The ACIT, Circle-6, Surat V. Shri Guj Rustomji Daruwala, Surat

ITA 1541/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94899 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-12-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 12-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition; Tax effect
• Section: 143(3); 154

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO.1541/AHD/2012 /BLOCK ASSTT. YEAR: 2003-2004 ACIT, CIR.6 SURAT. VS SHRI GUL RUSTOMJI DARUWALA 201, MADHURA APARTMENT BHAVNAGARI STREET, SAIYEDPURA SURAT. PAN : ABBPD 6011 C %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : SHRI KAMLESH MAKWANA, SR.DR ASSESSEE BY : NONE / DATE OF HEARING : 09/12/2015 / DATE OF PRONOUNCEMENT: 10/12/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A)-IV, SURAT DATED 20.3.2012 PASSED FOR THE ASSTT.YEAR 2004-05. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN QUASHING THE ORDER PASSED BY THE AO ON 31.3.2011 UNDER SECTION 154 OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) ON 28.6.2006. THE ASSESSEE HA S INHERITED CERTAIN SHARES. HE HAD SHOWN LONG TERM CAPITAL GAIN TAX ON SALE OF THESE INHERITED SHARES. THE CLAIM OF INDEXATION ON INHER ITED SHARES WAS ITA NO.1541/AHD/2012 2 DENIED TO THE ASSESSEE. THE AO HAS COMPUTED LONG T ERM CAPITAL GAIN TAX AT 10% AFTER GIVING BENEFIT OF FIRST PROVISO TO SECTION 112(1)(A) OF THE ACT. THE LD.AO, THEREAFTER, SOUGHT TO RECTIFY HIS ORDER ON THE GROUND THAT BENEFICIAL PROVISO OF FIRST PROVISO TO SECTION 112(1)(A) IS NOT APPLICABLE TO CAPITAL GAIN ARISING FROM TRANSFER OF HIS SHARES OF INHERITED SHARES AS COST OF ACQUISITION OF INHERITED SHARE IS NIL. ACCORDINGLY. HE RECTIFIED HIS ORDER. 4. DISSATISFIED WITH THE ORDER OF THE AO, THE ASSES SEE CARRIED THE MATTER IN APPEAL. THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: 3.2. I HAVE GONE THROUGH THE FACTS OF THE CASE. I FIND THAT THE PROVISO TO SECTION 112(L)(D) [WRONGLY MENTIONED BY THE A.O. AS 112(L)(A)] IS APPLICABLE TO LONG TERM CAPITAL ASSET S IN THE NATURE OF LISTED SECURITIES, UNITS AND ZERO COUPON BONDS IRRE SPECTIVE OF THEIR COST AND NATURE OF ACQUISITION. IN ANY CASE, INHERI TED SECURITIES WILL HAVE TO BE COMPUTED CONSIDERING THE COST TO TH E PREVIOUS OWNER AND THEREFORE CANNOT BE SAID TO HAVE NIL COST OF ACQUISITION. THEREFORE, THE PREMISE OF THE A.O. IS NOT CORRECT. EVEN OTHERWISE, RECTIFICATION AS SOUGHT TO BE MADE BY THE A.O. IS N OT A MATTER APPARENT FROM RECORD. IT REQUIRES AN INTERPRETATION OF THE STATUTE AND MORE THAN ONE VIEW IS POSSIBLE. SUCH RECTIFICAT IONS ARE NOT PERMITTED U/S. 154. IN MY OPINION, THERE WAS NO MIS TAKE IN THE ORDER PASSED U/S. 143(3) AND EVEN IF IT IS TO BE HE LD THAT THERE WAS MISTAKE AS MENTIONED BY THE AO., IT COULD NOT H AVE BEEN RECTIFIED U/S.154. THE ADDITIONAL TAX DEMANDED VID E ORDER U/S.154 IS NOT AS PER LAW. THE AO IS DIRECTED TO W ITHDRAW THE ADDITIONAL DEMAND RAISED. THE APPEAL IS ALLOWED. 5. WITH THE ASSISTANCE OF THE LD.DR WE HAVE GONE TH ROUGH THE RECORD CAREFULLY. 6. THE POWER OF RECTIFICATION UNDER SECTION 154 OF THE INCOME TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE, WHICH I S SOUGHT TO BE RECTIFIED, IS AN OBVIOUS PATENT MISTAKE, WHICH IS A PPARENT FROM THE RECORD AND NOT A MISTAKE, WHICH IS REQUIRED TO BE E STABLISHED BY ARGUMENTS AND LONG DRAWN PROCESS OF REASONING ON PO INTS, ON WHICH ITA NO.1541/AHD/2012 3 THERE MAY CONCEIVABLY BE TWO OPINIONS. THE LD.CIT( A) HAS OBSERVED THAT THERE IS NO APPARENT MISTAKE IN THE ASSESSMENT ORDER WHICH REQUIRES RECTIFICATION. THE VIEW POINTED OUT BY TH E AO CANNOT BE ESTABLISHED WITHOUT LOOKING TO THE FACTS AND ARGUME NTS. APART FROM THE ABOVE, WE FIND THAT THE REVENUE HAS FILED A STATEME NT OF FACTS ALONG WITH THE APPEAL. AT END OF THE STATEMENT, THE REVE NUE HAS PLEADED THAT TAX EFFECT BY VIRTUE OF THIS DECISION OF THE C IT(A) IS OF RS.1,42,300/-, BUT THE ORDER OF THE CIT(A) IS BEING CHALLENGED BECAUSE IT FALLS WITHIN THE EXEMPTION PROVIDED AT SR.NO.8(C ) OF INSTRUCTION NO.3/11 DATED 9.2.2011. ON DUE CONSIDERATION OF TH E FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY MERIT IN THIS APPEAL FOR TWO REASONS VIZ. (I) THAT THERE IS NO APPARENT MIST AKE IN THE ASSESSMENT WHICH REQUIRES RECTIFICATION AND (II) THE INSTRUCTI ON NO.3/2011 IS APPLICABLE IN THIS CASE, AND THE ORDER OF THE CIT(A ) OUGHT NOT TO HAVE BEEN CHALLENGED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 10 TH DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER