K C KAUSHIK Vs. P S RANE

JUDGEMENT

(1.) THE petitioner is in service of Bank of Baroda. He purchased a flat in Suvarnadeep Co-operative Housing Society Limited (for short Suvarnadeep), Santacruz, Bombay on 21st March, 1973 for a sum of Rs. 49,140/- for the purpose of his residence. He was residing in that flat. On 24th October, 1979, he sold the said flat for Rs. 1,25,000/- and on the same date purchased another flat in Jai Priyadarshini Co- operative Housing Society Limited at Khar, Bombay (for short Priyadarshini) for a sum of Rs. 1,11,000/ -. He resided in the Khar flat from 24th October, 1979 to 26th July, 1980. On 26th July, 1980, he sold the Khar flat also for a sum of Rs. 1,20,000/- and purchased another flat on the same date in Kalpana Co-operative Housing Society Limited (for short Kalpana), Santacruz, Bombay for Rs 1,20,000/ -. Thereafter he started residing in this flat. He vacated the flat on 16th May, 1981 on being transferred to Baroda From 27th May, 1981 to 1st July, 1983, the flat in Kalpana is let out to Bank of Baroda, his employers.

(2.) FOR assessment year 1980-81, the petitioner claimed that surplus of Rs. 75,860/- arising on the sale of his flat in Suvarnadeep on 24th October, 1979 was not taxable as he had invested more than the said amount in the purchase of flat in Kalpana on 26th July, 1980 for residence. The Income tax Officer (for short I. T O), partly accepted the claim, and held that the surplus was invested in the purchase of flat in Priyadarshini, Khar on 24th October, 1979 and not in the purchase of flat in Kalpana, Santacruz on 26th July, 1980 as claimed. The petitioner filed a revision petition under section 264 of the Income tax Act, 1961 which was rejected by the Commissioner of Income-tax vide order dated 5th February, 1985. It is pertinent to mention that two issues, viz. , (i) whether the petitioner had a choice to choose the property against which the capital gains which had arisen on the transfer of a capital asset are to be adjusted ; and (ii) whether the property purchased but not actually used for residence for these years fulfils the requirement of section 54 (1) of the Income tax Act, 1961, were raised before the Commissioner. While accepting the contention that the petitioner had choice and could claim relief under section 54 against the purchase of flat on 26th July, 1980 even though he had purchased a flat on 24th October, 1979 in the mean time, the Commissioner held that flat having not been occupied by the petitioner for his residence for three years, he was entitled to relief under section 54 against the purchase of that flat. For assessment year 1981-82, following his order for earlier assessment year, the I. T. O. held that the Khar flat purchased by the petitioner on 24th October, 1979 was sold on 26th July, 1980, i. e. , within a year. Therefore, the surplus was chargeable to short term capital gains. For this very reason, he also held that to the extent the petitioner had availed of relief under section 54 against the purchase of this flat on 24th October, 1979, the cost of the flat was required to be reduced. Accordingly he computed the short term capital gains for the year at Rs. 82,860, The petitioners appeal there against failed, According to the Commissioner of Income-tax (Appeals), the petitioner had no option or choice. Relief under section 54 was or could be available only against the purchase of the first property for residence after the sale of the residential house capital gains arising on the transfer of which were Bought to be adjusted.

(3.) THE petition was admitted on 30th August, 1985 when interim relief in terms of prayer (g) was also granted. It is proposed to dispose of the preliminary objection first. It was contended by Dr. Balasubramanian for the Revenue that the income-tax Act provides a complete machinery for assessment of tax, imposition of penalty and for granting relief in respect of any improper order passed by the Income-tax authorities. A person aggrieved by an order of the I. T. O. had, thus, adequate remedies available to him by way of appeal to the Commissioner (Appeals) and the Tribunal. Jurisdiction of this Court under Article 226 of the Constitution is a extra-ordinary jurisdiction. The petitioner can invoke tills jurisdiction only when there is no alternative and effective remedy. It is not established that the petitioner had in this case no alternative and/or effective remedy. Fairly admitting that the order passed by the Commissioner under section 264 of the income-tax Act in revision was not appealable. Dr. Balasubramanian stated that it was due to a conscious provision made by the legislature in this behalf. The petitioner had chosen not to go in appeal and to avail of a remedy which was available. In any event, that fact by itself would not entitle the petitioner to invoke the writ jurisdiction of this Court as a matter of course. The contentions were repelled by Shri Bonde, the learned Counsel for the petitioner. It was pointed out that though extraordinary, the jurisdiction under Article 226 was discretionary. When the petition has already been entertained. It may not be proper or legal for the same Court to consider question of entertaining it once again at the time of final hearing. n my judgment, the petition having already been entertained and jurisdiction being, though extra-ordinary, discretionary, I will prefer to dispose of the petition on merits. This was also the view taken by this Court (Goa Bench) in Writ Petition No. 174/b/1981 decided on 2nd August, 1984.