ITO 22(1)4, NAVI MUMBAI V. CHANDRAKANT VITHAL SHETYE, MUMBAI

ITA 1873/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79107 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS AGARWAL
• Assessee Lawyers: CHANDRAKANT V SHETYE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Cost of acquisition
• Section: 50C

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI .., . .!'#, $ , % BEFORE SHRI I.P.BANSAL, JM AND SHRI N.K.BILLAIYA, A M ITA NO.1873/MUM/2013 : ASST.YEAR 2009-10. THE ITO 22(1)-4, ROOM NO.412, 4 TH FLOOR, TOWER NO.6, VASHI RLY. STATION COMPLEX, VASHI, NAVI MUMBAI 400 705 SHRI CHANDRAKANT VITHAL SHETYE, C/48, INDRADEEP CHS LTD., LBS MARG, GHATKOPAR (WEST), MUMBAI 400 086. PAN: AAYPSS 4631F ( &' / // / APPELLANT) / VS. ( )*&'/ RESPONDENT) &' + , + , + , + , /APPELLANT BY : SHRI VIKAS AGARWAL )*&' + , + , + , + , /RESPONDENT BY : SHRI CHANDRAKANT V. SHETYE + -.$ / / / / DATE OF HEARING : 05.06.2014 /01 + -.$ / DATE OF PRONOUNCEMENT : 05.06.2014 2 2 2 2 / / / / O R D E R PER I.P.BANSAL (JM) : THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST ORDER PASSED BY LD. CIT(A)-33, MUMBAI DATED 17/12/2012 FO R ASSESSMENT YEAR 2009- 10. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, WHETHER THE CIT(A) WAS RIGHT IN HOLDING THAT WHILE COMPUTING THE CAPITAL G AIN ARISING ON TRANSFER OF CAPITAL ASSETS WHICH WAS ACQUIRED BY THE ASSESSEE BY VIRTUE OF LEGAL HAIR, THE INDEX COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNERS FIRST HELD THE ASSETS AND NOT THE YEAR IN WH ICH THE ASSESSEE BECAME THE OWNER OF THE ASSETS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE INDEXED COST OF ACQUIS ITION HAS BEEN DEFINED BY EXPLANATION (III) OF SECTION 48 WHICH MEANS AN AMOU NT WHICH BEARS TO THE COST OF ACQUISITION WHERE SAME PROPORTION AS COST INFLATION INDEX FOR THE YEAR IN WHICH THE ASSETS IS TRANSFERRED BEARS TO THE COST INFLATI ON INDEX FOR THE FIRST YEAR IN WHICH THE ASSETS WAS HELD BY THE ASSESSEE OR FOR TH E YEAR BEGINNING ON THE FIRST DAY OF APRIL 1981 WHICHEVER IS LATER. ITA NO.1873/MUM/2013 : ASST.YEAR 2009-10 . 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE CAPITAL ASSET WAS ACQU IRED BY THE ASSESSEE BY VIRTUE OF LEGAL HEIR ON 9.9.2008. 4. WHETHER THE CIT(A) WAS CORRECT IN LAW IN FOLLOWI NG THE DECISION IN THE CASE OF MANJULA J. SHAH 204 TAXMAN 691 (BOM) OVERLOOKING TH E FACT THAT THE REVENUE IS IN APPEAL AGAINST THE SAID DECISION AND FINAL OUTCOME IS AWAITED. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTO RED. 2. THE ASSESSEE VIDE MEMORANDUM OF UNDERSTANDING D ATED 25/5/2007 SOLD AN INDUSTRIAL PLOT WITH SHED BEARING NO. W 355 ADM. 800 SQ.MTR. ALONGWITH SHED ADM 108 SQ.MTR, AT T.T. INDUSTRIAL AREA, M.I.D .C RABALE, NAVI MUMBAI, TAL.& DIST. THANE. THE SALE VALUE OF WHICH WAS DET ERMINED BY THE DVO AS PER VALUATION DATED 23/12/2011 UNDER SECTION 50C AT RS. 74,48,000/-. THE ASSESSEE BECAME THE OWNER OF THIS PROPERTY, VIDE OR DER OF HONBLE BOMBAY HIGH COURT DATED 09/09/2008, BEING LEGAL HEIR OF HIS WIF E LATE SMT. CHDRAKALA CHANDRAKANT SHETYE ALIA BHARTIBEN CHANDRAKANT SHET YE, WHO DIED INTESTATE ON 18/08/2006. ACCORDING TO AO WHILE COMPUTING CAP ITAL GAIN, COST OF ACQUISITION WHICH WAS ASCERTAINED AT RS.29,58,133 /-, WAS TO BE INDEXED FROM FINANCIAL YEAR 2008-09 AS THE ASSESSEE BECAME OWNER OF SAID PROPERTY ONLY ON 09/09/2008, WHEN AS PER ORDER OF HONBLE BOMBAY HI GH COURT THE ASSESSEE WAS DECLARED AS LEGAL HEIR OF HIS WIFE. AS AGAIN ST THIS, IT IS THE CASE OF THE ASSESSEE THAT INDEXATION BENEFIT SHOULD BE GRANTED TO THE ASSESSEE FROM THE DATE WHEN HIS WIFE BECAME OWNER OF THE PROPERTY. T HE WIFE OF THE ASSESSEE BECAME OWNER IN THE YEAR 1989-90. THE ASSESSEE WAS AGGRIEVED AND HAD FILED AN APPEAL BEFORE LD. CIT(A), WHO FOLLOWING THE DECI SION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH, 355 I TR 474 (BOM) HAS HELD THAT THE BENEFIT OF INDEXATION HAS TO BE GIVEN TO THE SU CCESSOR FOR THE PERIOD WHEN PROPERTY WAS HELD BY THE PERSON WHOM THE TAX PAYER HAS SUCCEEDED. ACCORDINGLY, HE HAS DIRECTED THE AO TO GIVE THE BEN EFIT OF INDEXATION TO THE ASSESSEE FROM THE YEAR 1989-90 WHEN SUCH PROPERTY W AS PURCHASED BY WIFE OF THE ASSESSEE. THE DEPARTMENT IS AGGRIEVED BY SUCH RELIEF GIVEN BY LD. CIT(A) AND HAS FILED AFOREMENTIONED GROUND OF APPEAL. ITA NO.1873/MUM/2013 : ASST.YEAR 2009-10 . 3 3. LD. DR AFTER NARRATING THE FACTS RELYING UPON TH E GROUNDS OF APPEAL SUBMITTED THAT THE ORDER PASSED BY LD. CIT(A) SHOUL D BE SET ASIDE AND THAT OF AO BE RESTORED. 4. ON THE OTHER HAND, THE ASSESSEE WHO WAS PRESENT HIMSELF SUBMITTED THAT THE ISSUE HAS BEEN DECIDED BY LD. CIT(A) AS PER DEC ISION OF JURISDICTIONAL HIGH COURT. HE SUBMITTED THAT FACTS MENTIONED IN THE O RDERS PASSED BY A.O AND LD. CIT(A) HAVE NOT BEEN DISPUTED BY THE REVENUE, THEREFORE, HE SUBMITTED THAT THE ORDER PASSED BY LD. CIT(A) SHOULD BE UPHELD AND DEPARTMENTAL APPEAL SHOULD BE DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE FACT THAT WIFE OF THE ASSESSEE BEC AME OWNER OF THE IMPUGNED PROPERTY IN THE YEAR 1989-90 IS NOT DISPUTED BY TH E REVENUE. THE FACT THAT ASSESSEE BECAME OWNER OF THE SAID PROPERTY AS LEGA L HEIR BY THE ORDER OF HONBLE BOMBAY HIGH COURT IS ALSO NOT DISPUTED. IF IT IS SO, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH (SUPRA), WHEREIN IT HAS BEE N HELD THAT WHILE COMPUTING THE CAPITAL GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED BY THE ASSESSEE UNDER A GIFT, THE INDEXED COST ON ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. GIFT IS ONE OF THE MODE OF ACQUISITION AND THE PROVISIONS INCLUDE SUCCESSION A LSO AS ANOTHER MODE OF ACQUISITION OF ASSET.. THEREFORE, THE DECISION OF HONBLE BOMBAY HIGH COURT WILL BE EQUALLY APPLICABLE TO THE FACTS OF THE PRESENT C ASE AS IN THE PRESENT CASE ASSESSEE HAS ACQUIRED THE IMPUGNED ASSET BY WAY OF SUCCESSION. 5.1 NOW AS PER GROUNDS OF APPEAL IT IS ALSO THE CASE OF THE REVENUE THAT THE SAID DECISION OF HONBLE BOMBAY HIGH COURT IS NOT ACCEPTED BY THE REVENUE AND AN APPEAL HAS BEEN FILED AGAINST THE SAID DECIS ION. THE SAID ARGUMENTS OF REVENUE CANNOT BE OF ANY HELP TO THE REVENUE AS TH E JUDICIAL AUTHORITIES WORKING UNDER THE SUPERVISION OF JURISDICTIONAL HI GH COURT ARE BOUND TO FOLLOW THE JUDICIAL DECISION RENDERED BY HONBLE HIGH COUR T UNLESS THE SAME IS REVERSED. ITA NO.1873/MUM/2013 : ASST.YEAR 2009-10 . 4 5.1 IN VIEW OF ABOVE DISCUSSION, AS THE MATTER H AS BEEN DECIDED BY LD. CIT(A) ACCORDING TO THE AFOREMENTIONED DECISION O F HONBLE JURISDICTIONAL HIGH COURT, WE DECLINE TO INTERFERE IN THE RELIEF GRANTE D BY HIM AND DEPARTMENTAL APPEAL IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH JUNE, 2014. 2 + /01 34 05/06/2014 0 + ; SD/- SD/- (N.K.BILLAIYA) (I.P.BANSAL) $ $ $ $ / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 3 DATED : 5 TH JUNE, 2014. VM. 2 + )-! < !1- 2 + )-! < !1- 2 + )-! < !1- 2 + )-! < !1-/ COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. )*&' / THE RESPONDENT. 3. =() / THE CIT, MUMBAI. 4. = / CIT(A)-13, MUMBAI 5. !@; )- , , / DR, ITAT, MUMBAI 6. ;A B / GUARD FILE. 2 2 2 2 / BY ORDER, *!- )- //TRUE COPY// C CC C/ // /D E D E D E D E (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI