Radha Shelat, Pune V. Income-tax Officer, Ward - 13(3), Pune

ITA 1105/PUN/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2949 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 20-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Capital asset; Cost of acquisition; Fair market value; Capital Gains
• Section: 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 1105 /PUN/20 1 8 / ASSESSMENT YEAR : 20 13 - 14 RADHA SHELAT, 50, NATIONAL HOUSING SOCIETY, BANER ROAD, PUNE 411008 PAN : ACAPS4184M ...... / APPELLANT / V/S. ITO, WARD - 13(3), PUNE / RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 22 - 10 - 2021 / DATE OF PRONOUNCEMENT : 25 - 10 - 2021 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 26 - 04 - 2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 8, PUNE [CIT(A)] FOR ASSESSMENT YEAR 20 13 - 14. 2 ITA NO.1105/PUN/2018, A.Y. 2013 - 14 2. THE ASSESSEE RAISED SOLE GROUND WHICH IS AS UNDER : 1) THE LEARNED CIT APPEALS ERRED ON FACTS AND IN LAW IN DENYING INDE X ATION BENEFIT FROM 1.4.1981, IN CASE OF PROPERTY SOLD WHICH WAS SITUATED AT BARODA. SHE FAILED TO APPRECIATE THAT IN CASES COVERED U/S. 49(1)(III) IT IS THE FIRST PREVIOUS OWNER AND NOT THE IMMEDIATE PREVIOUS OWNER THAT IS RELEVANT FOR ASCERTAINING DATE OF ACQUISITION AND CONSEQUENT INDEXATION BENEFITS. SHE FAILED TO APPRECIATE SETTLED LEGAL PRECEDENT IN THIS REGARD AS WELL AS THE CBDT CIRCULAR DIRECTLY ON THE ISSUE WHICH WAS BINDING ON HER. 3. HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE SOLD A RESIDENTIAL PROPERTY BEARING PLOT NO. A/2, SHREEJI HSG. SOCIETY, SAYAJIGUNI, VADODARA FOR A TOTAL CONSIDERATION OF RS.35,11,000/ - ON 28 - 09 - 2012 AND ACCORDING TO LD. AR THE SAID PROPERTY WAS OWNED BY HER FATHER IN LAW AND MOTHER IN LAW. WE NOTE THAT AFTER THEIR DEMISE , THE ASSESSEES HUSBAND AND HIS SISTER BECAME LEGAL HEIRS OF SA ID PROPERTY HAVING 50% SHARE. THE ASSESSEE STATED THE VALUE OF SAID PROPERTY AS ON 01 - 04 - 1981 AT RS.2,12,220/ - AND CLAIMED COST OF ACQUISITION ON THE BASIS OF INDEXATION AS ON 01 - 04 - 1981 AT RS.10,21,500/ - . THE AO DID NOT AGREE WITH THE SAME AND OBSERVED THAT SHRI AJIT SHELAT, THE HUSBAND OF ASSESSEE DIED ON 01 - 09 - 2010, HELD INDEXATION FOR THE SAID PROPERTY SHOULD BE F.Y. 2010 - 11 . THE ASSESSEE CONTENDED THAT HER HUSBAND INHERITED SAID 50% FROM HIS FATHER BEING THE ORIGINAL PURCHAS ER (OWNER) AND THE INDEX COST SHOULD BE ON THE BASIS OF YEAR OF PURCHASE BY THE ORIGINAL OWNER IN TERMS OF SECTION 49(1)(III)(A) OF THE ACT. THE AO DID NOT ACCEPT THE SAME AND PROCEEDED TO TAKE THE BASE YEAR AS F.Y. 2010 - 11. THE CIT(A) IN THE IMPUGNED IN PARA NO. 9 HELD THAT THE LATE HUSBAND OF THE ASSESSEE IS THE PREVIOUS OWNER WHO ACQUIRED 50% AFTER THE DEATH OF HIS MOTHER AND HELD INDEXATION FROM THE YEAR OF DEATH OF ASSESSEES MOTHER IN LAW. IN THE ABSENCE OF DATE OF DEATH OF ASSESSEES MOTHER IN LAW , THE CIT(A) DIRECTED THE AO TO ADOPT THE YEAR OF DEATH OF HER MOTHER IN LAW AS THE BASE FOR 3 ITA NO.1105/PUN/2018, A.Y. 2013 - 14 INDEXATION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS REGARDING THE PROPERTY SITUATED IN VADODARA. THE LD. AR, SHRI C.H. NANIWADEKAR VEHEMENTLY OPPOSED THE FINDINGS OF BOTH THE AUTHORITIE S BELOW AND ARGUED THAT THE INDEXATION HAS TO BE ALLOWED NOT FROM THE DATE OF THE ACQUISITION BY IMMEDIATE PR ECEDING OWNER BUT FROM THE DATE ON WHICH THE FIRST PREVIOUS OWNER I.E. ON DATE ON WHICH THE FATHER IN LAW OF ASSESSEE SHRI CHANDRASHANKAR SHELAT ACQUIRED THE PROPERTY I.E. ON 23 - 11 - 1976. HE SUBMITS THAT THE ASSESSEE IS ENTITLED TO CLAIM ACTUAL COST OF INDEXATION BY FAIR MARKET VALUE AS ON 01 - 04 - 1981 SINCE THE SAID PROPERTY WAS ACQUIRED BY SHRI CHANDRASHANKAR SHELAT IN T HE YEAR 1976. IN THIS REGARD, HE PLACED ON RECORD CIRCULAR NO. 031 DATED 21 - 09 - 1962 ISSUED BY THE CBDT EXPLAINING CAPITAL GAINS. IN THE SAID CIRCULAR WE NOTE, THE CBDT EXPLAINED THE EXPRESSION PREVIOUS OWNER NEED NOT BE TAKEN TO MEAN MERELY THE IMMEDIA TELY PRECEDING OWNER BUT MAY BE CONSTRUED AS INCLUDING THE PREVIOUS OWNERS . FURTHER, IN DETAIL THE SAID CIRCULAR BY TAKING AN EXAMPLE EXPLAINED THAT WHERE AN ASSESSEE QCQUIRES AN ASSET BY INHERITANCE FROM A PERSON WHO IN TURN HAD ALSO ACQUIRED THE SAME BY INHERITANCE BEFORE THE 1 ST JAN., 1954, AND THE ASSESSEE HAS THE OPTION OF SUBSTITUTING THE FAIR MARKET VALUE OF THE ASSET AS AT 1 ST JAN., 1954, IN PLACE OF THE ORIGINAL COST. THEREBY, IT MEANS IN THE PRESENT CASE THE ORIGINAL ASSET WAS PURCHASED BY THE FATHER IN LAW OF ASSESSEE ON 23 - 11 - 1976 AND AFTER HIS DEMISE THE PROPERTY WAS SUCCEEDED BY HIS WIFE, AND IN TURN AFTER HER DEMISE HER CHILDREN I.E. HER SON AND DAUGHTER INHERITED THE SAID PROPERTY. GOING BY THE SAME, THE ASSESSEE CLAIMED INDEXATION AS ON 01 - 04 - 1981 BUT, HOWEVER, THE AO RESTRICTED TO SAID INDEXATION TO THE DATE OF DEATH OF HER HUSBAND I.E. 01 - 09 - 2010. WE NOTE THAT G OING BY CBDT CIRCULAR (SUPRA) WHICH EXPLAINED THAT THE ASSESSEE HAS OPTION OF SUBSTITUTING THE FAIR 4 ITA NO.1105/PUN/2018, A.Y. 2013 - 14 MARKET VALUE OF ASSET REL ATING TO THE ORIGINAL COST, TAKING INTO CONSIDERATION THE SAME THE INDEXATION AS CLAIMED BY THE ASSESSEE ON AS ON 01 - 04 - 1981 IS TO BE TAKEN FOR COMPUTATION OF CAPITAL GAINS. THEREFORE, WE HOLD THE VALUE OF SAID PROPERTY AS ON 01 - 04 - 1981 AT RS. 2,12,220/ - A ND COST OF ACQUISITION AS CLAIMED BY THE ASSESSEE ON THE BASIS OF SAID VALUATION AT RS.10,21,500/ - IS JUSTIFIED. 4. COMING TO THE PROVISIONS U/S. 49 OF THE ACT UNDER CLAUSE (III)(A) OF SUB - SECTION (1) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY SUCCESSION, INHERITANCE OR DEVOLUTION THE COST OF ACQUISITION OF THE SAID ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED. THE DEFINITION OF PREVIOUS OWNER IS DEFINED UNDER EXPLANATION WHICH READS THE PREVIOUS OWNER OF THE PROPERTY IN RELATION TO ANY CAPITAL ASSET OWNED BY AN ASSESSEE MEANS THE LAST PREVIOUS OWNER OF THE CAPITAL ASSET WHO ACQUIRED IT BY A MODE OF ACQUISITION OTHER THAN THAT R EFERRED TO IN CLAUSE (I) OR CLAUSE (II) OR CLAUSE (III) OR CLAUSE (IV) OF THIS SUB - SECTION (1) OF SECTION 49 OF THE ACT. IT MEANS, THE SAID PROPERTY WAS INHERITED BY THE HUSBAND OF THE ASSESSEE ON THE DEMISE OF HIS MOTHER AND HIS MOTHER ALSO INHERITED SUC H PROPERTY ON THE DEMISE OF HER HUSBAND. THEREFORE, THE EXPRESSION PREVIOUS OWNER IS TO BE CONSTRUED IN RELATION TO THE PERSON WHO ACQUIRED THE SAID PROPERTY BY MODE OF ACQUISITION OTHER THAN THAT REFERRED TO IN CLAUSE (I) OR CLAUSE (II) OR CLAUSE (III) O R CLAUSE (IV) OF THIS SUB - SECTION (1) OF SECTION 49 OF THE ACT. THEREFORE, THE AO AND CIT(A) DID NOT VIEW THE ISSUE IN RIGHT PERSPECTIVE AS CONTEMPLATED UNDER THE PROVISIONS OF SECTION 49 OF THE ACT AND THUS, THE ORDER OF CIT(A) IN DIRECTING THE AO TO ADO PT THE YEAR OF DEATH OF ASSESSEES MOTHER IN LAW IS NOT JUSTIFIED. THEREBY, WE HOLD THE ASSESSEE RIGHTLY CLAIMED INDEXATION AS ON 5 ITA NO.1105/PUN/2018, A.Y. 2013 - 14 01 - 04 - 1981 BEING THE ORIGINAL OWNER ACQUIRED THE SAID PROPERTY ON 23 - 11 - 1976. THUS, THE SOLED GROUND RAISED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 202 1 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 25 TH OCTOBER, 202 1 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 8, PUNE 4. THE PR. CIT - 4, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE