ITO, Coimbatore V. Smt. S.Kavery, Coimbatore

ITA 1361/CHNY/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 7872 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-11-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 19-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE DR.O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER .. ITA NO.1361/MDS./2010 A.Y : 2007-08 ITO WARD II(5), 63, RACE COURSE ROAD, COIMBATORE. VS. SMT. S.KAVERY, 21, PULUGAN THAMBY LANE, RAMANATHAPURAM, COIMBATORE 641 045. ( PAN NO.AQZPK 1118 Q ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. VASUDEVAN DEPARTMENT BY : SHRI K E B RENGARAJAN O R D E R PER DR.O.K.NARAYANAN, V.P. : THIS APPEAL IS FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF CIT(A)-1 AT COIMBATORE DATED 04.06.10 AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S.143(3) OF THE INCOME TAX ACT, 1961. PAGE 2 OF 4 ITA. 1361/MDS/2010 SMT.S.KAVERY 2. THE ASSESSEE IN THIS CASE HAD SOLD AN IMMOVABLE PROPERTY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER APPEAL. WHILE COMPUTING THE LONG TERM CAPITAL GAINS ARISING OUT OF THE SALE OF THE PROPERTY, THE ASSESSING OFFICER HAS MADE CERTAI N ADJUSTMENTS WITH REFERENCE TO FAIR MARKET VALUE AND THE COST IN FLATION INDEX. THE ASSESSING OFFICER GRANTED THE BENEFIT OF INDEXATION FROM THE DATE ON WHICH THE PROPERTY WAS DEVOLVED UPON THE ASSESSEE A S A RESULT OF THE JUDGEMENT PASSED BY THE COMPETENT CIVIL COURT. THE CONTENTION OF THE ASSESSEE WAS THAT THE INDEXATION MUST HAVE BEEN COMPUTED ON THE BASIS OF THE VALUE OF THE PROPERTY WHILE IT WAS IN THE HANDS OF THE PREVIOUS OWNER. IN FIRST APPEAL, THE CIT(A) AFTER E XAMINING THE STATUTORY PROVISIONS ON THE SUBJECT, HELD THAT THE LAW INTENTS TO TREAT THE PREVIOUS OWNER AS THE POINT OF COMPUTING THE C OST OF ACQUISITION AND THEREFORE, THE COST INFLATION INDEX MUST BE COM PUTED ON THAT COST OF ACQUISITION REFLECTED IN THE HAND OF PREVIOUS OW NER. 3. THE REVENUE IS AGGRIEVED BY THE ABOVE FINDING O F THE CIT(A) AND THEREFORE, HAS COME IN SECOND APPEAL BEFORE US. 4. THE GROUND RAISED BY THE REVENUE IS THE CIT(A) HAS ERRED IN HOLDING THAT FOR COMPUTING THE COST INFLATION INDEX , THE COST OF ASSET TO THE PREVIOUS OWNER SHOULD BE TAKEN AS THE BASE FOR COMPUTATION. PAGE 3 OF 4 ITA. 1361/MDS/2010 SMT.S.KAVERY 5. SHRI K.E.B. RENGARAJAN, THE LD. JUNIOR STANDING COUNSEL APPEARING FOR THE REVENUE RELIED ON THE ORDER PASSE D BY THE ASSESSING AUTHORITY AND ARGUED THAT THE COST OF ACQ UISITION OF AN ASSET FOR THE PURPOSE OF GRANTING THE BENEFIT OF CO ST INFLATION INDEX MUST BE RECKONED WITH THE VALUE OF THE PROPERTY IN THE HANDS OF THE OWNER OF ASSET AND IT SHOULD NOT BE PREPONED TO THE ACQUISITION DATE OF THE PREVIOUS OWNER. 6. SHRI T. VASUDEVAN, THE LD. COUNSEL FOR THE ASSE SSEE, ON THE OTHER HAND, CONTENDED THAT THE BENEFIT OF COST INFL ATION INDEX SHOULD BE ELONGATED TO THE POINT OF ACQUISITION OF ASSET B Y THE PREVIOUS OWNER AND THE CIT(A) HAS RIGHTLY ANALYZED THE STATU TORY PROVISIONS ON THE SUBJECT AND HELD THAT THE COST OF ACQUISITION I N THE HANDS OF PREVIOUS OWNER SHOULD BE THE BASIS FOR GRANTING THE BENEFIT OF COST INFLATION INDEX. 7. WE FIND THAT THE ORDER OF THE CIT(A) IS IN ACCO RDANCE WITH LAW AND THE PRINCIPLES FOLLOWED BY HIM ARE SUPPORTED BY THE JUDGEMENT OF ITAT, CHANDIGARH BENCH IN THE CASE OF MRS,. PUSHPA SOFAT (2002) 81 ITD 1 AND ALSO BY THE DECISION OF ITAT, CHENNAI IN ITA NO.1572/MDS./2008 REFERRED IN THE CASE OF ACIT VS. SMT.MANGAI KRISHNASWAMY. PAGE 4 OF 4 ITA. 1361/MDS/2010 SMT.S.KAVERY 8. WE MUST UNDERSTAND THAT EVEN THOUGH THE COMPUTA TION OF CAPITAL GAINS IS WITH REFERENCE TO THE OWNER OF THE ASSET, THE BENEFIT OF COST INFLATION INDEX IS NOT ASSESSEE-ORIENTED BUT A SSET-ORIENTED. THEREFORE WE DO NOT FIND ANY MERIT IN THE APPEAL FI LED BY THE REVENUE. 9. IN RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY THE 19 TH OF NOVEMBER, 2010 AT CHENNAI. SD/- SD/- ( HARI OM MARATHA ) ( DR.O.K.NARAYANAN ) JUDICIAL MEMBER VICE PRESIDENT CHENNAI, DATED THE 19 TH NOVEMBER, 2010. KSS COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE