ACIT 20(3), MUMBAI V. SNEHA VIJAY KANAYA, MUMBAI

ITA 177/MUM/2014

• Counselvise Citation: 17719914 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Department
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2014
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: RA JEEV WAGLAY
• Keywords: Capital asset; Gift; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & MS. SUSHMA CHOWLA , J M ./ I TA NO. 17 7 / MUM/20 1 4 ( / ASSESSMENT YEAR : 2009 - 2010 ) ACIT 20(3), MUMBAI VS. MS. SNEHA VIJAY KANAYA, KANAYA SHANTINIKETAN, N DUTTA MARG, 4 BUNGALOWS, ANDHERI (WEST), MUMBAI - 400053 ./ ./ PAN/GIR NO. : A ZVPK 0745 L ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI NEIL PHILIP /ASSESSEE BY : SHRI RAJEEV WAGLAY / DATE OF HEARING : 11 /0 6 / 2015 / DATE OF PRONOUNCEMENT 11 /06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2009 - 2010 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE ACT. 2. THE GRIEVANCE OF THE RE VENUE RELATES TO CIT(A)S AC TION FOR DIRECTING THE AO TO TAKE COST OF ACQUISITION WITH REFERENCE TO THE YEAR IN WHICH PREVIOUS OWNER HAS ACQUIRED THE ASSET. T HE FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 10 ON 11.06.2009 DECLARING TOTAL INCOME OF RS.70,30,660/ - . THE RETURN WAS PROCESSED AND SELECTED FOR SCRUTINY. DURING ASSESSMENT ITA NO. 177 /1 4 2 PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN CAPITAL GAIN ON SALE OF PROPERTY DURING THE YEAR UNDER CONSIDERA TION. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE SAID PROPERTY WAS ACQUIRED BY THE ASSESSEE BY WAY OF INHERITANCE AND THEREFORE PROVISIONS OF SECTION 49(1)(III)(A) OF T HE I T ACT 1961, WERE APPLICABLE. THE ASSESSING OFFICER ALSO NOTED THAT IN ORDER TO COMPUTE THE CAPITAL GAIN ARISING ON THE SAID PROPERTY, THE ASSESSEE HAD TAKEN THE BENEFIT OF INDEXATION TO COMPUTE THE COST OF ACQUISITION. THE ASSESSEE SUBMITTED THAT INDEXATION WAS ALLOWABLE IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF MANJULA J. SHAH FOR ASSESSMENT YEAR 2004 - 05 WHEREIN THE HON'BLE TRIBUNAL HAD HELD ACCORDINGLY. HOWEVER, THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE STATING THAT INDEXATION COULD NOT BE ALLOWED SINCE THE SAID, DECISION OF THE TRIBUNAL, HAD BEEN CH ALLENGED BY THE DEPARTMENT BEFORE THE HONBLE BOMBAY HIGH COURT. ACCORDINGLY, THE ASSESSING OFFICER RECOMPUTED THE LONG TERM CAPITAL GAIN WITHOUT ALLOWING INDEXATION OF RS.73,46,875/ - AND COMPLETED THE ASSESSMENT. 3. BY THE IMPUGNED ORDER , THE CIT(A) ALLOW ED ASSESSEES CLAIM FOR INDEXATION AFTER HAVING THE FOLLOWING OBSERVATION : - 3.5 IN THE PRESENT CASE, THE APPELLANT, ACQUIRED THE SAID PROPERTY, BY WAY OF INHERITANCE AND THE A.O HELD THAT BENEFIT OF INDEXATION WOULD NOT BE ALLOWABLE IN COMPUTATION OF C APITAL GAINS SINCE THE PROPERTY WAS SO ACQUIRED. THE ONLY REASON MENTIONED IN THE ASSESSMENT ORDER FOR THE DENIAL OF THE INDEXATION - BENEFIT WAS THE FACT THAT THE DEPARTMENT HAD NOT ACCEPTED THE DECISION OF THE HON'BLE ITAT IN THE CASE OF MANJULA J SHAH A ND. WAS IN FURTHER APPEAL. AS NOTED IN THE PRECEDING PARAGRAPHS, THE PROVISIONS OF THE ACT DO NOT LIMIT THE OPTION OF INDEXATION TO ASSETS ACQUIRED THROUGH GIFT OR WILL ETC. AS NOTED BY THE HON'BLE DELHI HIGH COURT THE PROVISIONS OF SECTION 48 AND 49 HAVE TO BE INTERPRETED HARMONIOUSLY TO GIVE FULL EFFECT TO LEGISLATIVE INTENT. THUS ON REVIEW OF THE ENTIRE CONSPECTUS OF. THE FACTS OF THE CASE AND THE PROVISIONS OF THE ACT, I ITA NO. 177 /1 4 3 FIND THAT THE BENEFIT OF INDEXATION WILL APPLY TO THE INSTANT CASE AND DIRECT THE A .O. TO A LLOW THE SAME. 4. WE HA VE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE RECORD CAREFULLY. THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH, 355 ITR 474, WHEREIN IT WAS H ELD THAT WHERE A CAPITAL ASSET IS TRANSFERRED UNDER GIFT OR WILL, SUCH TRANSACTION WILL NOT BE TREATED AS TRANSFER AND THE LIABILITY TO PAY CAPITAL GAINS WILL NOT ARISE, HOWEVER, WHENEVER SUCH ASST IS SUBSEQUENTLY TRANSFERRED FOR VALUABLE CONSIDERATION B Y THE ASSESSEE, THE LIABILIT7Y TO PAY CAPITAL GAINS WILL ARISE. THE COURT ALSO CONCLUDED TH AT FOLLOWING THE SCHEME PROVIDE D BY THE ACT, INDEXATION OF COST WOULD BE DETERMINED ON THE BASIS OF INCLUDING THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A). 5 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 11 /06 / 201 5 . SD/ - SD/ - ( ) ( SUSHMA CHOWLA ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 11 /06 /201 5 . . /PKM , . / PS ITA NO. 177 /1 4 4 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. //TRUE COPY/