Bhairavi Anilbhai Gala, Ahmedabad V. Dy. Commissioner of Income Tax, Ahmedabad

ITA 1300/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8601 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR ADL
• Keywords: Cost of acquisition

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NO.1300/AHD/2015 / ASSTT. YEAR: 2010-2011 BHAIRAVI ANILBHAI GALA NAVNEET HOUSE GURUKUL ROAD MEMNAGAR AHMEDABAD. PAN : ACZPG 9112 G VS. DCIT, CIR.6 AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ASEEM THAKKAR, AR REVENUE BY : MS.SONIA KUMAR, ADL.CIT(DR) ! / DATE OF HEARING : 09/08/2017 '#$ ! / DATE OF PRONOUNCEMENT: 07/09/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-13, AHMEDABAD DATED 16.2.2015 PASSED FOR THE ASSTT.YEAR 2010-11. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.3,00,000/- IM POSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1 961. ITA NO.1300/AHD/2015 2 3. WITH THE ASSISTANCE OF THE LD.REPRESENTTIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HER ORIGINAL RETURN OF INCOME ON 31.7.2010 DECLARING TO TAL INCOME AT RS.1,41,51,770/-. THEREAFTER SHE HAS REVISED HER R ETURN ON 27.3.2012 REVISING INCOME AT RS.1,09,99,750/-. THE ASSESSEE HAD SOLD THREE FLATS DURING THE YEAR AND ORIGINALLY SHO WN SHORT TERM CAPITAL GAIN, BUT LATER ON SHE COMPUTED LONG TERM C APITAL GAIN, AND THIS STAND WAS ACCEPTED BY THE AO. DISPUTE AROSE B ETWEEN THE ASSESSEE AND THE AO WITH REGARD TO COMPUTATION OF I NDEXATION COST FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. TH E FOLLOWING DETAILS NOTICED BY THE AO IN THE PENALTY ORDER WOUL D DEMONSTRATE FACTS MORE SCIENTIFICALLY FOR APPRECIATING THE CONT ROVERSY: 'IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED LONG T ERM CAPITAL GAIN ON SALE OF RIGHTS OF THREE FLATS AT MUMBAI ALO NG WITH TWO OTHERS. THE ASSESSEE HAS CLAIMED INDEXED COST OF AC QUISITION AGAINST THE SALE OF FLATS AS PER FOLLOWING DETAILS: YEAR FLAT NO COST OF ACQUISITION IN RS. COST OF IMPROVEM ENT IN RS. INDEXED COST OF ACQUISITION IN RS. 2004 - 05 2108 - 2208- 2308 68,00,000 89,53,333 2008 - 09 DO - 382263 415104 TOTAL 68,00,000 3,82,263 93,68,437 ITA NO.1300/AHD/2015 3 THE ASSESSEE WAS REQUESTED TO FURNISH THE DETAILS O F EXPENSES / PAYMENT MADE FOR ACQUISITION OF THE ABOV E MENTIONED PROPERTIES. FROM THE DETAILS SUBMITTED, I T IS NOTICED THAT THE ASSESSEE HAS MADE PAYMENT AGAINST THE ACQUISITION OF PROPERTIES AS PER FOLLOWING DETAILS: S.NO YEAR OF PAYMENT TOTAL PAYMENT MADE FOR 3 FLATS IN RS. 1 2004 - 05 5,00,000 2 2007 - 08 15,00,000 3 2008 - 09 48,00,000 4 2008 - 09 3,82,263 IN VIEW OF THE FACTS MENTIONED ABOVE, YEAR WISE IND EXED COST OF ACQUISITION OF THE ASSESSEE WOULD BE AS UNDER: S.NO YEAR OF PAYMENT TOTAL PAYMENT MADE FOR 3 FLATS IN RS. INDEXED COST OF ACQUISITION IN RS 1 2004 - 05 5,00,000. 6,58,333 2 2007 - 08 15,00,000 17,20,508 3 2008 - 09 48,00,000 52,12,371 4 2008 - 09 3,82,263 4,15,104 TOTAL 80,06,316 3. THE AMOUNT OF RS. 13,62,141/- AS ACCESS CLAIM OF INDEXATION. THE TOTAL AMOUNT OF LTCG WAS WORKED OUT AT RS. 1,03,02,621/- I.E. (RS.89,40,500/- AS PER RETURN + ITA NO.1300/AHD/2015 4 RS.13,62,121/-). THE ASSESSMENT WAS COMPLETED ON 27.2.2013 ON TOTAL INCOME OF RS.1,23,61,870/- 5. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS ON T HIS ALLEGED EXCESS CLAIM OF INDEXATION COST TO RS.13,62,121/-. THE STAND OF THE ASSESSEE WAS THAT SHE HAS FILED THIS CLAIM ON T HE BASIS OF LEGAL ADVICE. EARLIER SHE HAS COMPUTED SHORT TERM CAPITA L GAIN, AND THEREAFTER, ON THE BASIS OF LEGAL ADVICE, SHE HAS C HANGED THE STAND AND CLAIMED LONG TERM CAPITAL GAIN. THIS STAND WAS ACCEPTED. SHE WAS HARBOURING A BELIEF THAT SINCE INITIAL PAYMENT WAS MADE FOR F.Y.2004-05, THEREFORE, IT IS TO BE CONSTRUED THAT THE ASSET WAS ACQUIRED IN THAT YEAR. THIS FACT HAS ONLY LEAD TO ASSESSMENT OF GAIN AS LONG TERM CAPITAL GAIN. ON THE OTHER HAND, THE LD.AO WAS OF THE OPINION THAT AS PER SECTION 48, ASSESSEE WOU LD REDUCE THE FOLLOWING AMOUNTS FROM SALE CONSIDERATION RECEIVED BY HER FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL VIZ. (A) EXP ENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER, AND (B) COST OF ACQUISITION OF ASSET AND COST OF AN Y IMPROVEMENT THEREOF. THUS, THE AO WAS OF THE OPINION THAT COST OF ACQUISITION OUGHT TO BE TAKEN FOR THE PURPOSE OF INDEXATION IN THE YEAR SUCH COST WAS INCURRED. SINCE THE ASSESSEE HAS INCURRED THE COST IN THREE YEARS, THEREFORE, THERE IS A VARIATION IN VAL UE OF INDEXATION. THIS VIEW OF THE AO MET WITH APPROVAL OF THE LD.CIT (A). HOWEVER, AFTER DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE VIEW THAT THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE. SHE HAS DISCLOSED COMPLETE FACTS. SHE H AS DISCLOSED DETAILS OF PAYMENT AS WELL AS RECEIPTS. SHE HAS HA BOURED A BELIEF THAT THE ASSET SHOULD BE CONSTRUED AS ACQUIRED WHEN INITIAL ITA NO.1300/AHD/2015 5 AGREEMENT FOR PURCHASE WAS MADE AND PART PAYMENT WA S MADE. THIS CAN BE A BONA FIDE LAPSE AT THE END OF THE ASSESSEE, AND SHE SHOULD NOT BE VISITED WITH PENALTY FOR SUCH BELIEF WHICH MAY NOT BE ACCEPTED ULTIMATELY BY THE AO. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 7 TH SEPTEMBER, 2017. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 07/09/2017