Madhumal Adiyari Sajeev, CHENNAI V. ITO, CHENNAI

ITA 2/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4459 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NETHRAPAL IRS
• Assessee Lawyers: JAGADISAN
• Keywords: Gift; Cost of acquisition; Fair market value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.02/MDS/2017 / ASSESSMENT YEAR : 2012-2013 MADHUMAL ADIYARI SAJEEV, FLAT C SHRUSTI, 77, NATARAJAN STREET, DHANALAKSHMI COLONY, VADAPALANI, CHENNAI 600 026. [PAN CUPPS 1682D] VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 2(2) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. JAGADISAN, C.A /RESPONDENT BY : SHRI. M.S. NETHRAPAL, IRS, JCIT. /DATE OF HEARING : 30-05-2017 !' /DATE OF PRONOUNCEMENT : 31-05-2017 % / O R D E R GROUNDS TAKEN BY THE ASSESSEE IN THIS APPEAL, WHIC H IS AGAINST AN ORDER DATED 05.10.2016 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-16, CHENNAI READ AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN DISMISSING THE APPEAL B Y CONFIRMING TAXABLE CAPITAL GAIN AT RS. 98,27,657/- (BEFORE ITA NO.02/MDS/2017 :- 2 -: CLAIMING EXEMPTION ULS 54 AT RS. 90,00,000/-) AS AGAINST RS. NIL RETURNED BY ASSESSEE APPELLANT. 2THE CIT (A) ERRED IN CONFIRMING INDEXED COST OF ACQUISITION AT RS. 72,443/- AS AGAINST RS. 31,40,000/- ESTIMATED BY ASSESSEE APPELLANT BASED ON STATUTORY PROVISION AND CASE LAW RELATED THERETO. 3THE CIT (A) ERRED IN CONFIRMING THE INDEXATION BEN EFIT BASED ON INHERITANCE OF PROPERTY AND DATE OF SETTLE MENT OF THE PROPERTY ON 12.5.2011 DISREGARDING THE STATUTOR Y PROVISION AND CASE LAW FURNISHED BY APPELLANT. 4.THE CIT (A) ERRED IN REJECTING THE FAIR MARKET VA LUE ESTIMATED AT RS. 4 LAKHS L/5 TH OF RS. 20 LAKHS) BY ASSESSEE AND CONFIRMING THE FMV ESTIMATED AT RS. 61,600/- (L/5 TH OF RS.3,08,000/-). 5.THE CIT (A) OUGHT TO HAVE ACCEPTED THAT FMV IS TO BE ESTIMATED AS ON PER STATUTORY PROVISION. 6.THE CIT (A) ERRED IN WRONGLY UNDERSTANDING EXPLAN ATION (III) TO SECTION 48 AND CONFIRMED THE WORKING OF CA PITAL GAIN BY ASSESSING OFFICER. 7.FOR SUCH OTHER GROUNDS THAT APPELLANT MAY RAISE D URING THE HEARING OF THE APPEAL, THE HON'BLE TRIBUNAL MAY CONSIDER THE ISSUES RAISED IN THIS APPEAL. 2. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTE D THAT HE WAS NOT PRESSING GROUNDS ASSAILING THE FAIR MARKET VALUE. ACCORDING TO HIM, HE WAS PRESSING ONLY THE GROUNDS ASSAILING IN DEXATION OF COST OF ACQUISITION BEING GIVEN TO THE ASSESSEE ONLY FROM THE YEAR IN WHICH THE PROPERTY CAME TO ASSESSEES OWNERSHIP, WITHO UT CONSIDERING THE PERIOD OF HOLDING OF THE PREVIOUS OWNER. ACCORDING TO HIM THIS WAS AGAINST THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH SHAH 355 ITR 474. ITA NO.02/MDS/2017 :- 3 -: 3. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASS ESSEE HAVING INHERITED ONE-FIFTH SHARE IN THE SUBJECT PR OPERTY ON THE DEATH OF HIS FATHER ON 22.07.2009 AND ANOTHER 1/10 TH SHARE SUBSEQUENTLY, THROUGH A SETTLEMENT DEED EXECUTED BY HIS MOTHER ON 12.05.2011, BY VIRTUE OF JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH SHAH (SUPRA), THE CLAIM OF THE ASSESSEE APPEARED TO BE FAIR. 4. I HAVE CONSIDERED THE CONTENTIONS AND PERUSED THE O RDERS OF THE AUTHORITIES BELOW. ONLY ISSUE ARGUED BY THE LD. AUTHORISED REPRESENTATIVE IS WITH REGARD TO THE YEAR FROM WHI CH THE INDEXATION BENEFIT HAD TO BE GIVEN WHILE WORKING OUT INDEXED C OST, FOR COMPUTING THE CAPITAL GAINS. IT IS NOT DISPUTED THAT THE PRO PERTY ON WHICH CAPITAL GAINS WAS COMPUTED, WAS ACQUIRED BY THE ASSESSEES PARENTS ON 15.12.1972. ASSESSEES FATHER HAD DIED ON 22.07.20 09 AND BEING ONE OF THE LEGAL HEIR, HE HAD OBTAINED 1/5 TH SHARE IN 50% OF THE PROPERTY. THEREAFTER THROUGH A SETTLEMENT DEED EXECUTED ON B Y HIS MOTHER ON 12.05.2011, HE GOT ANOTHER 1/10 TH SHARE. ASSESSEE HAD CLAIMED INDEXATION TAKING THE BASE YEAR AS 01.04.1981, C ONSIDERING THE PERIOD OF HOLDING OF THE PROPERTY BY HIS PARENTS, WHICH WAS NOT ACCEPTED BY THE LD. ASSESSING OFFICER. THOUGH THE ASSESSEE RELIED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE C ASE OF MANJULA J. SHAH SHAH (SUPRA) BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS), ITA NO.02/MDS/2017 :- 4 -: THE LD. COMMISSIONER OF INCOME TAX (APPEALS), REFUS ED TO FOLLOW THE SAID JUDGMENT. IN MY OPINION BY VIRTUE OF JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH (SUPRA) READ ALONGWITH CLAUSE (B) TO SEC. 2(42A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) PERIOD OF HOLDING OF THE EARLIER OWNER OF THE PROPERTY HAS ALSO TO BE CONSIDERED WHILE COMPUTING THE INDEX ATION, BENEFIT IN THE CASE OF A SUCCESSION OR INHERITANCE OR GIFT. I THEREFORE DIRECT THE LD. ASSESSING OFFICER, TO WORKOUT THE INDEXED COST OF ACQUISITION OF THE SUBJECT PROPERTY FOR COMPUTING THE CAPITAL GAINS, CONSIDERING 01.04.1981 AS THE BASE YEAR. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED ON WEDNESDAY, THE 31 ST DAY OF MAY, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:31ST MAY, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF