A.Kuthalingam, Erode V. ITO, Krishnagiri

ITA 1913/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8231 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 24-06-2016
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: S SRIDHAR ERODE
• Keywords: Capital asset; Gift; Revision of order; Cost of acquisition
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . . ' #$ , % &' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1913/MDS/2016 / ASSESSMENT YEAR : 2011-12 SHRI A. KUTHALINGAM C/O SHRI S. SRIDHAR, ADVOCATE 112/1, PERIYAR STREET ERODE 638 001 VS. THE PR INCIPAL COMMISSIONER OF INCOME-TAX SALEM [PAN ABKPK 5158 N] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE, ERODE /RESPONDENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 21 - 09 - 2016 ! / DATE OF PRONOUNCEMENT : 17 - 10 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX, SALEM DAT ED 22.3.2016 FOR ASSESSMENT YEAR 2011-12. 2. AT THE OUTSET IT WAS NOTED THAT THERE WAS A DELAY O F 32 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED A PET ITION FOR CONDOANTION OF DELAY. WE HAVE HEARD THE LD. AR AND THE LD. DR. WE FIND THAT THERE ITA NO. 1913/16 :- 2 -: WAS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITH IN THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEA L. 3. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ORDER PASSED BY THE PRINCIPAL CIT U/S 263 OF THE ACT. IN THIS CAS E THE ASSESSMENT WAS COMPLETED U/S 143(3) BY AN ORDER DATED 28.2.2014. THE ASSESSEE SOLD A PROPERTY VIDE SALE DEED NO.4328/2010 DATED 6 .10.2010 FOR A CONSIDERATION OF ` 53,30,252/-. THE ASSESSEE DEVOLVED THE PROPERTY BY FAMILY PARTITION. THE ASSESSING OFFICER COMPLET ED THE ASSESSMENT AT A TOTAL INCOME OF ` 9,28,349/- AND COMPUTED THE CAPITAL GAINS AT ` 7,08,752/-. SUBSEQUENTLY, THE PRINCIPAL CIT HAS TA KEN UP THE CASE FOR REVISION U/S 263 OF THE ACT. IN HIS ORDER U/S 26 3, THE PRINCIPAL CIT NOTICED THAT THE ASSESSEE HAS ADOPTED THE COST OF ACQUISITION AT ` 6,50,000/- @ ` 130/- PER SQ FT FOR 5,000 SQ FT AS ON 1.4.1981 WI THOUT PRODUCING ANY SUPPORTING DOCUMENT. THE PRINCIPAL C IT NOTED THAT AS PER THE FAMILY PARTITION DEED THE ASSESSEE HAS ACQ UIRED THE SAID PROPERTY BY WAY OF SETTLEMENT DATED 7.7.1995 AND HE NCE, THE INDEXED COST OF ACQUISITION SHOULD BE TAKEN AS FINANCIAL YE AR 1995-96 BUT NOT 1.4.1981. THEREFORE, THE PRINCIPAL CIT HAS SET AS IDE THE ORDER OF THE ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICE R TO REDO THE ASSESSMENT AFRESH AFTER GIVING OPPORTUNITY TO THE ASSESSEE. ITA NO. 1913/16 :- 3 -: 4. AGGRIEVED BY THE ORDER OF THE PRINCIPAL CIT, THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. DURING THE APPEAL, THE LD. AR APPEARING FOR THE AS SESSEE SUBMITTED THAT THE PROPERTY WAS ACQUIRED BY SHRI P. APPAVOO PILLAI(HUF), FATHER OF SHRI A. KUTHALINGAM ON 1.11. 1935 AS PER DOCUMENT NO.3298/1935, BOOK NO.476 PAGES 457 TO 464 . ON DEMISE OF SHRI P. APPAVOO PILLAI, THE PROPERTY WAS DEVOLVE D UPON THE ASSESSEE AND HIS BROTHERS ON 17.8.1963. THERE WAS ORAL FAMILY PARTITION ON 10.3.1980 BETWEEN THE FAMILY MEMBERS AND THE FAMILY PARTITION ARRANGEMENT WAS REDUCED IN WRITING ON 7.7 .1995. THEREFORE, THE LD. AR CONTENDED THAT AS PER THE ORAL FAMILY PA RTITION, THE PROPERTY WAS DEVOLVED UPON THE ASSESSEE ON 10.3.1980 AND NO T ON 7.7.1995. FURTHER, THE LD. AR DRAWN OUR ATTENTION TO PARA 4 OF THE ORDER U/S 263 OF THE ACT WHEREIN THE PRINCIPAL CIT HAS RECOGNIZED THE