ITO, Coimbatore V. N.Kesavan, Coimbatore

ITA 1621/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4512 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: T VASUDEVAN
• Keywords: Capital asset; Gift; Cost of acquisition
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1621/MDS/2013 ASSESSMENT YEAR : 2006-07 INCOME-TAX OFFICER, WARD III(4), 63, RACE COURSE ROAD, COIMBATORE-641 018. (APPELLANT) VS SHRI N. KESAVAN, NO. 299, RANGAI GOUNDER STREET, COIMBATORE-641 001. [PAN: ADQPK 6092 B] (RESPONDENT) REVENUE BY : SHRI N. MADHAVAN, JCIT ASSESSEE BY : SHRI T.VASUDEVAN, ADVOCATE DATE OF HEARING : 24-09-2013 DATE OF PRONOUNCEMENT : 21-10-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGNING THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMBATORE DATED 24-05-2013 RELEVANT TO THE ASSESSMENT YEAR (A Y) 2006-07. I.T.A. NO. 1621/MDS/2013 2 2. THE APPEAL HAS BEEN FILED WITH A DELAY OF THREE DAYS. THE REVENUE HAS FILED PETITION CITING REASONS FOR CONDO NATION OF DELAY. WE ARE SATISFIED THAT THE DELAY IN FILING OF THE AP PEAL IS NOT INTENTIONAL OR WILLFUL. THEREFORE, THE DELAY OF TH REE DAYS IN FILING OF THE APPEAL IS CONDONED, THE APPEAL IS ADMITTED TO B E HEARD ON MERITS. 3. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY. 2006-07 ON 31-10-2006 DECLARING ITS INCOME AS ` 3,43,348/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSME NT WAS COMPLETED AFTER MAKING ADDITION OF ` 6,00,768/- ON ACCOUNT OF LONG TERM CAPITAL GAINS. THEREAFTER, THE ASSESSING OFFI CER OBSERVED THAT THERE HAS BEEN ESCAPEMENT OF INCOME WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREIN AFT ER REFERRED TO AS THE ACT). ACCORDINGLY, NOTICE U/S. 148 WAS IS SUED TO THE ASSESSEE. THE ASSESSEE HAD INHERITED A PROPERTY FR OM HIS FATHER ON 18-10-1996 AFTER HIS DEATH. THE SAID PROPERTY W AS SOLD BY THE ASSESSEE ON 15-09-2005 FOR A CONSIDERATION OF ` 1,14,44,883/-. THE ASSESSING OFFICER COMPUTED CAPITAL GAIN ON THE SALE OF PROPERTY INHERITED BY THE ASSESSEE BY ADOPTING THE COST OF INFLATION INDEX RELEVANT TO THE YEAR 1996-97 I.E., THE YEAR I N WHICH THE I.T.A. NO. 1621/MDS/2013 3 PROPERTY WAS INHERITED BY THE ASSESSEE AND THUS MAD E ADDITION OF ` 7,78,852/-. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 25-09 -2012 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) V IDE IMPUGNED ORDER RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH (2012) 68 DTR (BOMBAY) 269 , DIRECTED THE ASSESSING OFFICER TO CALCULATE THE I NDEXED COST OF ACQUISITION WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET I.E., AS ON 01-04-1981. THE REVENUE HAS COME IN APPEAL BEFORE TRIBUNAL IMPUGNING THE ORDER OF THE CIT(APPEALS). 4. SHRI N. MADHAVAN, APPEARING ON BEHALF OF THE REV ENUE STRONGLY SUPPORTING THE ASSESSMENT ORDER HAS PRAYED FOR SETTING ASIDE THE ORDER OF THE CIT(APPEALS). 5. ON THE OTHER HAND, SHRI T. VASUDEVAN, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT(APPEALS) IS WELL REASONED AND PRAYED FOR DISMIS SAL OF THE APPEAL OF THE REVENUE. THE LD. COUNSEL SUBMITTED T HAT THE CIT(APPEALS) HAS RIGHTLY ADOPTED THE COST OF INFLAT ION INDEX I.T.A. NO. 1621/MDS/2013 4 RELEVANT TO THE YEAR 1981-82 IN ACCORDANCE WITH THE PROVISIONS OF SECTION 49(1)(II). 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE UN-DISPUTED FACTS OF TH E CASE ARE THAT THE GRANDFATHER OF THE ASSESSEE HAD ORIGINALLY PURC HASED THE IMMOVEABLE PROPERTY CONSISTING OF LAND AND BUILDING ON 05-05-1937. THE PROPERTY WAS INHERITED BY THE FATH ER OF THE ASSESSEE IN THE YEAR 1947 AND SUBSEQUENTLY AFTER DE MISE OF ASSESSEES FATHER, THE PROPERTY DEVOLVED UPON THE A SSESSEE ON 18-10-1996. THE PROPERTY-IN-QUESTION WAS SOLD BY T HE ASSESSEE ON 15-09-2005 FOR A CONSIDERATION OF ` 1,14,44,883/-. THE ASSESSEE HELD 55% SHARE IN THE PROPERTY. IN RE-ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT LONG T ERM CAPITAL GAINS SHOULD HAVE BEEN CALCULATED ON THE INDEXED CO ST OF ACQUISITION OF THE PROPERTY RELEVANT TO THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE PROPERTY I.E., IN THE YEAR 1996- 97 INSTEAD OF 1981-82 I.E., THE YEAR IN WHICH THE P REVIOUS OWNER HELD THE ASSET. I.T.A. NO. 1621/MDS/2013 5 7. LET US FIRST EXAMINE THE PROVISIONS OF SECTION 4 9 OF THE ACT. THE RELEVANT EXTRACT OF SECTION 49 IS RE-PRODUCED H EREIN BELOW: 49(1) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE: (I) XXXX (II) UNDER A GIFT OR WILL; (III) (A) BY SUCCESSION, INHERITANCE OR DEVOLUTION OR (B) XXXX (C) XXXX (D) XXXX (E) XXXX (IV) XXXX THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEME D TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY A CQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROVEMENT OF THE ASSETS INCURRED OR BORN BY THE PREVIOUS OWNER OR THE ASSES SEE AS THE CASE MAY BE . A PERUSAL OF ABOVE PROVISIONS OF SECTION 49 CLEARLY INDICATE THAT FOR DETERMINING CAPITAL GAIN ARISING OUT OF TRANSFER OF CAPITAL ASSET ACQUIRED BY ASSESSEE UNDER SUCCESSION/WILL, THE IND EXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO TH E YEAR IN WHICH THE PREVIOUS OWNER I.E., THE FATHER OF THE ASSESSEE FIRST HELD THE I.T.A. NO. 1621/MDS/2013 6 ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. IN THE INSTANT CASE, THE FATHER OF THE ASSESSEE ACQUIRED PROPERTY IN THE YEAR 1947, THEREFORE, THE NEAREST V ALUE FOR DETERMINING INDEXED COST OF ACQUISITION SHALL BE TH E YEAR 1981. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE CIT(APPEALS). ACCORDINGLY, THE APPEAL OF THE R EVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED ON MONDAY, THE 21 ST OCTOBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 21 ST OCTOBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR