The ACIT, Circle-2(1)(1), Ahmedabad V. Shri Manas Anilkumar Jhanjaria, Ahmedabad

ITA 2122/AHD/2017

AI Insights

The case revolves around the appeal by the Revenue against the order of the CIT(A) which allowed the indexed cost of acquisition for shares gifted to the assessee, Shri Manas Anilkumar Jhanjaria, from his grandmother. The original assessment under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961, did not consider the details of the improvement in the cost of acquisition provided by the assessee. The CIT(A) found that the assessee had provided sufficient evidence to substantiate the claimed cost of acquisition, which was less than the face value of the shares, thereby certifying the bona fide approach of the assessee. The Tribunal agreed with the CIT(A)'s decision and dismissed the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125050 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-07-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 24-09-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Cost of acquisition; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ I. T.A. No. 212 2/Ahd /2017 ( नधा रण वष / A ss es sment Year : 2007-08) T h e A s si s t a nt C o mm is s i on e r o f I n c om e T a x C ir cl e - 2 ( 1 ) ( 1 ) , Ah me da b ad बनाम/ Vs . Sh r i M an as A nilk um ar J h an j a ria 3 6, S u ma d hu r So c i et y, B / h . Oc ea n Pa r k, S a te ll ite , A h m e da b ad थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A A Z P J 5 1 5 7 C (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Praveen Verma, Sr. DR यथ क ओर से/Respondent by : Shri Suresh Gandhi, A.R. स ु नवाई क तार ख / D a t e o f H e a r i ng 04/07/2023 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 05/07/2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the Revenue is directed against the order dated 04.07.2017 passed by the Ld. Commissioner of Income Tax (Appeals)- 2, Ahmedabad arising out of the order dated 15.09.2015 passed by the ITO, Ward-2(1)(1), Ahmedabad under Section 143(3) r.w.s. 263 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2007-08. ITA No. 2122/Ahd/2017 (ACIT vs. Shri Manas Anilkumar Jhanjaria ) A.Y.– 2007-08 - 2 – 2. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 3. On the basis of Oral as well as written submission made by the Ld. DR to this effect that the PCIT-2, Ahmedabad was holding additional charges of PCIT-1, PCIT-5 & PCIT-6, Ahmedabad as well as that of CIT(Exemption) during the month of September 2017 and having tremendous time barring judicial workload in each of these charges coupled with the fact that many of these appeals were of very high tax impact, the appeal could not be filed in time, we condone the delay of 6 days in preferring the same before us. 4. The order passed by the Ld. CIT(A) in allowing Rs.7,64,266/- as indexed cost of acquisition of 1,00,000 Shares received as gift from grandmother, namely, Smt. Savitri Devi Jhajharia, of the assessee is under challenge before us. 5. The brief facts involved in this matter is this that the assessment in the case of the assessee was finalized under Section 143(3) r.w.s. 147 of the Act by and under the order dated 26.12.2012 determining the total income at Rs.3,97,64,520/-. Subsequently, the Ld. PCIT noted that during the relevant previous year, the assessee sold shares of Gujarat Microwax Pvt. Ltd. (in short ‘GMPL’), which were purchased on 30.03.1990 for Rs.1,40,000/-. Though, the assessee claimed indexed cost of improvement of Rs.14,07,013/- while computing the LTCG in addition to indexed cost of acquisition, as the Ld. AO did not call for the details of such improvement, the said order dated 26.12.2012 passed by the Ld. AO under Section 143(3) r.w.s. 147 of the Act was found to be erroneous and prejudicial to the interest of the Revenue and ITA No. 2122/Ahd/2017 (ACIT vs. Shri Manas Anilkumar Jhanjaria ) A.Y.– 2007-08 - 3 – direction upon the Ld. AO to make fresh assessment of the total income of the assessee for the year under consideration was made. As the acquisition and transfers were not executed through any registered stock exchange there were no authentic record to prove the cost of acquisition in the hands of the grandmother, the Ld. AO did not allow the indexed cost of acquisition of bonus and gifted shares to the assessee amounting to Rs.7,64,266/- and the claim of the assessee was disallowed. It further appears that in support of the cost of acquisition of 1,00,000 shares in the hands of the previous owner i.e. Grandmother who has gifted the same to the assessee, the assessee furnished the return of income of Smt. Savitri Devi Jhajharia for A.Y. 2006-07 alongwith a copy of the balance sheet as on 31.03.2006 and the computation of total income. The following details were coming up from the balance sheet as on 31.03.2006: Particulars Amount Rs. Shares of Gujarat Microwas Ltd. 580000 24,00,000.00 Less: Gifted to 1. Anil Jhanjharia (Son) 3,31,034.48 2. Anil Jhanjharia HUF (Son) 4,13,793.10 3. Meenakshi Jhanjharia (Son's wife) 4,13,793.10 4. Swati Jhanjharia (Grand Son's wife) 4,13,793.10 5. Manas Jhanjharia (Grandson) 4,13,793.10 6. Manas Jhanjharia HUF (Grand Son) 4,13,793.10 Rs. 0.00 6. Considering the entire aspect of the matter, the Ld. CIT(A) with the following observation allowed the claim of the indexation as per law while computing the LTCG in respect of the gifts of 1,00,000 shares from the grandmother of the assessee at Rs.4,13,793/-: “2.7. Thus, it is seen that during the financial year 2005-06 Smt. Savitri Devi Jhanjharia has gifted her 5,80,000 shares of Gujarat Microwax Pvt. Ltd., to her family members i.e. Son, Son's wife, grandson, grandson's wife, son's HUF and grandson's HUF. The cost of total 5,80,000 shares in the hands of Smt. Savitri Devi Jhanjharia was Rs.24,00,000/- as ITA No. 2122/Ahd/2017 (ACIT vs. Shri Manas Anilkumar Jhanjaria ) A.Y.– 2007-08 - 4 – noted in the balance sheet as at 31-03-2006. Therefore, the cost of 1,00,000 shares given as gift to her grandson Manas Jhanjharia (i.e. the appellant) comes to Rs.4,13,793/- (24,00,000/- / 5,80,000/- x 1,00,000/-). These details were filed by the appellant before the AO also. 2.8. In the assessment order, there is no finding of the AO in respect of the cost of acquisition in the hands of previous owner as explained by the appellant. As regards, the shares of GMPL, the appellant has also filed the complete summary of the share portfolio no.57 of the said Smt. Savitri Devi Jhanjharia maintained by the said company showing the details of date of allotment of shares, number of shares, nominal value of the shares, share certificate no. and the details of the split of shares as well as sale of the shares. The first issue/allotment of shares to Smt. Savitri Devi Jhanjharia was in the financial year 1994-95 i.e. 21 years ago and the appellant has submitted that it is not possible to provide the copies of bank passbook of such old period, because in that time there were no computerized bank branches, therefore it is also not possible to obtain the details from bank also. However, it is a fact that the company GMPL has issued / allotted the shares having face value of Rs.10/-. This fact has not been disputed by the AO in the Assessment Order. It is also contend by the appellant that the cost of 1,00,000 shares received as gift from the grandmother has been taken by the appellant at Rs.4,13,7937- which is less than the face value of Rs.10/- and accordingly this fact itself certifies the bona fide approach of the appellant to claim the actual cost of the shares in the hands of previous owners. Further, the appellant has also filed the date wise summary of the stock of shares of GMPL from Financial Year 1994-95 to financial year 2003-04 and as per the said details, the previous owner Smt. Savitri Devi Jhanjharia was having 580000 shares amounting to Rs.24,00,000/- as on 27-02-2004. This number of shares and the cost of shares are exactly tallying with the no. of shares and cost reflecting in the Balance Sheet as on 31-03-2006. 2.9. Considering the totaling of the facts of the case, I am inclined to accept the contention of the appellant. The cost of the acquisition of 100000 shares in the hands of the previous owners at Rs.4,13,793/- is duly explained with supporting evidences as discussed above. Accordingly, the AO is directed to take the cost of acquisition of 1,00,000 shares received as gift from the grandmother at Rs.4,13793/- and allow indexation as per law while computing the LTCG.” 7. It appears from the records substantiated by the sufficient evidences that in F.Y. 2005-06 Smt. Savitri Devi Jhajharia gifted 580000 shares of GMPL to her family members i.e. son, son’s wife, grandson, grandson’s wife, son’s HUF and grandson’s HUF. The total cost whereof was Rs.24,00,000/- as appearing in the balance sheet dated 31.03.2006, out of which, 1,00,000 shares were given as gift to the grandson being assessee herein, the cost whereof comes at Rs.4,13,793/-. The details of which was filed before the Ld. AO. It also appears that the GMPL has issued/allotted shares having face value of Rs. 10/- which has neither been disputed by the Ld. AO and the cost of shares of ITA No. 2122/Ahd/2017 (ACIT vs. Shri Manas Anilkumar Jhanjaria ) A.Y.– 2007-08 - 5 – 1,00,000 shares received as gift to the assessee from the grandmother has been determined at Rs.4,13,793/- which is far less than the face value of Rs.10/-, which further establishes the bonafides of the assessee to claim the actual cost of shares in the hands of the previous owners. As the said controversy has already been explained with supporting evidence as narrated hereinabove, in our considered opinion, direction upon the Ld. AO to consider the cost of acquisition of 1,00,000 shares received as gift from the grandmother at Rs.4,13,793/- upon allowing the indexation as per law while computing the LTCG is without any ambiguity so as to warrant interference, same is, therefore, upheld. The ground of Revenue’s appeal found to be devoid of any merit and, thus, dismissed. 8. In the result, Revenue’s appeal is dismissed. This Order pronounced on 05/07/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 05/07/2023 True Copy S. K. SINHA आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं%धत आयकर आय ु 'त / Concerned CIT 4. आयकर आय ु 'त(अपील) / The CIT(A)- 5. *वभागीय -त-न%ध, आयकर अपील य अ%धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड3 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad