Amuradha Mathur, New Delhi V. ACIT, New Delhi

ITA 2297/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74342 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 06-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H G SEMA
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 2297/DEL/2011 ASSTT. YR: 2006-07 ANURADHA MATHUR, VS. ACIT CIR. 42(1), B-6, SECOND FLOOR GREEN PARK, NEW DELHI. EXTN, NEW DELHI. PAN: AAIPM 7905 N ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI KAPIL GOEL ADV. RESPONDENT BY : SHRI H.G. SEMA SR. DR O R D E R PER R.P. TOLANI, J.M: : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF CIT (A)-XXVII, NEW DELHI DATED 7-2-2011 RELATING TO A.Y. 2006-07. FOLL OWING GROUND IS RAISED: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER/ AO FOR ASSESSING CAPITAL GAINS A T RS. 7,54,615/- INSTEAD OF NIL AS DECLARED BY ASSESSEE. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER/ AO FOR TREATMENT OF THRESHOLD DA TE FOR COMPUTING PERIOD OF INDEXATION AS STARTING FROM FIN ANCIAL YEAR 1997-98 (YEAR IN WHICH POSSESSION WAS HANDED OVER) INSTEAD OF FINANCIAL YEAR 1989-90 (WHEN ASSESSEE BECAME MEMBER OF RELEVANT CO-OPERATIVE BUILDING HOUSING SOCIETY) RES ULTING IN REDUCTION OF INDEXED ACQUISITION COST FOR COMPUTATI ON OF CAPITAL GAINS. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF 2 ASSESSING OFFICER/ AO FOR MAKING DISALLOWANCE ON AC COUNT OF COST OF IMPROVEMENT AMOUNTING TO RS. 60,000/-. 2. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE DID NOT PRESS GROUND NO. 3, RELATING TO DISALLOWANCE ON ACCOUNT O F COST OF IMPROVEMENT OF HOUSE PROPERTY. HENCE, GROUND NO. 3 IS DISMISSED, B EING NOT PRESSED. 3. FACTS OF THE CASE, IN BRIEF, ARE: THE ASSESSEE D ISCLOSED LONG TERM CAPITAL GAINS QUA SALE OF FLAT NO. 111 IN THE CITY COOPERATIVE GROUP HOUSING SOCIETY, VASUNDHRA ENCLAVE, DELHI-96 FOR RS. 19,00, 000/-. THE ASSESSEE HAD PURCHASED THIS FLAT FOR AN AMOUNT OF RS. 4,80,440/- , QUA WHICH PAYMENTS WERE MADE AS UNDER: RS. 75,000/- ON 30-09-1989 RS. 25,000/- ON 18-10-1989 RS. 50,000/- ON 21-9-1992. RS. 1,50,000/- ON 27-1-1995. RS. 1,25,000/- ON 7-7-1995. RS. 55,440/- ON 12-3-96. TOTAL: RS. 4,80,440/- 3.1. THE DRAW OF LOTS OF FLATS WAS HELD ON 17-3-199 6 AND THE POSSESSION THEREOF WAS GIVEN ON 1-8-1997. WHILE COMPUTING THE CAPITAL GAINS THE ASSESSEE IN ORDER TO DETERMINE INDEXED COST OF ACQU ISITION TOOK THE ENTIRE COST OF FLAT AND APPLIED THE NOTIFIED INDEXATION FR OM F.Y. 1989-90. THE A.O. WAS OF THE VIEW THAT POSSESSION OF FLAT HAVING BEEN GIVEN TO ASSESSEE ON 1-8- 1997 THE INDEXATION OF THE COST, ON ACQUISITION OF FLAT, WAS TO BE ALLOWED IN F.Y. 1997-98 I.E. THE YEAR OF ALLOTMENT. THE LON G TERM CAPITAL GAINS WERE RECOMPUTED ACCORDINGLY. 3.2. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL WHE RE IT WAS PLEADED THAT INDEXED COST OF ACQUISITION, AS DEFINED BY SEC. 4 8, MEANS AS UNDER: 3 INDEXED COST OF ACQUISITION HAS BEEN DEFINED BY C LAUSE- (III) OF EXPLANATION. INDEXED COST OF ACQUISITION MEAN AN AM OUNT WHICH BEARS TO THE COST OF ACQUISITION THE SAME PROPORTIO N AS COST OF INFLATION INDEX FOR THE YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE IN THE YEAR BEGINNING ON THE FIRST DAY OF APRIL, 1981, WHICHEVER IS LATER. 3.3. BY THIS DEFINITION, THE INDEXATION IS TO BE A PPLIED FROM THE YEAR THE ASSET IS HELD BY THE ASSESSEE. IT IS NOT DISPUTED T HAT THE ASSESSEE BECAME MEMBER OF THE SOCIETY, ACQUIRED THE SHARES AND HELD AN INTEREST IN ALLOTMENT OF THE FLAT, BEING A SHARE HOLDER BY WAY OF RIGHT F OR MAKING THE PART PAYMENT FOR THE FLAT AS DETERMINED BY SOCIETY. THE WORD HE LD IN ORDINARY PARLANCE WILL INCLUDE A RIGHT IN THE FORM OF ACQUISITION OF THE FLAT, WHICH IS THE CASE OF THE ASSESSEE. CIT(A), HOWEVER, REJECTED THE CLAIM O F THE ASSESSEE BY OBSERVING AS UNDER: I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AS WELL AS THE FINDINGS OF THE ASSESSING OFFICER. IT IS A FACT THAT THE APPELLANT FAILED TO DECLARE THE CAPIT AL GAINS IN THE ORIGINAL RETURN OF INCOME FILED. IT IS A FACT ON RE CORD THAT THE POSSESSION WAS OBTAINED BY THE APPELLANT ON 1-8-199 7 AND ACCORDINGLY THE INDEXED COST AS ARRIVED AT BY THE A .O. IS VALID IN LAW. THE A.O. WAS RIGHT IN TREATING THE DATE OF POSSESSION AS THE DATE ON WHICH THE HOUSE CAME TO BE VESTED IN CO NTROL OF THE APPELLANT. MERE OWNER SHIP OF THE SHARES DOES NOT C ONFER THE BENEFIT TO ENJOY THE FLAT, UNLESS THE SAME HAS BEE N PHYSICALLY HANDED TO THE APPELLANT. THE APPELLANT FAILED TO PR OVIDE ANY EVIDENCE O COST OF IMPROVEMENT OF RS. 60,000/- MADE AND THEREFORE THE A.O. WAS RIGHT IN DISALLOWING THE PLE A OF THE APPELLANT. ACCORDINGLY THE ADDITIONS MADE BY A.O. H AVE BEEN RIGHTFULLY MADE AND THERE IS NO NEED FOR INTERFEREN CE. 3.4. AGGRIEVED, ASSESSEE IS BEFORE US. 4. LD. COUNSEL FOR THE ASSESSEE REITERATED THE ARGU MENTS AS MADE BEFORE ASSESSING OFFICER QUA THE MEANING AND SCOPE OF WOR D HELD AND PRAYS THAT 4 THE INDEXATION OFFERED BY ASSESSEE MAY BE ADOPTED. IN ALTERNATE, IT IS SUBMITTED THAT IF THE ENTIRE COST OF ACQUISITION IS NOT RELATED TO THE DATE OF FIRST INSTALMENT, THEN THE ALTERNATIVE PLEA MAY BE CONSIDERED. THE PLEA IS TO THE EFFECT THAT THERE IS NOT DOUBT THAT THE ASSESSE E HAD MADE THE PAYMENTS OF THESE AMOUNTS FOR THE ACQUISITION OF THE FLAT BY BE COMING THE MEMBER AND SHARE HOLDER OF THE HOUSING DEVELOPMENT COOPERATIVE SOCIETY. THUS THE PAYMENTS MADE BY THE ASSESSEE OVER A PERIOD OF TIME ARE TOWARDS THE RIGHT HOLDING OF THE FLAT I.E. TOWARDS THE ACQUISITION O F THE ASSET. THEREFORE, THESE INSTALMENTS BEING FOR HOLDING THE RIGHT NEED TO BE CONSIDERED FOR SUITABLE INDEXATION. THUS APPROPRIATE INDEXATION OF SUCH PAR T PAYMENT TOWARDS COST OF ASSET WOULD BE IN THE INTEREST OF JUSTICE. LD. COUNSEL REITERATED THE ARGUMENT THAT THE ASSESSEES INTEREST IN ACQUISITIO N OF THE FLAT ITSELF AMOUNTS TO AN INCHOATE RIGHT OF HOLDING THE RIGHT OF ACQUI RING THE OWNERSHIP OF THE FLAT. 5. LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIES AND CONTENDS THAT ASSESSEE HAS NOT DISPUTED THE DATE OF ALLOTMENT AND POSSESSION. THUS, IT IS AMPLY CLEAR THAT THE ASSESSEE BECAME OWNER OF THE F LAT ON POSSESSION. THEREFORE, THE INDEXATION HAS BEEN RIGHTLY ADOPTED BY LOWER AUTHORITIES. APROPOS ALTERNATE CONTENTION OF THE ASSESSEE, LD. D R OPPOSED THE SAME. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. APROPOS THE MAIN PLEA OF THE ASSESSEE WE A RE INCLINED THE UPHOLD THE ORDER OF LOWER AUTHORITIES THAT THE ENTIRE COST OF THE FLAT CANNOT BE THE DATE OF FIRST INSTALMENT. THE MEANING OF THE WORD HELD CA NNOT BE EXTENDED TO THE PART OF PAYMENT WHICH IS EVEN NOT PAID BY THE ASSES SEE. THUS, THERE IS NO CASE TO ALLOW THE INDEXATION ON THE ENTIRE COST OF ACQUISITION ON THE DATE OF PAYMENT OF FIRST INSTALMENT I.E. F.Y. 1989-90. 5 6.1. HOWEVER, WE FIND MERIT IN THE ALTERNATE PLEA O F LD. COUNSEL. SINCE THERE IS NO DISPUTE THAT ASSESSEE HAS MADE PART PAY MENT BY WAY OF INSTALMENTS TOWARDS ACQUISITION OF FLAT BY BECOMING SHARE HOLDER AND MEMBER OF THE SOCIETY THROUGH A RECOGNIZED AND BYE LAWS APPROVED METHOD OF ACQUIRING MEMBER OF A HOUSING COOPERATIVE SOCIE TY. THE PAYMENT OF INDIVIDUAL INSTALMENTS MADE BY THE ASSESSEE ON THES E ACTUAL AMOUNTS TO PAYMENT TOWARDS HOLDING OF AN ASSET, IT DESERVES TO BE INDEXED FROM THE DATE OF ACTUAL PAYMENT OF EACH INSTALMENT. 6.2. IN VIEW THEREOF, WE ACCEPT THE ASSESSEES ALTE RNATE PLEA AND DIRECT THE ASSESSING OFFICER TO WORK OUT THE LONG TERM CAPITAL GAINS BASED ON AFOREMENTIONED OBSERVATION. THE LONG TERM CAPITAL GAINS ARE TO BE WORKED OUT BY PROVIDING INDEX COST OF ACQUISITION QUA THE ACTUAL PAYMENT OF EACH INSTALMENTS. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 14-03-2014. SD/- SD/- ( SHAMIM YAHYA) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14-03-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 6