The DCIT, Circle-14, Ahmedabad V. Shri Prakash Krishnalal Bhagwati, Ahmedabad

ITA 1811/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9973 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT JAVERI
• Assessee Lawyers: N B SHAH
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NOS.1811 /AHD/2013 (ASSESSMENT YEAR:2006-07) DCIT, CIRCLE 14, AHMEDABAD APPELLANT VS. SHRI PRAKASH KRISHNALAL BHAGWATI VATSALAYA BHAGWATI FARM, B/H KARNAVATI CLUB, MUMATPURA, VILLAGE, BOPAL, AHMEDABAD. RESPONDENT / BY REVENUE : SHRI JAYANT JAVERI, SR. D.R. /BY ASSESSEE : SHRI N. B. SHAH, A.R. /DATE OF HEARING : 07.11.2016 /DATE OF PRONOUNCEMENT : 21.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2006-07 A RISES AGAINST THE CIT(A)-XXI, AHMEDABADS ORDER DATED 15.04.2013, IN APPEAL NO. CIT(A)- XXI/367/11-12, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE REVNUES PLEADINGS IN THE INSTANT APPEAL REA D AS UNDER: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON THE FACT S BY IGNORING THE FACT THAT THE PROPERTY IN QUESTION WAS TRANSFERRED IN FAVOUR OF T HE ASSESSEE IN MAY, 2004 AND NOT IN THE YEAR IN WHICH IT WAS HELD BY PREVIOU S OWNER I.E. 1945. HENCE COST OF INFLATION INDEX OF 1981-82 I.E. 100 IS WRON GLY ADOPTED BY THE ASSESSEE. ITA NO.1811/AHD/2013 (DCIT VS. SHRI PRAKASH K. BHAG WATI) A.Y. 2006-07 - 2 - 2. THE LEARNED CIT(A) ERRED IN LAW AND ON THE FACTS BY IGNORING THE EXPLANATION III OF SECTION 48 OF THE INCOME-TAX ACT, 1961 WHERE IN IT IS CLEARLY MENTIONED THAT BENEFIT OF COST INFLATION INDEX IS TO BE TAKEN FOR THE YEAR IN WHICH THE PROPERTY IS TRANSFERRED TO THE SELLER, HENCE COST O F INFLATION INDEX OF 2004-05 IS TO BE ADOPTED IN THIS CASE. 3. WE COME TO THE RELEVANT FACTS NOW. THIS ASSESSE E INHERITED CAPITAL ASSET IN QUESTION I.E. BUNGALOW NO.22, SHRIMALI SOCIETY, NAVRANGPURA, BY WAY OF A WILL ON 08.03.2004. THE SAME DEVOLVED UPON HIM IN THE CAPACITY OF SOLE BENEFICIARY OF HIS LATE FATHER. THE ASSESSEE SOLD THIS CAPITAL ASSET ON 23.01.2006 FOR RS.2,20,00,000/-. HE FILED RETURN ON 30.07.200 6 DECLARING LONG TERMS CAPITAL GAINS OF RS.1,03,15,530/- AFTER TAKING COST OF ACQU ISITION FROM THE YEAR 1981. THE ASSESSING OFFICER FRAMED THE IMPUGNED RE-ASSESS MENT ON 31.10.2012. HE QUOTED SECTION 48 EXPLANATION (III) TO CONCLUDE THA T THE ABOVE COST INDEXATION HAD TO BE TAKEN FROM MARCH 2004 ONLY AND NOT FROM T HE YEAR 1981 SINCE THE IMPUGNED ASSET STOOD ACQUIRED ON THE FORMER DATE ( SUPRA). HE ACCORDINGLY RE- COMPUTED EXCESS COST OF ACQUISITION OF RS.92,50,206 /- TO MAKE THE CONSEQUENTIAL ADDITION IN QUESTION. 4. THE ASSESSEE PREFERRED APPEAL. LD. CIT(A) QUOTE S HONBLE BOMBAY HIGH COURTS DECISION IN MANJULA J. SHAHS CASE 249 CTR 270 UPHOLDING THIS TRIBUNALS SPECIAL BENCH REPORTED AS (2009) 126 TTJ 145 IN THE VERY ASSESSEES CASE CONCLUDING THAT SECTION 49(1)(III) IS VERY MUC H CLEAR THAT WHERE AN ASSESSEE ACQUIRES THE CAPITAL ASSET IN QUESTION BY WAY OF SU CCESSION, INHERITANCE OR DEVOLUTION, COST OF ACQUISITION THEREOF SHALL BE DE EMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY HAD ACQUIRED THE SAME. THE ASSESSEE HAS ACCORDINGLY SUCCEEDED IN LOWER APPELLATE PROCEEDING S. 5. WE HAVE HEARD BOTH THE PARTIES. THERE IS NO DIS PUTE THAT ASSESSEES FATHER HAD ACQUIRED THE IMPUGNED CAPITAL ASSET WAY BACK IN THE YEAR 1934 I.E. MUCH BEFORE 01.04.1981. WE ACCORDINGLY QUOTE THE ABOVE CASE LAW TO CONCLUDE THAT THE CIT(A) HAS RIGHTLY ACCEPTED ASSESSEES ARGUMENT FOR TAKING COST OF ITA NO.1811/AHD/2013 (DCIT VS. SHRI PRAKASH K. BHAG WATI) A.Y. 2006-07 - 3 - ACQUISITION OF THE IMPUGNED CAPITAL ASSET FROM THE YEAR 1981. THE REVENUES SOLE SUBSTANTIVE GROUND FAILS. 6. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF NOVEMBER, 2016.] SD/- SD/- (N. K. BILLAIYA) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 21/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0