Dy.CIT, Cir.2, Pune, Pune V. Smt. Pushpa Tejani, Pune

ITA 151/PUN/2012

• Counselvise Citation: 15124514 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Gift; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 151/PN/2012 (ASSESSMENT YEAR: 2005-06) DY. COMMISSIONER OF INCOME TAX CIRCLE 2, PUNE . APPELLANT VS. SMT. PUSHPA TEJANI OXFORD HALLMARK C-801, LANE NO. 7 KOREGAON PARK, PUNE 411 001 PAN : ACSPT 6943 R . RESPONDENT APPELLANT BY : MS. ANN KAPTHUAMA RESPONDENT BY : WRITTEN SUBMISSION DATE OF HEARING : 10-04-2013 DATE OF PRONOUNCEMENT : 29-04-2013 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 10.10.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 12.11.2007 PAS SED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME TAX ACT , 1961(IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, ALTHOUGH THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE SOLITARY GRIEVANCE IS WITH REGARD TO ACTION OF THE CIT(A) IN HOLDING THAT IN COMPUTING CAPITAL GAIN ON SALE OF F LAT, THE ASSESSEE WAS ENTITLED TO WORK OUT THE COST INFLATION INDEX AND THE INDEXE D COST OF ACQUISITION BY TAKING THE DATE OF ACQUISITION BY THE PREVIOUS OWNE R IN RESPECT OF 50% RIGHT ACQUIRED BY THE ASSESSEE BY INHERITANCE AFTER THE D EATH OF HER HUSBAND SHRI LAMIDAS TEJANI. ITA NO. 151/PN/2012 SMT. PUSHPA TEJANI A.Y. 2005-06 3. IN BRIEF, FACTS ARE THAT ASSESSEE IS AN INDIVIDU AL WHO FILED A RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 DECLARING TOTAL INCOME OF RS. 10,71,034/- WHICH INTER-ALIA INCLUDED LONG TERM CAPITAL GAIN (LTCG) ON SALE OF FLAT IN KUMKUM APARTMENTS COOPERATIVE HOUSING SOCIETY LTD., VILLE PARLE, MUMBAI AT RS. 6,65,160/-. THE ASSESSEE HAD SOLD A FLAT FOR A TOTAL CONSIDERATION OF RS. 48,00,000/- AND THE LTCG WAS COMPUTED AT RS. 6, 65,160/-. THE SAID PROPERTY WAS ORIGINALLY PURCHASED BY THE DISEASED H USBAND SHRI LAXMIDAS TEJANI OF THE ASSESSEE, AND HER BROTHER-IN-LAW MR. RAMNIKLAL TEJANI ON 10.02.1967 FOR A SUM OF RS. 35,400/-. ON THE DEATH OF MR. LAXMIDAS TEJANI ON 13.05.1988, 50% SHARE DEVOLVED ON THE ASSESSEE. THE REAFTER, ON 27.01.1994 THE BALANCE 50% SHARE IN THE PROPERTY BELONGING TO RAMNIKLAL TEJANI WAS ALSO TRANSFERRED TO THE ASSESSEE BY WAY OF A FAMILY SETT LEMENT FOR A CONSIDERATION RS. 17,700/-. THE SAID PROPERTY WAS THEREAFTER SOLD BY THE ASSESSEE ON 18.08.2004 FOR A TOTAL CONSIDERATION OF RS. 48,00,0 00/-, AND, CAPITAL GAIN OF RS. 6,65,160/- WAS COMPUTED. THE ASSESSEE CONSIDERE D THE MARKET VALUE OF THE SAID PROPERTY AS ON 01.04.1981 AS A COST OF ACQ UISITION FOR THE PURPOSE OF CALCULATING CAPITAL GAIN. THE ASSESSING OFFICER HOW EVER DIFFERED WITH THE ASSESSEE AND HE DID NOT CONSIDER THE DATE OF HOLDIN G IN RESPECT OF THE 50% SHARE DEVOLVED ON THE DEATH OF ASSESSEES HUSBAND F OR THE PURPOSES OF INDEXATION AND INSTEAD THE ASSESSING OFFICER ALLOWE D INDEXATION FROM THE YEAR 1998-99 I.E. DURING THE YEAR IN WHICH 50% SHARE HAD DEVOLVED ON THE ASSESSEE ON DEATH OF HER HUSBAND. SECONDLY, WITH RE GARD TO THE OTHER 50% SHARE OF THE PROPERTY RECEIVED BY WAY OF FAMILY SET TLEMENT ON 27.01.1994, THE ASSESSING OFFICER HELD IT TO BE A PURCHASE AND THAT DATE OF PURCHASE WAS TAKEN AS THE DATE OF FAMILY SETTLEMENT AND COST OF ACQUISITION WAS CONSIDERED AT RS. 17,700/- AND WITH RESPECT TO THE SAME THE IN DEXATION WAS ALLOWED BY THE ASSESSING OFFICER FROM 1994-95 TO 2004-05. THUS , THERE WERE TWO ASPECTS ON WHICH THE ASSESSING OFFICER DIFFERED WITH THE AS SESSEE NAMELY, FIRSTLY, IN RELATION TO 50% SHARE IN PROPERTY INHERITED BY THE ASSESSEE ON THE DEATH OF HER HUSBAND IN 1998; AND, SECOND BEING THE 50% SHARE AC QUIRED BY THE ASSESSEE ITA NO. 151/PN/2012 SMT. PUSHPA TEJANI A.Y. 2005-06 IN TERMS OF FAMILY ARRANGEMENT