FAMILY PARTITION WHICH TOOK PLACE ON 10.3.1980. FOR READY REFERENCE , WE REPRODUCE HEREUNDER PARA 4 OF THE PRINCIPAL CITS ORDER: FROM THE REPLY FILED BY THE AUTHORIZED REPRESENTA TIVE IT IS NOTICED THAT THE PROPERTY IN QUESTION ORIGINALLY BE LONGED TO SHRI SHRI P. APPAVOO PILLAI(HUF) WHO HAD SIX SONS. CONSEQUENT TO PARTIAL PARTITION THE SAID PROPERTY W AS DIVIDED INTO TWO PARTS. ONE PART WAS RECEIVED BY SHRI A. V IMALAN AND THE REST OF THE PROPERTY WAS SHARED BY ALL THE OTHER FIVE SONS. THIS PARTIAL PARTITION TOOK PLACE ON 10.3.19 80. THE SAID PROPERTY RECEIVED BY THE FIVE BROTHERS ON PART ITION WAS COMMONLY ENJOYED BY THEM UPTO 07.07.1995 AND WAS ITA NO. 1913/16 :- 4 -: TREATED AS COMMON PROPERTY OF THE FAMILY AND THE CO MMON FAMILY LIABILITIES WERE ALSO DISCHARGED OUT OF THE INCOME FROM THE PROPERTY. 6. ON THE OTHER HAND, THE LD. DR ARGUED THAT THERE IS NO EVIDENCE TO SUPPORT THE ASSESSEES CLAIM THAT ORAL PARTITION WAS MADE ON 10.3.1980 AND THE PROPERTY WAS DEVOLVED UPON THE ASSESSEE ON 7.7.1995. THE LD. DR FURTHER ARGUED THAT THE PRINC IPAL CIT HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO ADOPT THE DATE OF ACQUISITION AS 7.7.1995 SINCE THE DATE OF ACQUISITION OF THE PROPE RTY WAS 7.7.1995. ACCORDING TO THE LD. DR, THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE SINCE THE ASSESSING OFFICER HAS ALLWOED EXCESS COST OF ACQUISITION. THEREFORE, THE LD. DR ARGUED THAT THE ORDER OF THE PRINCIPAL CIT REQUIRES TO BE UPHELD. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE LD. AR ARGUED THAT THE PR OPERTY WAS ACQUIRED IN 1935 WHICH WAS DEVOLVED UPON THE ASSESSEE ON EX PIRY OF HIS FATHER IN 1963. THE FAMILY PARTITION WAS MADE ORALLY AND SETTLEMENT DEED WAS REDUCED IN WRITING ON 7.7.1995. SINCE THE PROP ERTY AS ACQUIRED PRIOR TO 1980, THE COST OF INDEXATION HAS TO BE REC KONED FROM 1981 BUT NOT FROM 7.7.1995 AS HELD BY THE PRINCIPAL CIT. FO R THIS PURPOSE, THE LD. AR HAS INVITED OUR ATTENTION TO THE PROVISIONS OF SEC. 49(1) OF THE ITA NO. 1913/16 :- 5 -: ACT WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE ON ANY DISTRIBUTION OF ASSETS ON THE TOTAL OR PARTIAL PARTITION OF HIS SHARE UNDER GIFT OR WILL BY SUCCESSION, INHERITANCE OR DE VOLUTION OR ON ANY DISTRIBUTION OF ASSETS, COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER ACQUIRE D IT. IN ASSESSEES CASE, THE ASSESSEES FATHER HAS ACQUIRED THE PROP ERTY IN 1935 WHICH DEVOLVED UPON THE ASSESSEE IN 1963 ALONGWITH HIS B ROTHERS. FAMILY PARTITION WAS ENTERED IN 1980 WHICH WAS REDUCED IN 1995. THEREFORE, AS PER THE PROVISIONS OF SEC. 49, AND AS PER THE CH RONOLOGICAL EVENTS, THE CORRECT DATE OF ACQUISITION TO THE ASSESSEE WA S 10.3.1980 WHICH WAS ALSO ACKNOWLEDGED BY THE PRINCIPAL CIT IN HIS O RDER AND THE ASSESSING OFFICER HAS CORRECTLY COMPUTED THE LONG T ERM CAPITAL GAINS ADOPTING THE DATE OF ACQUISITION AS 10.3.1980. THE LD. AR HAS ALSO FILED THE COPY OF FAMILY PARTITION DEED DATED 7.7.1 995 WHEREIN IT WAS MENTIONED THAT ORAL PARTITION WAS MADE ON 10.3.1980 . THEREFORE, WE FIND NO ERROR IN THE ORDER PASSED BY THE ASSESSING OFFICER AND ACCORDINGLY, WE QUASH THE ORDER PASSED BY THE PRINC IPAL CIT U/S 263 OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ITA NO. 1913/16 :- 6 -: ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ' #$ ) (D.S. SUNDER SINGH) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 17 TH OCTOBER, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF