Kalaiarasi Mahalingam by POA Holder S.Gopinath, CHENNAI V. DDIT, CHENNAI

ITA 2901/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86341 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 26-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . . , ! BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.2900/MDS/2014 ( / ASSESSMENT YEAR : 2005-2006) SMT. MEKALA MAHALINGAM, BY PAO HOLDER S. GOPINATH, C/O. M/S. GOPI KUMAR ASSOCIATES, CHARTERED ACCOUNANTS, AP 345, 36 TH STREET, 7 TH SECTOR, K.K.NAGAR, CHENNAI 600 078. [PAN: ANEPM 9562A] VS THE DDIT. INTERNATIONAL TAXATION, CHENNAI. ./ I.T.A. NO.2901/MDS/2014 ( / ASSESSMENT YEAR : 2005-2006) SMT. KALAIARASI MAHALINGAM, BY PAO HOLDER S. GOPINATH, C/O. M/S. GOPI KUMAR ASSOCIATES, CHARTERED ACCOUNANTS, AP 345, 36 TH STREET, 7 TH SECTOR, K.K.NAGAR, CHENNAI 600 078. [PAN: ARBPK 6688G] ( '# /APPELLANT) VS THE DDIT. INTERNATIONAL TAXATION, CHENNAI. ( $%'# /RESPONDENT) / APPELLANT BY : SHRI. M. NARAYANAN, RETD ADDL. CIT. / RESPONDENT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. I.T.A.NO.2900 & 2901/MDS/2014. :- 2 -: /DATE OF HEARING : 25.02.2015 !' /DATE OF PRONOUNCEMENT : 27.02.2015 & / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THESE TWO APPEALS BY DIFFERENT ASSESS EES EMANATE FROM SEPARATE ORDERS; BOTH DATED 05.09.2014, PASSED BY T HE COMMISSIONER OF INCOME TAX-VII, CHENNAI, IN ITAS NO.383 AND 384 /13-14 RESPECTIVELY, SUSTAINING LONG TERM CAPITAL GAINS OF D23,94,560/- EACH, IN PROCEEDINGS U/S. 143(3) R.WS. 147 OF THE INCOME TAX ACT, 1961 [IN SHORT THE ACT]. THE RELEVANT ASSESSMENT YEAR IS 2005-2006. 2. THE ASSESSEES IDENTICAL GROUNDS PLEADED IN THE A PPEALS READ AS UNDER:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) IS BAD IN LAW AND AGAINST THE FACTS AND C IRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN NOT GRANTED THE INDEXATION FROM THE DATE OF HOLDING OF THE PROPERTY BY THE FATHER, THE FIRST OWNER WHO BOUGHT IT. 3. THE LEARNED ASSESSING OFFICER HAVING ACCEPTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE GOT HER SHARE OF 37.5% ON THE DEATH OF HER FATHER AND LATER HER MOTHER, SHOULD HA VE ALLOWED INDEXATION FROM THE DATES OF HOLDING BY THE FATHER. 4. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN DISMISSING THE APPEAL BY NOT FOLLOWING THE SUPERIOR DECISIONS WITHOUT EXPLAINING HOW HE FACTS ARE DIFFERENT IN ASSESSEES CASE. I.T.A.NO.2900 & 2901/MDS/2014. :- 3 -: 5. FOR THESE AND OTHER GROUNDS THAT MAY BE TAKEN AT THE TIME OF HEARING THE APPEAL, IT IS PRAYED THAT THE INDEXATIO N AS CLAIMED BY THE ASSESSEE APPELLANT MAY BE ALLOWED. BOTH THE LEARNED REPRESENTATIVES INFORM US THAT THE SE ASSESSEES ARE REAL SISTERS. THE ISSUE IN QUESTION OF LONG TERM C APITAL GAINS IS ALSO STATED TO HAVE BEEN ARISEN FROM THE SAME CAPITAL AS SET. THUS, WE TAKE UP ITA NO.2900/MDS/2014 AS THE LEAD CASE. 3. THE ASSESSEE/ AN INDIVIDUAL IS PERMANENTLY SETTLE D IN BRITAIN. SHE IS DAUGHTER OF SHRI. P. MAHALINGAM AND SMT. SAR ASWATHI MAHALINGAM. BOTH OF THEM WERE INDIAN CITIZENS. SH RI. MAHALINGAM HAD PURCHASED A PLOT IN ASHOK NAGAR IN THE YEAR 197 6. HE RAISED SUPER STRUCTURE THEREUPON IN THE YEARS 1977, 1986 A ND 1990. SHRI. MAHALINGAM EXPIRED IN THE YEAR 1999 LEAVING BEHIND HIS MOTHER, WIFE, HIS TWO DAUGHTERS IE THE ASSESSEE AND HER SISTER HA VING EQUAL SHARES OF EACH IN THE PROPERTY . THE ASSESSEES MOTHER EXPIRED IN THE YEAR 2004. HER SHARE ALSO DEVOLVED IN FAVOUR OF THE ASS ESSEE AND HER SISTER. THIS MADE BOTH OF THEM TO BE OWNERS HAVING 37.5% SHARE EACH. 4. THE ASSESSEE, HER SISTER AND GRANDMOTHER SOLD THE AFORESAID PROPERTY ON 11.03.2005 FOR D70,00,000/-. SHE FILED HER RETURN ON I.T.A.NO.2900 & 2901/MDS/2014. :- 4 -: 13.07.2006 STATING TOTAL INCOME OF D18,59,150/-. T HE SAME WAS SUMMARILY PROCESSED. 5. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE NOTIC ED THAT THE ASSESSEE HAD NOT TAKEN INTO CONSIDERATION SECTION 4 8 EXPLANATION (III) FOR COMPUTING COST INFLATION INDEX OF THE PROPERTY SOLD. NOTICE U/S.148 STOOD ISSUED ON 31.03.2009. THE ASSESSEE REITERATE D HER RETURN ALREADY FILED. SHE CHALLENGED THE INITIATION OF SEC TION 147 PROCEEDINGS. THE ASSESSING OFFICER REJECTED HER OBJECTIONS IN A SEPARATE ORDER DATED 21.09.2010. HE TOOK UP THE CASE ON MERITS. HE OBS ERVED IN ASSESSMENT ORDER DATED 21.12.2010 THAT THE ASSESSE E HAD HELD THE PROPERTY IN THE YEAR 2004 AND COST INFLATION INDEX AS PER SECTION 48 EXPLANATION (III) WOULD APPLY FROM THE SAID FINANCI AL YEAR ONLY. THIS RESULTED IN COMPUTATION OF THE IMPUGNED LONG TERM C APITAL GAINS OF D23,94,562/-. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS AFF IRMED THE ASSESSING OFFICER FINDINGS ON LEGALITY OF REOPENING AS WELL AS ON MERITS. THEREFORE, THE ASSESSEE HAS FILED THE INSTANT APPEA L. 7. WE HAVE HEARD BOTH SIDES AND PERUSED THE CA SE FILE. THE I.T.A.NO.2900 & 2901/MDS/2014. :- 5 -: ASSESSEES SOLE SUBSTANTIVE CONTENTION BEFORE US IS THAT COST INFLATION INDEX HAS TO BE CALCULATED IN THE HANDS OF PREVIOUS LAND OWNER/HER FATHER. THERE IS NO DISPUTE ON FACTS. THE ASSESSE ES FATHER HAD PURCHASED THE PROPERTY IN QUESTION IN THE YEAR 1976 . HE PASSED AWAY IN THE YEAR 1999. THE ASSESSEE INHERITED THIS CAPI TAL ASSET. SHE ACQUIRED 12.5% SHARE ON DEATH OF HER MOTHER IN THE YEAR 2004. SECTION 49(1)(III) SPECIFICALLY PRESCRIBES THAT WHE RE THE CAPITAL ASSET BECOMES PROPERTY OF THE ASSESSEE BY SUCCESSION, IN HERITANCE OR DEVOLUTION, ITS COST OF ACQUISITION SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED I T, AS INCREASED BY THE COST OF ANY IMPROVEMENT... THIS IS FOLLOWE D BY FURTHER EXPLANATION DEFINING PREVIOUS OWNER AS THE LAST PRE VIOUS OWNER OF THE CAPITAL ASSET WHO ACQUIRED IT BY A MODE OF ACQUISIT ION OTHER THAN THOSE STATED IN CLAUSES (I) TO (IV) OF SECTION 49(1 ). THE ASSESSEES FATHER HAD PURCHASED THE PLOT IN THE YEAR 1976. TH IS MODE DOES NOT FALL IN ANY OF THE ACQUISITION INSTANCES IN CLAUSES (I)-(IV) STATED HEREINABOVE. THEREFORE, WE HOLD THAT THIS SPECIFIC PROVISION PREVAILS OVER SECTION 48(III); WHICH IS OTHERWISE A DEFINITI ON CLAUSE. THE HONBLE BOMBAY HIGH COURT IN [2013] 355 ITR 474 CIT VS. MA NJULA J. SHAH HAS APPROVED SPECIAL BENCH DECISION OF THE TRIBUNAL I N THE VERY CASE [2009] 318 ITR (AT) 471 (MUMBAI) (SB) HOLDING THAT COST INDEXATION I.T.A.NO.2900 & 2901/MDS/2014. :- 6 -: HAS TO BE FROM THE DATE THE PREVIOUS OWNER ACQUIRED OWNERSHIP OF THE CAPITAL ASSET SOLD. THE REVENUE FAILS TO QUOTE ANY JUDICIAL PRECEDENT TO THE CONTRARY. THEREFORE, THE ASSESSEE GROUNDS ARE A CCEPTED. WE DIRECT THE ASSESSING OFFICER TO RE-COMPUTE CAPITAL GAINS AFRESH BY TAKING COST INDEXATION FROM THE FINANCIAL YEAR IN W HICH SHRI. MAHALINGAM HAD PURCHASED THE PROPERTY OR FROM 01.04 .1981; WHICHEVER IS LATER. THE ASSESSEES APPEAL ITA NO.2 900/MDS/2014 IS ALLOWED. 8. SAME ORDER TO FOLLOW IN ITA NO. 2901/MDS/2014. BOTH APPEALS ITAS NO.2900 & 2901/MDS/2014 ARE ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 27 TH OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . . ) (S.S. GODARA) / JUDICIAL MEMBER #$ /CHENNAI. %& /DATED:27.02.2015. KV &' () *) /COPY TO: 1. + APPELLANT 2. / RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. )-. / /DR 6. .0 1 /GF. I.T.A.NO.2900 & 2901/MDS/2014. :- 7 -: