DDIT, New Delhi V. Mr. Banita Sawhney, New Delhi

ITA 2976/DEL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7115 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: R SINGH
• Keywords: Cost of acquisition; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.2976/DEL/2011 ASSESSMENT YEAR : 2006-07 DEPUTY DIRECTOR OF INCOME TAX, CIRCLE 2(2), NEW DELHI. VS. MS BANITA SAWHNEY, C/O SURESH SETHI & CO., CAS, 42, GF, WORLD TRADE CENTRE, NEW DELHI 110 001. PAN : BHXPS6829N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. SINGH, ADVOCATE REVENUE BY : SHRI N.K. CHAND, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 3 RD FEBRUARY, 2011 FOR ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT (A) HAS ERRED IN HOLDING THAT BASE YEAR FOR CALCULATING IN DEXED COST OF ACQUISITION WOULD BE 1981-82. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT (A) HAS ERRED IN NOT APPRECIATING THAT FIRST YEAR IN WHICH A SSET WAS HELD THE ASSESSEE WAS THE FIRST YEAR IN WHICH IT WAS IN HERITED BY THE ASSESSEE. 3. THE APPELLANT PRAYS FOR LEAVE TO ADD, AMEND, MODIF Y OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF APPEAL. ITA NO.2976/DEL/2011 2 2. THE ASSESSEE HAD INHERITED PROPERTY ON THE DEATH OF HER FATHER ON 5 TH DECEMBER, 2001. THE DETAILS OF THE PROPERTY WHICH COMPRISE SHARES HAS BEEN TABULATED IN THE ORDER OF THE CIT (A) AND, FOR THE SAKE OF CONVENIENCE, THE SAME IS REPRODUCED BELOW:- COMPANY PAID UP SHARE CAPITAL BOOK VALUE OF BUILDING APPEARING IN BALANCE SHEET (RS.) MARKET VALUE OF BUILDING AS ON 1.04.1981. SAWHNEY INVESTMENTS PRIVATE LIMITED 5,00,000.00 5,16,821.10 11,36,720.00 BABA PROPERTIES PRIVATE LIMITED 2,50,000.00 2,37,656.00 5,24,640.00 H.S. INVESTMENTS PRIVATE LIMITED 2,50,000.00 2,37,656.00 5,24,640.00 TOTAL 10,00,000.00 9,92,133.10 21,86,000.00 3. 50% OF THE EQUITY SHAREHOLDING OF THE ABOVE COMPA NIES BELONGED TO THE ASSESSEE ALONG WITH SHRI HARPREET SAWH NEY, SHRI HARMEET SAWHNEY AND MRS. PRATIBA SAWHNEY AND WAS SOLD FOR A CONSIDERATION OF ` 2,73,75,000/-. LONG TERM CAPITAL GAIN WAS WORKED OUT BY THE ASSESSEE AS UNDER:- PARTICULARS AMOUNT (RS.) SALE CONSIDERATION 68,43,750.00 LESS: COST OF ACQUISITION FAIR MARKET VALUE AS ON 01.04.1981 = 2,73,250.00 (AS PER VALUATION REPORT RS.21,86,000* 1/8 TH SHARE) INDEXED COST OF ACQUISITION = RS.2,73,250*497/100 (13,58,053.00) TOTAL LONG TERM CAPITAL GAIN 54,85,697.00 4. THE ASSESSING OFFICER DID NOT AGREE WITH THE VERSION OF THE ASSESSEE AND HAS ADOPTED THE COST INDEX WITH EFFECT FROM FINANCIAL YEAR 2001-02 WHEN THE AFOREMENTIONED SHARES FELL ON T HE ASSESSEE ON THE DEATH OF HER FATHER. BY TAKING THE COST INDEXAT ION FROM FINANCIAL YEAR 2001-02, THE ASSESSING OFFICER MADE AN ADDITION OF ` 10,39,259/- TO THE INCOME OF THE ASSESSEE. LEARNED CIT (A) HAS DECI DED THE ISSUE ITA NO.2976/DEL/2011 3 IN FAVOUR OF THE ASSESSEE ON THE BASIS OF VARIOUS DECISIONS RENDERED BY THE TRIBUNAL IN WHICH IT HAS BEEN HELD THAT THE BASE YEAR FOR CALCULATION OF INDEX COST OF ACQUISITION OF THE SHARES IN TERMS OF E XPLANATION (III) TO SECTION 48 OF THE ACT, ACQUIRED BY THE ASSESSEE BY WAY OF INHERITANCE (ONE OF THE MODES SPECIFIED IN SECTION 49(1) OF THE A CT) SHOULD BE TAKEN AS FINANCIAL YEAR 1981-82 WHEN SUCH SHARES WERE A CQUIRED BY THE PREVIOUS OWNER PRIOR TO 1 ST APRIL, 1981. BASED UPON THOSE DECISIONS AND THE DECISION OF SPECIAL BENCH OF MUMBAI ITAT IN THE CASE OF DCIT VS. MANJULA J. SHAH DATED 16 TH OCTOBER, 2009, LEARNED CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE DEPARTM ENT IS AGGRIEVED, HENCE, IN APPEAL. 5. THE LEARNED DR RELIED UPON THE ORDER OF ASSESSING OF FICER. AS AGAINST THAT THE LEARNED AR OF THE ASSESSEE HAS PRODUCED BEFORE US COPY OF THE AFOREMENTIONED SPECIAL BENCH DECISION AN D IT WAS CONTENDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE A SSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AND WE FIND THAT T HE LEARNED CIT (A) WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE HA S RELIED UPON THE AFOREMENTIONED DECISION OF THE SPECIAL BENCH IN WHICH IT HAS BEEN STATED THAT IN CASE OF INHERITANCE, IF THE ASSETS WERE A CQUIRED BY THE PREVIOUS OWNER BEFORE 1 ST APRIL, 1981, THEN, COST INDEX SHOULD BE BASED ON THE INDEX OF FINANCIAL YEAR 1981-82. THEREFORE, AFTER HEARING BOTH THE PARTIES, WE FIND NO SUBSTANCE IN THE DEPARTMENTAL APPEAL AND THE SAME IS DISMISSED. 7. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.12.20 11. SD/- SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 19.12.2011. ITA NO.2976/DEL/2011 4 DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES