Income-tax Officer, Ward-3(2), Pune V. Shri Laxmkant D. Deshpande, Pune

ITA 1507/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9808 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINITA MENON
• Assessee Lawyers: SHRENIK GANDHI
• Keywords: Capital asset; Cost of acquisition; Fair market value
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1507/PN/2011 (ASSESSMENT YEAR: 2007-08) I.T.O. WARD 3(2) PUNE .. APPELLANT VS. SHRI LAXMIKANT D DESHPANDE NO. 310 LANE NO. 20, MAHATMA CO-OP. HOUSING, KOTHRUD, PUNE-411 038 PAN AABPD 7883 M RESPONDENT APPELLANT BY : SMT. VINITA MENON RESPONDENT BY : SHRI SHRENIK GANDHI DATE OF HEARING: 21-11-2012 DATE OF PRONOUNCEMENT:23-11-2012 ORDER PER G.S. PANNU, A.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II PUNE DATED 23-9-2011 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 15-12-2 008 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSM ENT YEAR 2007-08. 2. THOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS O F APPEAL BUT ESSENTIALLY THE GRIEVANCE IS AGAINST THE ACTION OF THE CIT(A) IN HOLDING THAT FOR COMPUTING LONG TERM CAPITAL GAIN, THE INDEXED COST OF ACQUISITION HAS TO BE WORKED OUT WITH REFERENCE TO THE COST INFLATION INDEX FOR FINANCIAL YEAR 1981-82 AND NOT FOR 2003-0 4, AS CONTENDED BY THE ASSESSING OFFICER. 3. IN BRIEF, THE FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO SOLD A PROPERTY SITUATED AT SHIVAJINAGAR, PUNE DUR ING THE YEAR UNDER APPEAL FOR A TOTAL CONSIDERATION OF RS. 1.90 CRORES AND CAPITAL GAIN WAS COMPUTED AT RS. 1,50,14,080/- AFTER CONSIDERING THE INDEXED 2 ITA NO. 1507/PN/2011 LAXMIKANT D DESHPANDE A.Y. 2007-08 COST OF ACQUISITION AT RS. 39,85,920/-. THE ASSESS ING OFFICER HAS DISAGREED WITH THE ASSESSEE ON THE ADOPTION OF INDE XED COST OF ACQUISITION AT RS. 39,85,920/-. THE ASSESSEE HAD A DOPTED THE FAIR MARKET OF THE PROPERTY ON 1-4-1981 AS THE COST OF A CQUISITION IN TERMS OF SECTION 55(2)(B) OF THE ACT AT RS. 7,68,00 0/- AND THEREAFTER ASCERTAINED THE INDEXED COST OF ACQUISITION AT RS. 39,85,920/- AFTER CONSIDERING THE COST INFLATION INDEX OF 1981-82. T HE ASSESSING OFFICER HOWEVER, HELD THAT THE ASSESSEE ACQUIRED TH E PROPERTY ON THE DEATH OF HIS FATHER ON 18-1-2004 AS PER HIS FATHER S WILL DATED 20-12- 2002 AND THEREFORE, THE COST INFLATION INDEX FOR TH E F.Y. 2003-04 WAS TO BE CONSIDERED WHILE ASCERTAINING THE INDEXED COS T OF ACQUISITION INSTEAD OF COST INFLATION INDEX FOR 1981-82 CONSIDE RED BY THE ASSESSEE. 4. FACTUALLY, THE SAID PROPERTY WAS PURCHASED BY TH E ASSESSEES MOTHER MRS. SUDHA DESHPANDE VIDE REGISTERED SALE DE ED DATED 21- 10-1957. MRS. SUDHA DESHPANDE EXPIRED ON 25-10-200 2 AND IN TERMS OF HER WILL DATED 4-7-2001, THE SAID PROPERTY WAS TRANSMITTED TO HER HUSBAND MR. DATTATRAYA DESHPANDE. MR. DATTAT RAYA DESHPANDE I.E. ASSESSEES FATHER EXPIRED ON 18-1-20 04 AND IN TERMS OF HIS WILL DATED 20-12-2002, THE SAID PROPERTY WAS TRANSMITTED IN FAVOUR OF THE ASSESSEE. NOW, THE CASE SET UP BY TH E ASSESSEE IS THAT IN TERMS OF SEC. 49(1)(II) OF THE ACT READ WIT H EXPLANATION THEREOF, THE COST OF ACQUISITION OF THE PROPERTY HA S TO BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PRO PERTY VIZ. SMT. SUDHA DESHPANDE ACQUIRED IT. PERTINENTLY, THE AFOR ESAID ASSERTION OF THE ASSESSEE IS ON A SOUND FOOTING, INASMUCH AS THE EXPLANATION TO SEC. 49(1) PRESCRIBES THAT THE EXPRESSION PREVI OUS OWNER OF THE PROPERTY IN RELATION TO ANY CAPITAL ASSET OWNED BY AN ASSESSEE MEANS THE LAST OF THE PREVIOUS OWNERS WHO ACQUIRED IT BY A MODE OTHER THAN THOSE REFERRED TO IN CLAUSES (I), (II), (III) AND (IV) OF SEC. 3 ITA NO. 1507/PN/2011 LAXMIKANT D DESHPANDE A.Y. 2007-08 49(1) OF THE ACT. IN TERMS THEREOF AS THE ASSESSEE RECEIVED THE PROPERTY IN TERMS OF WILL OF HIS DECEASED FATHER, W HO HAD, IN TURN, RECEIVED AS PER THE WILL OF HIS WIFE SMT. SUDHA DES HPANDE, THE PREVIOUS OWNER, WHO HAD ACQUIRED IT BY MODE OF ACQU ISITION OTHER THAN THOSE PRESCRIBED IN CLAUSES (I) TO (IV) OF SEC . 49(1) OF THE ACT IS MRS. SUDHA DESHPANDE. IN THIS VIEW OF THE MATTER, IT HAS TO BE HELD THAT IN TERMS OF EXPLANATION 1(I)(B) TO SEC. 2(42A) OF THE ACT, ASSESSEE IS DEEMED TO HAVE HELD THE IMPUGNED CAPITA L ASSET FROM 21-10-1957 THE AFORESAID PROPOSITION IS IN LINE WI TH THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DY. CI T VS. MANJULA J. SHAH (313 ITR (AT) 417) WHICH HAS SINCE BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE REPORTED AT ( 2012) 249 CTR (BOM) 270. IN TERMS THEREOF, IT HAS TO BE HELD THAT IN DETERMINING THE INDEXED COST OF ACQUISITION U/S 48 OF THE ACT FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAIN, THE ASSESSEE IS T O BE TREATED AS HAVING HELD THE ASSET FROM 21-10-1957. AS A RESULT, THE COST OF ACQUISITION HAS TO BE THE FAIR MARKET VALUE OF T HE PROPERTY AS ON 1- 4-1981 IN TERMS OF SEC. 55(2)(B) OF THE ACT AND THE COST INFLATION INDEX FOR 1981-82 WOULD BE APPLICABLE IN DETERMININ G THE INDEXED COST OF ACQUISITION. THE STAND OF THE ASSESSING OF FICER THAT AS THE ASSESSEE INHERITED THE CAPITAL ASSET WITH EFFECT FR OM 18-1-2004 AND THEREFORE, THE FIRST YEAR OF HOLDING THE ASSET WOUL D BE THE F.Y. 2003- 04 AND ACCORDINGLY THE COST INFLATION INDEX FOR 200 3-04 WOULD BE APPLICABLE, IS CLEARLY UNTENABLE HAVING REGARD TO T HE PARITY OF JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF MANJUL A J. SHAH (SUPRA). IN THIS BACKGROUND OF THE MATTER, WE FIND THAT THE CIT(A) MADE NO MISTAKE IN DIRECTING THE ASSESSING OFFICER TO WORK OUT THE INDEXED COST OF ACQUISITION BY ADOPTING THE COST IN FLATION INDEX FOR F.Y. 1981-82 INSTEAD OF COST INDEX FOR A.Y. 2003-04 ADOPTED BY THE ASSESSING OFFICER. AT THE TIME OF HEARING BEFORE U S, THE LEARNED DR HAS NOT POINTED OUT ANY DECISION TO THE CONTRARY WH ICH WOULD REQUIRE 4 ITA NO. 1507/PN/2011 LAXMIKANT D DESHPANDE A.Y. 2007-08 US TO DEVIATE FROM THE CONCLUSION OF THE CIT(A). I N VIEW OF THE AFORESAID DISCUSSION, WE DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER 2012. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED:23 RD NOVEMBER 2012 ANKAM COPY TO:- 1. ASSESSEE 2. DEPARTMENT 3. THE CIT (A)-II PUNE 4. THE CIT- II PUNE 5. THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T. A.T., PUNE. BY ORDER //TRUE COPY// SR. P.S. I.T.A.T., PUNE