. The same cannot be allowed to be questioned on the ground of discrimination. Therefore, the challenge to the validity of the aforesaid provision cannot be sustained. Hence, this writ petition is liable to be dismissed and accordingly, petition is dismissed. It is open for the petitioner to file statutory appeal before the Division Bench of the Court within five weeks from today regarding first prayer.