ACIT 16(3), MUMBAI V. VIKRAM U MANIAR, MUMBAI

ITA 1137/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1693 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 17-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P SINGH
• Assessee Lawyers: B V JHAVERI
• Keywords: Capital asset; Gift; Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER I.T.A. NO.1136/M/2012 (AY: 2008-2009) I.T.A. NO.1137/M/2012 (AY: 2008-2009) ACIT 16(3), MATRU MANDIR, 2 ND FLOOR, R.NO.206, TARDEO ROAD, MUMBAI 400 007. VS. SHRI VIKRAM U. MANIAR, LR SHRI BHARAT MEHTA, A-15, TARABAUG ESTATE,CHARNI ROAD, GIRGAUM, MUMBAI 400 004. PAN: AAEPM8706F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.P. SINGH, CIT-DR RESPONDENT BY : SHRI B.V. JHAVERI DATE OF HEARING:20.2.2013 DAT E OF ORDER: 8.3.2013 O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND BOTH THE APPEALS A RE FILED BY THE REVENUE ON 17.2.2012 AGAINST THE SAME ORDER OF ONE CIT (A)-27, MUMBAI DATED 9.11.2011 FOR THE SAME ASSESSMENT YEAR 2008-2009. FOR THE SAKE OF CONVENIENCE, WE ARE ADJUDICATING BOTH THE APPEALS IN THIS COMMON ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS. FIRSTLY, WE SHALL TAKE UP ITA NO.1137/M/2012 AND THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT (A) HAS ERRED IN ALLOWING THE INDEX CONST OF ACQUISITION FROM 1981-82 WHEREAS THE PROPERTY WAS ACQUIRED BY THE ASSESSEE I N THE PREVIOUS YEAR RELEVANT TO AY 2006-07. 2. ON THE FACTS AND CIRCUMSTANCES IN LAW, THE LD CI T (A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE RELYING ON THE I TATS SPECIAL BENCH DECISION IN THE CASE OF MANJULA J SHAH WITHOUT APPRECIATING THAT THE DEPARTMENT HAS PREFERRED A SPECIAL LEAVE PETITION B EFORE THE HONBLE SUPREME COURT. 2. AT THE OUTSET, SHRI B.V. JHAVERI, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ISSUE UNDER CONSIDERATION RELATES TO ADOPTING T HE COST OF FAIR MARKET VALUE AS ON 1.4.1981 WHEN ACTUAL COST IN THE HANDS OF PREVIOUS OWNER IS AVAILABLE. LD COUNSEL 2 ALSO MENTIONED THAT, ISSUE IS NOW SETTLED BY VIRTUE OF THE ITAT, SPECIAL BENCH, DECISION IN THE CASE OF CIT VS. MANJULA J. SHAH , 318 ITR 417 (AT) (MUM) (SB) WHICH WAS RELIED UPON BY THE CIT (A) WHILE GRANTING RELIEF FOR THE PROPOSITION THAT THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREV IOUS OWNER IS ALSO TO BE CONSIDERED WHILE ALLOWING COST INFLATION INDEX. LD COUNSEL BROUGHT OUR ATTENTION TO THE ORDER OF THE COORDINATE BENCH IN THE CASE ITO V S. SHRI PINOO KARAMCHAND SONEJA VIDE ITA NO.7296/M/2011 (AY: 2007-2008) ORDER DATED 12.10.2012, WHERE ONE OF US IS A PARTY TO IT. WE HAVE PERUSED THE SAID ORDER O F THE TRIBUNAL AND FIND THAT PARA 6 IS RELEVANT AND SAME READS AS UNDER: 6. THERE IS NONE APPEARED FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. CONSIDERING THE FACT THAT THE ISSUE IS COVERED BY T HE ITAT, SPECIAL BENCH DECISION IN THE CASE OF MANJULA J. SHAH (SUPRA), CO VERED IN FAVOUR OF THE ASSESSEE, WE HAVE TAKEN UP THE CASE FOR ADJUDICATIO N. IT IS A FACT THAT THE SAID PROPERTY WAS ORIGINALLY OWNED BY SHRI KARACHAND SON EJA WAY BACK IN 1971 AND HE PASSED AWAY IN 1985. IN SUCCESSION, HIS WIFE I.E . MOTHER OF THE ASSESSEE, HAS BECOME THE OWNER AND THE ASSESSEE BECAME THE OWNER OF THE PROPERTY ON 20.7.2005 AND SOLD THE PROPERTY ON 1.12.2006. SO, T HE PREVIOUS OWNER FIRST HELD THE ASSET WAS LATE KARACHAND SONEJA AND THEREFORE, 1.4.1981 BECOMES A RELEVANT DATE, WHICH IS RIGHTLY ADOPTED BY THE ASSE SSEE. THEREFORE, ASSESSEES CLAIM FOR INDEXING THE COST OF ACQUISITION AS PER T HE FAIR MARKET VALUE AS ON 1.4.1981 IS PROPER. THE RELEVANT PART OF THE SPECIA L BENCH DECISION AS EXTRACTED BY THE CIT (A) IN HIS ORDER IN PARA 2.4 IS AS UNDER : FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAI N ARISING FROM THE TRANSFER OF A CAPITAL ASSET WHICH HAD BECOME PR OPERTY OF THE ASSESSEE UNDER GIFT, THE FIRST YEAR IN WHICH THE CA PITAL ASSET WAS HELD BY THE ASSESSEE HAD TO BE DETERMINED TO WORK O UT THE INDEXED COST OF ACQUISITION, AS ENVISAGED IN THE EXPLANATIO N (III) TO SECTION 48 AFTER TAKING INTO ACCOUNT THE PERIOD FOR WHICH THE SAID CAPITAL ASSET WAS HELD BY THE PREVIOUS OWNER. IN THAT VIEW OF THE MATTER, IT WAS TO BE HELD THAT THE INDEXED COST OF ACQUISITION OF SUCH CAPITAL ASSET HAD TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WH ICH THE PREVIOUS OWNER FIRST HELD THE ASSET. 3. FURTHER, LD COUNSEL RELIED ON THE CONTENTS OF PA RA 5 OF THE CIT (A)S ORDER WHICH IS REPRODUCED HERE UNDER: 5. DURING THE PROCEEDINGS BEFORE ME, THE AR SUBMIT TED THAT THE ISSUE UNDER CONSIDERATION VIZ. ALLOWING THE INDEXED COST OF ACQUISITION IN RESPECT OF THE PROPERTY RECEIVED THROUGH WILL WAS RAISED BEFO RE THE SPECIAL BENCH OF ITAT, MUMBAI BENCH IN THE CASE OF DCIT VS. MANJULA J. SHAH 318 ITR 47 (AT) (MUM) (SB) AND IT WAS DECIDED THAT FOR THIS PURPOSE , THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER IS ALSO TO BE CONSIDERED WHILE ALLOWING COST INFLATION INDEX. HAVING REGARD TO THE AFORESA ID DECISION OF THE ITAT, AT PRESENT, I HOLD THAT THE APPELLANT IS ENTITLED TO C LAIM THE BENEFIT OF COST 3 INFLATION INDEX FROM THE FY 1981-82. ACCORDINGLY, THE AO IS DIRECTED TO RE- COMPUTE THE CAPITAL GAINS. THE APPELLANT SUCCEEDS ON THIS GROUND. 4. FROM THE ABOVE FACTS OF THIS CASE, IT IS EVIDENT THAT THE AO ADOPTED THE COST INFLATION INDEX RELEVANT FOR THE DATE 24.3.2005 IE DATE OF DEVOLUTION OF THE FLAT ON THE ASSSESSEE FROM HIS BROTHER-IN-LAW SHRI BALKRISHNA V ASUDEV DALAL RELEVANT INDEX COST IS RS. 8,02,543/-, WHEN THE PURCHASE PRICE WAS OF RS. 7,68,524/- BY THE ORIGINAL OWNER OF THE ASSET. PRIOR TO THE DATE 1.4.1981, TH E ASSET WAS AVAILABLE IN THE HANDS OF SHRI BALAKRISHNA VASUDEV DALAL. THE RATIO OF TH E SPECIAL BENCH DECISION IN THE CASE OF MANJULA J SHAH (SUPRA) ALLOWS FOR ADOPTING THE PURCHASE PRICE OF RS. 7,68,524/- AND AFTER ITS INDEXATION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. THEREFORE, THE DIRECTION GIVEN BY THE CIT (A) IN PA RA 5 OF HIS ORDER IS PROPER AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GR OUNDS RAISED BY THE REVENUE ARE DISMISSED . 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . I.T.A. NO.1136/M/2012 (AY: 2008-2009) (BY REVENUE) 6. THIS APPEAL FILED BY THE REVENUE ON 17.2.2012 IN CONNECTION WITH THE RELIEF GRANTED BY THE CIT (A) ON THE PENALTY U/S 271(1)(C) OF THE ACT. AT THE OUTSET, BOTH THE LEARNED REPRESENTATIVES OF THE PARTIES HAVE MEN TIONED THAT, IN CASE THE QUANTUM APPEAL OF THE REVENUE IS DISMISSED, THIS APPEAL ALS O FOLLOWS THE SAME SUIT. CONSIDERING THE DECISION THAT WE HAVE GIVEN ON MERI TS VIDE ITA NO.1137/M/2012, WHICH IS DISMISSED, THE LEVY OF PENALTY DOES NOT AR ISE. THEREFORE, THE ORDER OF THE CIT (A) GRANTING RELIEF TO THE ASSESSEE DOES NOT CA LL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED IN THIS APPEAL ARE DISMISSED . 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 8TH MARCH, 20 13. SD/- SD/- (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 8.3 .2013 AT :MUMBAI 4 OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR F, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI