ACIT, CHENNAI V. Shri Pranay Kothari, CHENNAI

ITA 1210/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64196 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Keywords: Cost of acquisition
• Section: 143(3); 54

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 1210/MDS/2012 ASSESSMENT YEAR: 2007- 08 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE II, CHENNAI 600 034. VS. SHRI PRANAY KOTHARI, FLAT NO. D301, 3 RD FLOOR, GRAYSHOTT, NO. 4, BISHOP GARDEN EXTN., CHENNAI [PAN: AAIPK6930C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B. RENGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY : NONE DATE OF HEARING : 27.08.2012 DATE OF PRONOUNCEMENT : 27.08.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XII, CHENNAI D ATED 20.02.2012 IN ITA NO. 291/2009-10 FOR THE ASSESSMENT YEAR 2007-08 . SHRI K.E.B. RENGARAJAN, JUNIOR STANDING COUNSEL REPRESENTED ON BEHALF OF THE REVENUE. INSPITE OF SERVICE OF NOTICE, NONE APPEARED ON BEHA LF OF THE ASSESSEE. HENCE WE PROCEED TO DECIDE THE APPEAL ON MERITS AFTER HEA RING THE COUNSEL FOR THE REVENUE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1210 210210 210/M/ /M/ /M/ /M/1 11 12 22 2 2 2. THE ONLY ISSUE IN THE GROUNDS OF APPEAL OF TH E REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIREC TING THE ASSESSING OFFICER TO ADOPT THE BASE YEAR FOR THE PURPOSE OF I NDEXATION AS DATE ON WHICH THE INHERITED PROPERTY WAS HELD BY THE PREVIOUS OWN ER OF THE ASSESSEE. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE FILED R ETURN OF INCOME ON 30.04.2007 DECLARING INCOME OF ` .9,10,430/-. THE ASSESSEE DECLARED TAXABLE LONG TERM CAPITAL GAINS AT NIL AFTER CLAIMING EXEMP TION UNDER SECTION 54 AND SECTION 54EC OF THE ACT. THE ASSESSMENT WAS COMPLET ED UNDER SECTION 143(3) ON 13.12.2009 ACCEPTING THE INCOME RETURNED BY THE ASSESSEE. HOWEVER, WHILE COMPUTING THE LONG TERM CAPITAL GAIN S, THE ASSESSING OFFICER COMPUTED THE INDEXED COST OF ACQUISITION OF THE PRO PERTY, ADOPTING COST INFLATION INDEX OF THE YEAR 2002-03, SINCE, ACCORDI NG TO THE ASSESSING OFFICER THE ASSESSEE BECOME THE OWNER OF THE PROPERTY ONLY ON 18.12.2002 BY WAY OF SETTLEMENT DEED DRAWN BY HIS MOTHER. HOWEVER, TH E ASSESSEE WHILE COMPUTING THE INDEXED COST OF ACQUISITION ADOPTED T HE COST INFLATION INDEX OF THE FINANCIAL YEAR 1981-82 SINCE THE PROPERTY WAS P URCHASED IN THE YEAR 1972 BY HIS FATHER. 4. THE ASSESSEE FILED APPEAL BEFORE THE COMMISSION ER OF INCOME TAX (APPEALS) CONTENDING THAT THE PROPERTY IN QUESTION WAS ACQUIRED NOT BY HIM, BUT BY HIS FATHER LATE B.C. KOTHARI IN HIS HUF CAPA CITY BY SALE DEED DATED 29.01.1972. THE ASSESSEE CONTENDED THAT THE PROPERT Y WAS INHERITED BY HIM I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1210 210210 210/M/ /M/ /M/ /M/1 11 12 22 2 3 ON DEATH OF HIS FATHER AND THE ASSESSEE BECAME THE KARTA LATER ON. THE ASSESSEE CONTENDED THAT THE SAID PROPERTY HAS DEVOL VED ON THE MEMBERS OF THE ABOVE HUF IN THE RATIO OF 1/3 RD TO THE ASSESSEES BROTHER MR. PRATIK B. KOTHARI AND 1/9 TH TO THE ASSESSEES MOTHER SMT. DEVINDRABALA B. KOTH ARI. LATER, MR. PRATIK B. KOTHARI HAS RELINQUISHED HIS R IGHTS REPRESENTING 4/9 TH SHARE TO HIS MOTHER BY SETTLEMENT DEED DATED 16.12. 2002. LATER SMT. DEVINDRABALA B. KOTHARI HAS RELINQUISHED HER RIGHTS REPRESENTING 5/9 TH SHARE IN FAVOUR OF THE ASSESSEE BY SETTLEMENT DEED DATED 18.12.2002. THEREFORE, IT WAS CONTENDED BY THE ASSESSEE THAT HE HAS BECOME TH E ABSOLUTE OWNER OF THE ENTIRE PROPERTY INCLUSIVE OF HIS SHARE IN HUF. HE CONTENDED THAT THE PROPERTY IN QUESTION DEVOLVED ON THE ASSESEEE, WHIC H WAS ACQUIRED BY HIS FAMILY EVEN PRIOR TO 01.04.1981 I.E. ON 29.01.1972 WHEN THE PROPERTY WAS PURCHASED BY HIS FATHER. THE ASSESSEE CONTENDED THA T THE ASSESSING OFFICERS CONCLUSION THAT THE PROPERTY IN QUESTION WAS VESTED ON THE ASSESSEE ONLY IN THE FINANCIAL YEAR 2002-03 IS WRON G AS THE ASSESSEES BROTHER AND MOTHER HAVE ONLY RELINQUISHED THEIR SHA RES OF RIGHTS IN THE FINANCIAL YEAR 2002-03 AND THE PROPERTY WAS ACTUALL Y ACQUIRED IN THE YEAR 1972 I.E. PRIOR TO 01.04.1981 AND THEREFORE THE WOR KING GIVEN BY THE ASSESSEE APPLYING THE COST INFLATION INDEX AS ON 01 .04.1981 IS CORRECT. 5. THE COMMISSIONER OF INCOME TAX (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1210 210210 210/M/ /M/ /M/ /M/1 11 12 22 2 4 THE COMPUTATION OF INDEXED COST OF ACQUISITION WAS RIGHTLY COMPUTED BY THE ASSESSEE. 6. WE HAVE GONE THROUGH THE ORDERS OF LOWER AUTHOR ITIES. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER EXAMININ G THE ISSUE IN DETAIL AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALL OWED THE CONTENTION OF THE ASSESSEE OBSERVING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE AR AND PERUSED THE JUDGEMENTS RELIED ON BY THE AR. THE FAC TS OF THE CASE OF THE APPELLANT ARE SIMILAR TO THAT OF THE FACTS OF THE C ASE OF ITO VS. SHRI P.S. KALYANARAMAN, THE JURISDICTIONAL TRIBUNAL (D BENCH) IN ITA NO. 1935/MDS/08 FOR AY 2005-06 DATED 11.09.2009 ON AN I DENTICAL SET OF FACTS HAS CONFIRMED THE ORDER OF CIT(APPEAL) DIRECT ING THE AO TO ADOPT THE DATE OF ACQUISITION OF THE ASSET AS THE BASIS O F DATE OF ACQUISITION BY HIS FATHER I.E. PREVIOUS OWNER FOR THE PURPOSE OF A RRIVING AT INDEXED COST. THEREFORE, I DIRECT THE AO TO TREAT THE DATE OF ACQUISITION OF THE PROPERTY BY THE APPELLANT AS THE DATE ON WHICH HER GREAT GRANDMOTHER PURCHASED THE PROPERTY FOR THE PURPOSE OF INDEXATIO N. THIS GROUND OF APPEAL IS ALLOWED. 7. AS COULD BE SEEN FROM THE ABOVE, THE COMMISSION ER OF INCOME TAX (APPEALS) FOLLOWED THE DECISION OF THE COORDINATE B ENCH OF THIS TRIBUNAL IN ITO V. P.S. KALYANARAMAN IN I.T.A. NO. 1935/MDS/200 8 DATED 11.09.2009 FOR THE ASSESSMENT YEAR 2005-06, WHEREIN THE TRIBUNAL H ELD AS UNDER: 6. THE NEXT ISSUE RELATES TO COMPUTATION OF INDEX COST OF ACQUISITION. THE ASSESSEE HAS WORKED OUT WITH 100 A S THE BASE VALUE AS THE PROPERTY WAS REQUIRED MUCH EARLIER TO THE YEAR 1981 BY ASSESSEES FATHER. BUT THE ASSESSING OFFICER, AFTER RELYING ON THE EXPLANATION TO SECTION 48 OF THE ACT, HAS TAKEN THE BASE VALUE DUR ING FINANCIAL YEAR 2002-03 BEING AT 447 INSTEAD OF 100 ADOPTED BY THE ASSESSEE. THE LD. CIT(A) HAS OVERTURNED THE ACTION OF THE ASSESSING O FFICER BY DIRECTING HIM TO ADOPT THE DATE OF ACQUISITION OF THE ASSET A S THE BASIS OF DATE OF I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1210 210210 210/M/ /M/ /M/ /M/1 11 12 22 2 5 ACQUISITION BY HIS FATHER I.E. THE PREVIOUS OWNER. NOW THE REVENUE IS AGGRIEVED. 7. AFTER HEARING BOTH SIDES, WE ARE IN AGREEMENT W ITH THE LD. CIT(A) THAT SECTION 49(1) OF THE ACT WOULD COME INT O PLAY BECAUSE THIS HOUSE HAS CAME TO THE ASSESSEE FROM HIS FATHER AND THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT. HENCE, WE DO NOT INTERFERE IN THE IMPUGNED FINDING OF THE LD. CIT(A) AND CONFI RM THE SAME. 8. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDIN ATE BENCH OF THIS TRIBUNAL, WE UPHOLD THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS) IN DIRECTING THE ASSESSING OFFICER TO TREAT THE DAT E OF ACQUISITION OF THE PROPERTY AS THE DATE ON WHICH HIS FATHER PURCHASED THE PROPERTY FOR THE PURPOSE OF INDEXATION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 27 TH AUGUST, 2012 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 27.08.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.