ITO WD 19(3)(4), MUMBAI V. VALENTINE L. D.SOUZA, MUMBAI

ITA 2525/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3740 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 02-05-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M M GOLVALAAMEY WAG
• Keywords: Capital asset; Gift; Cost of acquisition; Fair market value

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, F BENCH, F BENCH, F BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , ! !! ! . ' ' ' ' , #$ #$ #$ #$ BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & SHRI D KARUNAKARA RAO, AM & SHRI D KARUNAKARA RAO, AM & SHRI D KARUNAKARA RAO, AM & SHRI D KARUNAKARA RAO, AM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.2525 2525 2525 2525/MUM/2012 /MUM/2012 /MUM/2012 /MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER WARD 19(3)(4) MUMBAI % % % % / VS. VALENTINE L D SOUZA 101 BUTTERCUP 5 REBELLO ROAD, BANDRA (W), MUMBAI 50 ' #$ ./ ( ./ PAN/GIR NO. : AABPD9938M ( ') / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ') ') ') ') , , , , # ## # / APPELLANT BY : APPELLANT BY : APPELLANT BY : APPELLANT BY : SHRI M M GOLVALA/AMEY WAGLE *+') *+') *+') *+') - -- - , , , , # ## # /RESPONDENT /RESPONDENT /RESPONDENT /RESPONDENT BY BYBY BY : : : : SHRI RAJARSHI DWIVEDY % % % % - -- - .$ .$ .$ .$ / DT. OF DT. OF DT. OF DT. OF HEARING : HEARING : HEARING : HEARING : 2 ND MAY 2013 /0& /0& /0& /0& -.$ -.$ -.$ -.$ / // / DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: DT.OFPRONOUNCEMENT: 8 TH MAY 2013 #1 #1 #1 #1 / O R D E R O R D E R O R D E R O R D E R PER : PER : PER : PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 20.1.2012 OF THE COMMISSIONER OF INCOME TAX(APPEALS ) FOR THE ASSESSMENT YEAR 2007-08. 2 THE ONLY ISSUE ARISES IN THIS APPEAL OF THE REVEN UE FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER IN THE FA CTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEAL S) IS JUSTIFIED IN ALLOWING THE BENEFIT OF COST OF INDEXATION FROM 1.4 .1981 WHILE COMPUTING ITA NO.. 2525/M/12 . 2 THE CAPITAL GAIN ARISING FROM THE SALE OF PROPERTY, WHICH HAS BEEN INHERITED BY THE ASSESSEE ON THE DEATH OF HIS FATHE R. 3 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE UN DISPUTED FACTS EMERGING FROM THE RECORDS ARE THAT THE ASSESSEE HAS SOLD THE FLAT NO.32 NOVA ROSE, ST. DOMINIC ROAD, BANDRA (W), MUMBAI V IDE AGREEMENT DATED 18.10.2006. THE ABOVE FLAT WAS INHERITED BY THE ASSESSEE ON THE DEMISE OF HIS FATHER IN MAY 1992. THE ASSESSEE HAS CLAIMED INDEXATION FROM 1.4.1981 ON THE FAIR MARKET VALUE OF THE PROPE RTY AS ON 1.4.1981. THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS ENT ITLED TO CLAIM COST INFLATION INDEXATION ONLY FROM THE DATE ON WHICH TH E SAID ASSET ACTUALLY CAME TO THE POSSESSION OF THE ASSESSEE. 3.1 ON APPEAL, THE COMMISSIONER OF INCOME TAX(APPEA LS) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS MANJULA J SHAH REPORTED IN (2009) 318 ITR(AT) 417 (MUM)(SB). 4 THUS, THE LIMITED ISSUE BEFORE US IS WHETHER THE ASSESSEE IS ENTITLED TO BENEFIT OF INDEXATION COST AS ON 1.4.1981 BECAUS E THE PROPERTY WAS ORIGINALLY ACQUIRED BY THE FATHER OF THE ASSESSEE P RIOR TO 1.4.1981. ITA NO.. 2525/M/12 . 3 5 AT THE OUTSET, WE NOTE THAT THIS ISSUE IS NOW SET TLED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS MANJULA J SHAH WHEREBY THE ORDER OF THE SPECIAL BENCH OF THIS TRIB UNAL HAS BEEN CONFIRMED. THE HONBLE HIGH COURT HAS DEALT WITH TH E ISSUE AND CONCLUDED IN PARA 17 AS UNDER: 17) WE SEE NO MERIT IN THE ABOVE CONTENTION. AS RI GHTLY CONTENDED BY MR. RAI, LEARNED COUNSEL FOR THE ASSESSEE, THE I NDEXED COST OF ACQUISITION HAS TO BE DETERMINED WITH REFERENCE TO THE COST INFLATION INDEX FOR THE FIRST YEAR IN WHICH THE CAPITAL ASSET WAS HELD BY THE ASSESSEE. SINCE THE EXPRESSION HELD BY THE ASSESSE E IS NOT DEFINED UNDER SECTION 48 OF THE ACT, THAT EXPRESSION HAS TO BE UNDERSTOOD AS DEFINED UNDER SECTION 2 OF THE ACT. EXPLANATION 1(I )(B) TO SECTION 2(42A) OF THE ACT PROVIDES THAT IN DETERMINING THE PERIOD FOR WHICH AN ASSET IS HELD BY AN ASSESSEE UNDER A GIFT, THE P ERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PREVIOUS OWNER SHAH BE I NCLUDED. AS THE PREVIOUS OWNER HELD THE CAPITAL ASSET FROM 29/1/199 3, AS PER EXPLANATION 1(I)(B)TO SECTION 2(42A) OF THE ACT, TH E ASSESSEE IS DEEMED TO HAVE HELD THE CAPITAL ASSET FROM 29/1/1993. BY R EASON OF THE DEEMED HOLDING OF THE ASSET FROM 29/1/1993, THE ASSESSEE IS DEEMED TO HAVE HELD THE ASSET AS A LONG TERM CAPITA L ASSET. IF THE LONG TERM CAPITAL GAINS LIABILITY HAS TO BE COMPUTE D UNDER SECTION 48 OF THE ACT BY TREATING THAT THE ASSESSEE HELD TH E CAPITAL ASSET FROM 29/1/1993, THEN, NATURALLY IN DETERMINING THE INDEXED COST OF ACQUISITION UNDER SECTION 48 OF THE ACT, THE ASSESS EE MUST BE TREATED TO HAVE HELD THE ASSET FROM 29/1/1993 AND A CCORDINGLY THE COST INFLATION INDEX FOR 1992-93 WOULD BE APPLICABL E IN DETERMINING THE INDEXED COST OF ACQUISITION. 5.1 THEREFORE, THE ISSUE IS NOW COVERED BY THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MANJULA J SHAH (SUPRA). ACCORDINGLY, FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT ITA NO.. 2525/M/12 . 4 (SUPRA), WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSE SSEE AND AGAINST THE REVENUE. 6 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED/ 2 .3 - 4 $2 - . 56 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 8 TH MAY 2013 . #1 - 0& $# 4 7%3 8 TH 6 0 - 8 SD/- SD/- ( ! !! ! . ' ' ' ' ) #$ ( D KARUNAKARA RAO ) ACCOUNTANT MEMBER ( ) (VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 8 TH MAY 2013 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI