M.Prakash, CHENNAI V. ITO, CHENNAI

ITA 1693/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8457 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 07-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SHREEKANTH
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Cost of acquisition; Fair market value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . , ! ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 1693/MDS/2016 # $# /ASSESSMENT YEAR : 2013-14 SHRI M.PRAKASH, F-4, JAIN ANAHITHA, NO.9, 1 ST CROSS STREET, LAKE AREA, NUNGAMBAKKAM, CHENNAI 600 034. PAN : AYGPP9316G V. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 2(1), CHENNAI. ( %& /APPELLANT) ( '(%& /RESPONDENT) %& ) * /APPELLANT BY : SHRI A.S.SRIRAMAN, ADVOCATE '(%&)* /RESPONDENT BY : SHRI A.V.SHREEKANTH, JCIT + ),! /DATE OF HEARING : 30.08.2016 -$ ),! /DATE OF PRONOUNCEMENT : 23.09.2016 /O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(A) -16, CHENNAI DATED 11.05.2016 AND PERTAINS TO ASSES SMENT YEAR 2013-14. 2 I.T.A. NO. 1693/MDS/2016 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DETER MINATION OF FAIR MARKET VALUE AS ON 01.04.1981 FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. SHRI A.S.SRIRAMAN, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ACQUIRED A PROPERTY BY WAY OF A SETTLEMENT DEED EXE CUTED BY HIS GRANDMOTHER ON 14.02.2003. THIS PROPERTY WAS ORIGINALLY PURCHAS ED BY THE ASSESSEES GRAND MOTHER MRS.KAMALAMMAL ON 23.03.1960. THEREFORE, THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER TO DETERMINE THE COST OF ACQUISITION AS ON 01.04.1981. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE ACQUIRED THE PROPER TY ONLY ON 14.02.2003 BY MEANS OF A SETTLEMENT DEED FROM HIS GRANDMOTHER. TH EREFORE, THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED FROM ASSESSMENT Y EAR 2003-04. PLACING RELIANCE ON THE JUDGMENT OF THE BOMBAY HIGH COURT I N THE CASE OF CIT-12 VS. MANJULA J.SHAH REPORTED IN (2012) 204 TAXMAN 691, T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON IDENTICAL SITUATION, THE BOMBAY HIGH COURT FOUND THAT THE COST OF INDEXATION HAS TO BE DETERMI NED WITH EFFECT FROM 01.04.1981. IN FACT, THIS TRIBUNAL IN S.KRISHNAN VS . DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) REPORTED IN (2015) 44 CCH 0132 CHENTRIB HAD AN OCCASION TO CONSIDER AN IDENTICAL SITUATION. THIS T RIBUNAL PLACING RELIANCE ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF MA NJULA J.SHAH FOUND THAT THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH EFFECT FROM 01.04.1981. THEREFORE, ACCORDING TO THE LEARNED COU NSEL FOR THE ASSESSEE, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 3 I.T.A. NO. 1693/MDS/2016 3. ON THE CONTRARY, SHRI A.V.SHREEKANTH, THE LEARNE D DEPARTMENT REPRESENTATIVE SUBMITTED THAT THE ASSESSEE ACQUIRED THE PROPERTY FROM HIS GRANDMOTHER ONLY BY MEANS OF A SETTLEMENT DEED DATE D 14.02.2003. THEREFORE, THE ASSESSEE BECOMES OWNER OF THE PROPERTY ONLY FRO M 14.02.2003. HENCE, THE CIT(A) HAS RIGHTLY FOUND THAT THE INDEXED COST OF A CQUISITION HAS TO BE COMPUTED ONLY FROM THE DATE ON WHICH THE ASSESSEE A CQUIRED THE PROPERTY. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE ARISES FOR CONSIDERATION, RIGHTLY POINTED OUT BY THE LEARNED D EPARTMENT REPRESENTATIVE IS THE FAIR MARKET VALUE AS ON 01.04.1981 FOR THE PURP OSE OF COMPUTING CAPITAL GAIN. IT IS NOT IN DISPUTE THAT THE ASSESSEE ACQUIR ED THE PROPERTY BY MEANS OF A SETTLEMENT DEED EXECUTED BY HIS GRANDMOTHER ON 14.0 2.2003. THE REVENUE CLAIMS THAT THE ASSESSEE BECOMES THE OWNER OF THE P ROPERTY ONLY FROM 14.02.2003. THEREFORE, THE COST OF INDEXATION HAS T O BE COMPUTED ONLY FROM THE FINANCIAL YEAR 2002-03 RELEVANT TO ASSESSMENT Y EAR 2003-04. FROM THE ORDER OF THE CIT(A), IT APPEARS THAT THE ASSESSEE B ROUGHT TO THE NOTICE OF THE CIT(A) THE DECISION OF THIS BENCH OF THE TRIBUNAL I N THE CASE OF MR.RAMALINGAM BALAJI VS.DCIT IN ITA NO.86/MDS/2016 DATED 24.03.20 16. THE CIT(A) AFTER REFERRING TO THE DECISION OF THIS TRIBUNAL OBSERVED THAT HE DIFFER FROM THE DECISION OF THIS TRIBUNAL. IT IS PERTINENT TO POINT OUT THAT THE CIT(A) IS AN AUTHORITY LOWER IN RANK TO THAT OF THIS TRIBUNAL. W HEN THIS TRIBUNAL FOUND THAT THE INDEXATION HAS TO BE MADE WITH EFFECT FROM 01.0 4.1981, THE CIT(A) CANNOT DIFFER FROM THE ORDER OF THIS TRIBUNAL. IF THE REVE NUE HAS ANY GRIEVANCE OVER THE 4 I.T.A. NO. 1693/MDS/2016 ORDER OF THIS TRIBUNAL, IT IS OPEN TO THEM TO TAKE UP THE MATTER BEFORE THE HIGH COURT IN A MANNER KNOWN TO LAW. IF THE CIT(A) IS AL LOWED TO DIFFER FROM THE DECISION OF THE TRIBUNAL, THEN, THERE IS NO MEANING IN HAVING AN APPELLATE TRIBUNAL UNDER THE SCHEME OF INCOME TAX ACT. THEREF ORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THIS TRIBUNAL FOUND TH AT THE COST OF ACQUISITION HAS TO BE DETERMINED AS ON 01.04.1981, WHEN THE PRO PERTY WAS INHERITED FROM THE PREVIOUS OWNER EITHER BY SUCCESSION OR BY MEANS OF SETTLEMENT DEED, THE CIT(A) IS EXPECTED TO FOLLOW THE ORDER OF THIS TRIB UNAL. UNFORTUNATELY, THE CIT(A) HAS NOT DONE SO AND HE SIMPLY OBSERVED THAT HE DIFFER FROM THE DECISION OF THIS TRIBUNAL. SUCH AN ATTITUDE ON THE PART OF T HE CIT(A) IS NOT APPRECIABLE. 5. THIS TRIBUNAL HOPE AND TRUST THAT IN FUTURE, THE CIT(A) WILL BE LITTLE MORE CAREFUL IN MAKING AN OBSERVATION AGAINST THE O RDER OF THIS TRIBUNAL. WHENEVER THERE IS AN ORDER OF THIS TRIBUNAL ON IDEN TICAL SET OF FACTS, UNLESS THERE IS A CONTRARY JUDGMENT OF ANY OF THE HIGH COU RTS OR APEX COURT, THE CIT(A) IS EXPECTED TO FOLLOW THE SAME. 6. NOW COMING TO THE ISSUE UNDER CONSIDERATION, ADM ITTEDLY, THE PROPERTY WAS ACQUIRED BY THE ASSESSEE FROM HIS GRANDMOTHER B Y MEANS OF A SETTLEMENT DEED. ON AN IDENTICAL SITUATION, THIS TRIBUNAL, PLA CING RELIANCE ON THE JUDGMENT OF BOMBAY HIGH COURT IN MANJULA J.SHAH (SUPRA) FOUN D THAT THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH EFFECT FROM 01. 04.1981. SINCE THE ISSUE IS IDENTICAL AS IN MANJULA J.SHAH (SUPRA), THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT THE JUDGMENT OF THE MUMBAI HIGH COURT IS SQUAR ELY APPLICABLE TO THESE 5 I.T.A. NO. 1693/MDS/2016 FACTS. THEREFORE, BY FOLLOWING THE JUDGMENT OF THE MUMBAI HIGH COURT IN MANJULA J.SHAH (SUPRA) AND FOR THE REASONS STATED T HEREIN, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO COMPUTE THE INDEXED COST OF ACQUISITION WITH EFFECT FROM 01 .04.1981. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 23 RD SEPTEMBER, 2016 AT CHENNAI. SD/- SD/- ( . ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) ! /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, . /DATED, THE 23 RD SEPTEMBER, 2016. SP. ) ',/0 10$, /COPY TO: 1. %& /APPELLANT 2. '(%& /RESPONDENT 3. + 2, ( )/CIT(A) 4. + 2, /CIT, 5. 03 ', /DR 6. 4# 5 /GF.