Gopala Duraiswamy, CHENNAI V. ITO, CHENNAI

CO 42/CHNY/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2318 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 14-03-2016
• Court: TRIBUNAL
• Department Lawyers: N VENKATARAMAN; A B KOLI
• Keywords: Capital asset; Cost of acquisition; Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , ! ' , # $% & [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO.279/MDS/2016 & C.O.NO.42/MDS/2016 / ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER NON-CORPORATE WARD 21(1) CHENNAI VS. SHRI GOPALA DURAISAMY NEW NO.5, OLD NO.2, MANICKAM STREET WEST MAMBALAM CHENNAI 600 033 [PAN AISPD 6039 N ] ( '( / APPELLANT) ( RESPONDENT/CROSS OBJECTOR ) DEPARTMENT BY : SHRI A.B KOLI, JCIT /RESPONDENT BY : SHRI N. VENKATARAMAN, CA / DATE OF HEARING : 18 - 04 - 201 6 / DATE OF PRONOUNCEMENT : 26 - 05 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE AND THE CROSS OBJECT ION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CO MMISSIONER OF INCOME-TAX (APPEALS)-9, CHENNAI, DATED 26.11.2015, FOR ASSESSMENT YEAR 2006-07. ITA NO.279/16 CO NO.42/16 :- 2 -: 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS COST OF ACQUISITION OF THE CAPITAL ASSET FOR COMPUTING CAPITAL GAINS. 3. SHRI A.B KOLI, LD. DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT THE ASSESSEE IS A PENSIONER RETIRED FROM LIFE INSU RANCE CORPORATION OF INDIA. THE ASSESSEES ADOPTED MINOR CHILDREN, BY VIRTUE OF COURT DECREE DATED 27.1.2003 IN ADOP NO.404 OF 2002 FROM THE CITY CIVIL COURT, CHENNAI, INHERITED THE PROPERTY OF THEIR PAR ENTS WHO DIED ON A ROAD ACCIDENT WHICH TOOK PLACE ON 3.5.2002. THE A SSESSEE SOLD THE PROPERTY ON 11.11.2015 AND ADMITTED LONG TERM CAPIT AL GAINS TO THE EXTENT OF ` 7,06,395/-. FOR THE PURPOSE OF INDEXED COST OF AC QUISITION, THE ASSESSEE TOOK THE COST OF ACQUISITION BY THE P ARENTS OF THE MINOR CHILDREN. ACCORDING TO THE LD. DR, THE MINOR CHILD REN INHERITED THE PROPERLY ONLY ON THE DEATH OF THEIR PARENTS ON 3.5. 2002. THEREFORE, THE COST INFLATION INDEX APPLICABLE TO FINANCIAL YE AR 2002-03 HAS TO BE ADOPTED. THE LD. DR FURTHER SUBMITTED THAT EVEN T HOUGH THE INCOME- TAX ACT, 1961 PRESCRIBES THE COST TO THE PREVIOUS O WNER WOULD BE THE COST OF ACQUISITION U/S 49(1)(II) OF THE ACT, THERE IS NO SPECIFIC PROVISION TO EXTEND THE BENEFIT OF INDEXATION IN THE YEAR IN WHICH THE PROPERTY WAS ACQUIRED BY THE PREVIOUS OWNER. THE LD. DR FUR THER SUBMITTED THAT AS PER EXPLANATION (III) TO SEC. 48 OF THE ACT , THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE HAS TO BE TAKEN FOR THE PURPOSE OF ESTIMATING THE COST OF ACQUISITION. THEREFORE, THE CIT(A) OUGHT NOT TO ITA NO.279/16 CO NO.42/16 :- 3 -: HAVE DELETED THE ADDITION MADE BY THE ASSESSING OFF ICER. THE LD. DR FURTHER SUBMITTED THAT HE IS SUPPORTING THE OBSERVA TION MADE BY THE ASSESSING OFFICER AND THE GROUNDS OF APPEAL FILED B EFORE THIS TRIBUNAL. 4. ON THE CONTRARY, SHRI N. VENKATARAMAN, LD. REPRESEN TATIVE FOR THE ASSESSEE SUBMITTED THAT THE TAX EFFECT IN THIS CASE IS LESS THAN ` 10 LAKHS, THEREFORE, THE DEPARTMENT OUGHT NOT TO H AVE FILED THIS APPEAL IN VIEW OF THE LATEST CIRCULAR NO.21/2015 IS SUED BY THE CBDT. EVEN OTHERWISE, THE BOMBAY HIGH COURT IN CIT VS MAN JULA SHAH, 355 ITR 474, EXAMINED THIS ISSUE AND FOUND THAT WHEN TH E CAPITAL ASSET WAS INHERITED BY THE LEGAL HEIRS, THE COST OF ASSET OF THE PREVIOUS OWNER HAS TO BE TAKEN AS THE COST OF ACQUISITION. THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESS EE. THE LD. REPRESENTATIVE HAS ALSO SUBMITTED THAT THE ASSESSE E HAS FILED THE CROSS OBJECTION ONLY TO SUPPORT THE ORDER OF THE C IT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMI TTEDLY, THE CHILDREN ADOPTED BY THE ASSESSEE INHERITED THE PROPERTY ON THE DEATH OF THEIR PARENTS ON 3.5.2002. THEREFORE, AS FOUND BY THE BO MBAY HIGH COURT IN THE CASE OF MANJULA SHAH (SUPRA), THE COST OF AC QUISITION OF THE ASSET BY THE PARENTS OF THE MINOR CHILDREN IS THE C OST OF ACQUISITION FOR COMPUTING THE CAPITAL GAINS. EVEN OTHERWISE, THE T AX EFFECT IN THIS ITA NO.279/16 CO NO.42/16 :- 4 -: APPEAL IS LESS THAN ` 10 LAKHS. IN VIEW OF THE LATEST CIRCULAR ISSUED B Y THE CBDT, THE REVENUE OUGHT NOT TO HAVE FILED THE A PPEAL BEFORE THIS TRIBUNAL. IN THOSE CIRCUMSTANCES, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGL Y, THE SAME IS CONFIRMED. 6. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONLY TO SUPPORT THE ORDER OF THE CIT(A). THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT TO SUPPORT THE ORDER OF THE CIT(A), CROSS OBJE CTION IS NOT MAINTAINABLE. THE ASSESSEE CAN SUPPORT THE ORDER OF THE CIT(A) EVEN WITHOUT FILING THE CROSS OBJECTION. THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE IS NOT MAINTAINABLE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2016, AT CHENNAI. SD/- SD/- ( ! ' ) (CHANDRA POOJARI) # / ACCOUNTANT MEMBER ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 26 TH MAY, 2016 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF