The role of Professionals in practice of Direct Tax Law (DTC- the law on income-tax) and also of INDIRECT TAX LAW (IDT- VAT / GST) are twofold.
CAs and Lawyers, in view of/ giving respect to their respective educational qualifications and experience in field practice, are invariably consulted by clients for assistance, –
a) firstly, in an advisory capacity , for expert guidance and opinion; and
b)secondly, for being expertly represented before the assessing and appellate authorities .
By and large, clients engage CAs for professional assistance, from the initial stage of preparing and filing tax return, then during the assessment proceedings, and, thereafter, up to the second appeal stage of ITAT for representation.
For further appeal, writ, and other proceedings before courts and the apex court, depending upon the stakes involved only lawyers are engaged for representation. In cases in which it is considered necessary, clients- if prudent and well-informed, prefer to and choose a suitable lawyer, with due focus on and having regard to, among others, the comparative seniority, so also his eminence, in terms of mainly his field experience and sufficient exposure.
It is generally believed that lawyers have a role to play in the making of ‘case law’, expected of to function as a catalyst, so to say. However, if mindfully considered, lawyers do have a vital role to play in the making of the ‘law’ as well. For, though not always but especially in respect of issues (involving a question of law) on which, at any point in time, there are found to be a large/significant number of inconsistent court decisions, it is with a view to try and set at rest disputes and litigation, recourse to an amendment of the related provision(s) is resorted to by the Finance Ministry/ Executive, in consultation with the Law authorities.
It is in such a situation that, instead of providing a final resolution as wished for, any amendment of law so made, unanticipated or otherwise, gives rise to a fresh spate of controversies and scope for procrastination of disputes and a further more prolonged court ligation.
The foregoing words of implied caution should serve the purpose of a useful backdrop for insight-fully understanding and getting a proper grip of the intent, as desired, behind the discussion herein.
The subject matter chosen for an analytical study concerns the ongoing controversy over a limited area; that pertains to the entitlement of an assessee, being an individual or a HUF, for tax exemption (deduction) under section 54 or 54F of the IT Act (the Act). The need for such a study has been necessitated- hence attempted herein-particularly because of the fact that even after an amendment of the referred provisions in the year 2014, the related points of dispute are sought to be impudently kept alive,- rather to be given a fresh lease of life.
1. The most recent of the instances giving rise to such a fresh spate of controversy is to be found in the court decision in the case of Navin Jolly (for short).
Own thoughts and viewpoints in the matter have been shared, in details, vide the posted comment (s), –
2. To sum-up the points requiring special focus:
Basically faulty and fundamentally weak ideas have been put across and arguments advanced in some of the cited court cases; and, been sought to be unwittingly reinforced in the lastly decided case of Navin Jolly, on the assessee’s behalf, and accepted by courts.
To illustrate, furnished below, is an extract there from:
A landmark judgment on this issue was delivered by the Delhi High Court in the case of CIT Vs. Gita Duggal (357 ITR 153). While reiterating the principles already laid down in Anand Basappa and K.G. Rukminiamma (supra), what makes this decision one of a kind is that it analyses THE MODERN NEEDS AND WAYS OF A HOUSE CONSTRUCTION.
Pausing here, we can see that in today’s world, a large number of people prefer to live independently due to a lot of factors. As a result, several INDEPENDENT UNITS may be constructed in the same premises. Let us assume a scenario where an elderly couple has an ancestral property in their native place and have three married sons. All of them have a share in the ancestral property and PREFER TO RESIDE IN THE CITY. In such a situation, they may sell the ancestral property, purchase a large piece of land in the city and construct a big house with 4 SEPARATE RESIDENTIAL UNITS to accommodate the 4 families. THESE SEPARATE DWELLING UNITS MAY BE PRIVATE TO EACH COUPLE AND YET BE TOGETHER AS ONE HOUSE, WITH COMMON ENTRANCE, UNITY OF STRUCTURE AND BEING CAPABLE OF MERGED OR AMALGAMATED INTO ONE ‘BUILDING’ AS A WHOLE. In such a scenario, we CANNOT CALL THIS as 4 HOUSES BECAUSE IN SUM AND SUBSTANCE THIS IS ACTUALLY ‘ONE HOUSE’ UQ
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Personally, me have been left nonplussed, as to why and how, (?!) -even by any straight forward reasoning or simple count, what are known as the natural numbers- one, two, three, so on- duly and strictly constructed UNITS (i.e.Flats/Apartments) as per the sanctioned plan, for occupation and use as such, as separate living (dwelling) units, could, going by sheer common sense, even ‘in sum and substance’, conceivably be rightly regarded and/or made to be believed as ‘ÓNE’, to make sense and be accepted.
And, more importantly / essentially, how (?) any such plea could be rightly made, without doing violence to the clear language of any governing enactment, – the letter or spirit of it, or the objective of such enactment, etc.
In any view, to say/react in the least offensive manner, any such conclusion as urged for, and reached, do seem to implicitly make a mockery of the legal formalities, as mandated by the statute/ the rules enacted and in place, on the Rules Book, – in the form, as well as in substance of, – ‘house building rules’ of Urban Development, Town Planning, and/ or other civic authorities, – not to speak of the regulatory authority (RERA).
And, not to miss the deplorably pathetic flip side of it- i.e. the field reality,- it ought not to be bypassed or could not be conveniently over sighted that the empowered local authorities have made a move and are in the midst of an ongoing exercise of- say in Bangalore, – what is commonly known as, and given publicity in the guise of, – Legalization of Illegal buildings / its Structures, – with the blessings of courts. Infer ably, that is on the only legal footing that any structural or other alteration in violation of the building plan as per the official sanction / approval is illegal, entailing dire consequences.
For that matter, even after completion of construction and certification, as has been known, there have been numerous instances, not only in Bangalore (but also elsewhere- say, in Mumbai- e.g. Adarsh Cooperative Housing) in which those came to be ordered by courts to be demolished, wholly or partly, on the ground of having been made in clear breach of the governing law / rules.
3.1. All such and other related issues, prima facie having a common weak thread passed through (reference is to the half-baked and fatally faulty ideas, unwittingly put across in the course of arguments and found in the cited cases) , might have to perforce be taken on, -if not done already,- before the SC by the Revenue, for adjudication after consolidation of all disputes / cases wherever pending, in one -go, in order to effectively cry a halt and accomplish the intended purpose of putting an end to all such frivolously ‘stimulated litigation’ (in its bizarre sense), mostly founded on convoluted and in-box thinking, without a proper in-depth study and incisive application of mind.
3.2. In venturing to offer/put across such a suggestion, – which has also been reached to the concerned authorities lastly through a Message sent, – one has in view the outstanding landmark, nay- truly classical, judgment in Podar Cement case.
For a critical study thereof, look up the published Article-
MASTER Note: For a proper appreciation of the foregoing FEED-Input, as urged herein before, the host of material available in public domain should be necessarily gone through; and is recommended to be done so.
3.3. For the above referred material, in order to get a good grip of all the related aspects, suggest, without fail or reservation , looking through, besides others, the following published Articles:
A) In own firm conviction, the implications of the 2014 amendment, though, in terms, made prospectively, would be worthwhile a study in-depth, based on THE FIRST PRINCIPLES of the governing state legislative enactments; instead of, mainly / entirely relying on the mutually contradicting court and ITAT decisions, which the legislature seems to have had wholly in mind even while conceiving of the need for amending the law.
B) Several related points of dispute (Issues or Non-issues) taken on and relentlessly but mindlessly pursued up to the highest court of the land could have been nipped in the bud, and/or at the earliest stage (say, ITAT), had attention been duly drawn to, forcefully addressed and sufficiently stressed before the adjudicating authority (ies) sufficiently; in order to successfully driving home the most crucial / clinching aspect of all- that is, why such issues could not but only be effectively and conclusively decided- not de hors but having due regard to the statutes specially governing / to be applied to the legal concept of ‘Unit’- being ‘Flat’ or ‘Apartment’ as envisaged by the Spl. State laws.
C) Poser: For serving the very objective behind the 2014 Amendment of the law, from all angles, should that not be construed and be given effect to ‘retrospectively’,- as opposed to prospectively?
To restate and reinforce own view and suggestion, that should be possible, with prospects of every success, if so done, relying on, rightly so, as a Precedent, on the SC Judgment in the case of Podar Cement.
OVER to Experts in field practice for sharing own independent but eminent thoughts, if any, to add value, for THE COMMON GOOD.
To Be Completed – Invite to do so!