Ramdas Dhondiba Dagade, Pune V. Income-tax Officer, Ward - 4(1), Pune

ITA 1097/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2751 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Capital asset; Cost of acquisition; Valuation report
• Section: 143(3); 148

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1741 /P U N/201 7 / ASSESS MENT YEAR : 20 09 - 10 RAMDAS DHONDIBA DAGADE, AT POST BAVDHAN, NEAR SHINDE NAGAR, TAL. - MULSHI, DISTT. - PUNE - 411021 PAN : AAVPD2901L . / APPELLANT VS. THE INCOME TAX OFFICER , WARD 10(2), AKURDI, PUNE . / RESP ONDENT . / ITA NO. 1097 /P U N/201 8 / ASSESSMENT YEAR : 20 09 - 10 RAMDAS DHONDIBA DAGADE, AT POST BAVDHAN, NEAR SHINDE NAGAR, TAL. - MULSHI, DISTT. - PUNE - 411021 PAN : AAVPD2901L . / APPELLANT VS. THE INCOME TAX O FFICER, WARD 4(1), SWARGATE, PUNE . / RESPONDENT / APPELLANT BY : SHRI DEEPAK SASAR / RESPONDENT BY : S HRI M.K. VERMA / DATE OF HEARING : 1 4 .01.2019 / DATE OF PRONOUNCEMENT: 26 . 0 2 .201 9 ITA NO S.1741/PUN/2017 & 10 97/PUN/2018 2 / ORDER PER SUSHMA CHOWLA, J M : BOTH T H E APPEAL S FILED BY SAME ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT (A) - 9, PUNE, DATED 10 . 04 .201 7 AND CIT(A), PUNE - 3, DATED 27.04.2018 RELATING TO ASSESSMENT YEAR 20 0 9 - 10 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) AND 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. BOTH THESE APPEALS HAVE BEEN FILED BY THE SAME ASSESSEE AGAINST SAME ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009 - 10 WERE HE ARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT APPEAL IN ITA NO. 1741/PUN/2017 IS AGAINST THE ORIGINAL ASSESSMENT MADE U/S. 143(3) OF THE ACT. HE FURTHER POI NTED OUT THAT APPEAL IN ITA NO. 1097/PUN/2018 IS AGAINST U/S. 148 PROCEEDINGS INITIATED AGAINST THE ASSESSEE. HE ALSO POINTED OUT THAT IN CASE THE ISSUE IS DECIDED IN ITA NO. 1741/PUN/2017 THAT THE GROUNDS OF APPEAL IN ITA NO. 1097/PUN/2018 WOULD BECOME A CADEMIC. 4. THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF AUTHORITIES BELOW IN COMPUTING THE INCOME FROM LONG TERM CAPITAL GAINS , WHEREIN THE COST OF TRANSFER OF THE ASSET HAS BEEN PARTLY ALLOWED AND COST OF ACQUISITION HAS NOT BEEN CORRECTLY ADOPTED AS ON 01.04.1981. 5 . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD LAND SITUATED AT BHAVDHAN KHURD, TAL. - MULSHI, PUNE FOR RS.2,04,00,000/ - . THE ASSESSEE HAD 1/3 RD SHARE IN THE SAID PROPERTY. THERE IS ITA NO S.1741/PUN/2017 & 10 97/PUN/2018 3 NO DISPU TE ABOUT THE SALE CONSIDERATION. FURTHER, THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS. 1,25,000/ - BEING BROKERAGE AND LEGAL FEES PAID. THE ASSESSING OFFICER RESTRICTED THE SAME TO RS.1,00,000/ - IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. THE ASSESSING OFF ICER FURTHER OBSERVED THAT THE ASSESSEE WAS THE ABSOLUTE OWNER OF PROPERTY AFTER DEATH OF HIS FATHER I.E. ON 01.09.1999. THE ASSESSING OFFICER THUS HELD THAT THE ASSESSEE WAS ENTITLED FOR VALUE OF COST OF ACQUISITION AS ON 01.04.1981; HOWEVER INDEXED COST OF ACQUISITION WAS REQUIRED TO BE ADOPTED FOR FINANCIAL YEAR 1999 - 2000 IN VIEW OF EXPLANATION (III) TO SECTION 48 OF THE ACT, INSTEAD OF INDEXATION OF ASSESSMENT YEAR 19 81 - 82. HE THUS, RECOMPUTED THE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORDER OF ASSESSING OFFICER , AGAINST WHICH THE ASSESSEE IS IN APPEAL. 7 . THE FIRST ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE NON - ALLOWANCE OF COST OF TRANSFER OF THE SAID ASSET. THE ASSESS EE CLAIME D AN EXPENDITURE OF RS.1,25,000/ - AS THE COST OF BROKERAGE AND LEGAL FEES PAID. HOWEVER, IN THE ABSENCE OF ANY EVIDENCE BEING FILED IN THIS REGARD , THE SAME WAS RESTRICTED TO RS.1,00,000/ - . THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE BEFORE THE T RIBUNAL AND HENCE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IS UPHELD. 8 . THE SECOND ISSUE WHICH IS RAISED IS THE COST OF ACQUISITION AND INDEXATION IN THE YEAR TO BE ADOPTED FOR THE COST OF ASSESSEE. THE SAID PROPERTY WAS ACQUIRED BY THE FATHE R OF THE ASSESSEE AND THE COST OF ACQUISITION AS ON 01.04.1981 HAS TO BE TAKEN IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER IN THIS REGARD MADE REFERENCE TO THE VALUER BUT BEFORE COMPLETION OF THE ASSESSMENT PROCEEDINGS THE VALUATION REPORT WAS NOT RECEIVED AND THE ITA NO S.1741/PUN/2017 & 10 97/PUN/2018 4 COMMISSIONER OF INCOME TAX (APPEALS) APPLIED THE VALUE DETERMINED BY THE DVO U/S. 48 OF THE ACT. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT HE HAS NO GRIEVANCE AGAINST THE SAID VALUE. HOWEVER, THE ASSESSEE IS AGGRIEVED BY THE YEAR OF INDEXATION TO BE APPLIED. UNDER SECTION 49( 1 )(III) OF THE ACT, IT IS PROVIDED THAT WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY SUCCES SION, INHERITANCE OR DEVOLUTION THEN THE COST OF THE ACQUISITION OF THE ASSETS SHALL BE DEEMED TO BE TH E COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROVEMENT . THE EXPLANATION THERE UNDER PROVIDES THE EXPRESSION 'PREVIOUS OWNER OF THE PROPERTY' MEANS THE LAST PREVIOUS OWNER OF THE CAPITAL ASSET WHO ACQUI RED IT I.E. IN THE CASE OF ASSESSEE, THE FATHER OF THE ASSESSEE . S O THE VALUE AS ON 01.04.1981 HAS TO BE ADOPTED. NOW, COMING TO THE SECOND ASPECT OF THE ISSUE WHEREIN SECTION 48 WHICH LAYS DOWN THE MODE OF COMPUTATION, WHEREIN IT IS PROVIDED THAT THE CAP ITAL GAINS SH ALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING , THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AND THE COST OF ACQUISITION OF THE ASSET AND COST OF ANY IMPROVEMENT T HERETO. FURTHER, THE PROVISO PROVIDES THAT IN CASE OF LONG TERM CAPITAL GAINS ARISING FROM TRANSFER OF LONG TERM CAPITAL ASSET, THEN IN THE CASE OF COST OF ACQUISITION AND COST OF ANY IMPROVEMENT, THE WOR D S INDEXED COST OF ACQUISITION AND COST OF IMPROVEM ENT SHALL BE SUBSTITUTED. THE EXPLANATION THEREIN FURTHER DEFINES INDEXED COST OF ACQUISITION AS PER CLAUSE (III) , WHICH STATES THAT COST INFLATION INDEX FOR T HE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE C OST I NFLATION I NDEX FOR THE FIRST YEAR I N WHICH THE ASSET WAS HELD BY THE ASSESSEE OR FOR THE YEAR BEGINNING ON THE 1ST DAY OF APRIL, 1981, WHICHEVER IS LATER . IN VIEW OF THE PROVISIONS OF SECTION 49(1)(III) EXPLANATION THE ASSESSEE WHEN IT ACQUIRES THE PROPERTY ON INHERITANCE FROM HIS FATHER T HEN FOR COMPUTING THE COST OF ACQUISITION OF THE ASSET , THE SAME WOULD BE DEEMED THE COST FOR WHICH THE PREVIOUS OWNER OF THE ITA NO S.1741/PUN/2017 & 10 97/PUN/2018 5 PROPERTY ACQUIRED. CONSEQUENTLY, WHERE THE ASSESSEE IS ADMITTED TO HAVE ACQUIRED THE PROPERTY FROM THE DATE THE PREVIOUS OWNER HA D ACQUIRED IT , WHICH IN THE PRESENT CASE WAS BEFORE 01.04.1981 . HENCE, THE COST AS ON 01.04.1981 IS TO BE APPLIED AND THE YEAR OF INDEXATION IS TO START FROM 1981 AN D NOT THE YEAR IN WHICH THE ASSESSEE RECEIVED THE SAID ASSET BY INHERITANCE/SUCCESSION. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE INCOME ON CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITA NO.1741/PUN/20 17 ARE THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED IN ITA NO.1097/PUN/2018 BECOME ACADEMIC. 9 . IN THE RESULT, APPEAL OF ASSESSEE IN ITA NO.1741/PUN/2017 IS ALLOWED AND APPEAL OF ASSESSEE IN ITA NO.1097/PUN/2018 IS DISPOSED OF AS INDICATED ABOVE. ORDER P RONOUNCED ON THIS 26 TH DAY OF FEBRUARY, 2019. SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 26 TH FEBRUARY, 2019. R K / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 9, PUNE ; 4. THE PR. CIT - 5, PUNE ; 5. 6. , , , - / DR SMC , ITAT , PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / PRIVATE SECRETARY , / ITAT, PUNE