DATED 27.01.1994 WHI CH THE ASSESSING OFFICER HELD TO BE A CASE OF PURCHASE. THE AFORESAID DISPUT E RESULTED IN COMPUTATION OF CAPITAL GAIN OF RS. 33,21,337/- WHICH WAS CARRIE D IN APPEAL BEFORE THE CIT(A). ON THE FIRST ASPECT OF THE DISPUTE RELATING TO DEVOLVEMENT OF 50% SHARE TO THE ASSESSEE ON THE DEATH OF HER HUSBAND, THE CI T(A) UPHELD THE PLEA OF THE ASSESSEE FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VERSUS MANJULA J. SHAH (2009) 318 ITR (AT) 417 (MUMBAI)(SB ). ON THIS ASPECT THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE US. SO FAR AS THE SECOND ASPECT RELATING TO THE 50% SHARE OF THE PROPERTY ACQUIRED BY THE ASSESSEE IN TERMS OF THE FAMILY SETTLEMENT IS CONCERNED, THE CIT(A) HAS UPHELD THE STAND OF THE ASSESSING OFFICER. NEVERTHELESS THE ISSUE BEFORE US IS WITH REGARD TO THE COMPUTATION OF INDEXED COST OF ACQUISITION AND ADOP TION OF COST INFLATION INDEX FOR THE PURPOSE OF DETERMINING CAPITAL GAIN WITH RE SPECT TO THE 50% SHARE IN PROPERTY DEVOLVED ON THE ASSESSEE ON THE DEATH OF H ER HUSBAND MR. LAXMIDAS TEJANI. 4. IT IS NOTICEABLE THAT THE DECISION OF THE CIT(A) IS BASED ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. MANJULA J. SHAH (SUPRA) WHICH HAS SINCE BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT VIDE ITS JUDGMENT IN ITA NO. 3378 OF 2010 DATED 11.10.20 11. IN THE CASE BEFORE THE HONBLE HIGH COURT, ASSESSEES DAUGHTER HAD PURCHAS ED A FLAT ON 29.01.1993 WHICH WAS GIFTED TO THE ASSESSEE ON 01.02.2003 AND ASSESSEE SOLD THE FLAT ON 30.06.2003. IN COMPUTING LTCG, ASSESSEE COMPUTED IN DEXED COST OF ACQUISITION UNDER EXPLANATION (III) TO SECTION 48 O N THE BASIS THAT SHE HAD HELD THE FLAT SINCE 29.01.1993 WHEREAS THE ASSESSING OFF ICER COMPUTED IT ON THE BASIS THAT THE ASSESSEE HELD THE FLAT ONLY FROM 01. 02.2003 AND THEREFORE THE COST INFLATION INDEX OF FINANCIAL YEAR 2002-03 WOUL D APPLICABLE. THE SPECIAL BENCH OF THE TRIBUNAL UPHELD THE CLAIM OF THE ASSES SEE, WHICH HAS BEEN AFFIRMED BY THE HONBLE HIGH COURT. IN TERMS OF THE AFORESAID DECISION, IT IS TO BE UNDERSTOOD THAT IN TERMS OF EXPLANATION 1(B) TO SECTION 2(42A) OF THE ACT IN DETERMINING THE PERIOD FOR WHICH AN ASSET IS HELD B Y ASSESSEE, THE PERIOD FOR ITA NO. 151/PN/2012 SMT. PUSHPA TEJANI A.Y. 2005-06 WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER HAS TO BE INCLUDED. IN TERMS OF THE AFORESAID LEGAL POSITION, THEREFORE, I N THE PRESENT CASE IT HAS TO BE HELD THAT THOUGH THE ASSESSEE ACQUIRED 50% SHARE IN THE PROPERTY ON DEVOLVEMENT OF DEATH OF HER HUSBAND ON 13.05.1988, BUT SHE WAS DEEMED TO HAVE HELD THE ASSET FROM 10.02.1967 ONWARDS, THE DA TE OF WHICH IT WAS ORIGINALLY PURCHASED BY HER HUSBAND. FOLLOWING THE RATIO OF THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE MANJULA J . SHAH (SUPRA) THE AFORESAID FICTION WILL ALSO OPERATE FOR CLAUSE (III ) OF EXPLANATION TO SECTION 48 OF THE ACT AS WELL AS FOR DETERMINING THE COST OF INFL ATION INDEX. THEREFORE, HAVING REGARD TO THE JUDGEMENT OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF MANJULA J. SHAH (SUPRA), THE CIT(A) MADE NO MISTAKE IN UPHOLDING THE PLEA OF THE ASSESSEE THAT THE COST INFLATION INDEX AND THE INDEXED COST OF ACQUISITION IN RESPECT OF THE 50% SHARE IN PROPERTY ACQUIRED BY TH E ASSESSEE BY WAY OF INHERITANCE ON THE DEATH OF HER HUSBAND HAS TO BE W ORKED OUT BY TAKING INTO CONSIDERATION THE DATE OF ACQUISITION BY THE PREVIO US OWNER I.E. THE HUSBAND OF THE ASSESSEE. RESULTANTLY, THE REVENUE HAS TO FAIL ON THIS ASPECT. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 29 TH APRIL, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)- II , PUNE; 4) THE CIT- II , PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE