HEMANT H. MAIKAN, MUMBAI V. ITO 17(2)(2), MUMBAI

ITA 3055/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71979 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 10-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P J PARDIWALA
• Keywords: Cost of acquisition
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 3055/MUM/2011 ASSESSMENT YEAR: 2006-07 HEMANT H. MALKAN 255/5, KAMAL SADAN V.V. BHATT MARG, MATUNGA CR, MATUNGA MUMBAI-. 400 019 VS. ITO 17(2)(2) MUMBAI. (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAEPM 5832 A APPELLANT BY : SHRI P.J. PARDIWALA RESPONDENT BY : SHRI RAVI PRAKASH DATE OF HEARING : 10.12.2013 DATE OF PRONOUNCEMENT : 18.12.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-29, MUMBAI DATED 02.02.2011 FOR THE ASSES SMENT YEAR 2006-07. 2. THE ONLY ISSUE ARISES OUT OF THE GROUNDS OF APPE AL IS REGARDING THE DETERMINATION OF INDEXED COST OF ACQUISITION OF THE FLAT PURCHASED BY THE ASSESSEE VIS-A-VIS COMPUTATION OF CAPITAL GAINS IN RELATION TO SALE O F THE FLAT. 3. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL, WHI LE DECLARING A TOTAL INCOME OF RS. 1 LACK, HAD SHOWN A LONG TERM CAPITAL GAIN ON S ALE OF FLAT BEARING NO. 62 AT ANDHERI (W) IN MUMBAI AGAINST WHICH HE HAD CLAIMED THE INDEXED COST OF ACQUISITION AT RS.39,80,120/-. ACCORDINGLY, THE ASSESSEE HAD DE CLARED A LONG TERM CAPITAL GAIN AT RS.10,19,880/- AFTER DEDUCTING THE INDEXED COST OF ACQUISITION AS ON 1993, THE YEAR IN WHICH, ACCORDING TO THE ASSESSEE, HAD HELD THE F LAT. HOWEVER, IN THE ASSESSMENT ITA NO. 3055/MUM/2011 HEMANT H. MALKAN ASSESSMENT YEAR: 2006-07 2 FRAMED U/S 143(3), THE AO HAD REDUCED THE INDEXED C OST OF ACQUISITION OF FLAT BY RS.12,97,827/- AND THEREBY ENHANCED THE CAPITAL GAI NS AS THE ASSESSEE COULD NOT BE SAID TO BE THE OWNER OF THE FLAT FROM 1993 AND THER EFORE, THE AO COMPUTED THE INDEXED COST AT RS.26,82,293/- ON THE BASIS OF THE YEARS IN WHICH THE ASSESSEE HAD MADE THE PAYMENTS OF INSTALLMENTS AS STATED IN PARA 14 OF THE ASSESSMENT ORDER. ON APPEAL THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO AS THE PAYMENTS WERE MADE IN INSTALLMENTS TOWARDS THE RIGHT OF ACQUISITION OF TH E FLAT. AGGRIEVED BY THE IMPUGNED ORDER THE ASSESSEE IS NOTHING BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD IT IS PERTINENT TO MENTION THAT THERE ARE PLETHORA OF DECISIONS THA T ONCE IMMOVABLE PROPERTY IS ACQUIRED, THE COST OF ACQUISITION AND THE DATE OF A CQUISITION WILL BE THAT DATE, NOTWITHSTANDING THE FACT THAT THE PRICE OF IMMOVABL E PROPERTY ACQUIRED IS PAID OVER A PERIOD OF TIME. THEREFORE, ITS VERY CLEAR THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN WORKING OUT THE INDEXED COST ON THE BASIS OF PAYMEN TS MADE IN EVERY YEAR RIGHT FROM THE FIRST INSTALLMENT TO TILL THE COMPLETE PAY MENT IS EFFECTED. IT IS THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE PROPERT Y HAS BEEN ACQUIRED BY THE ASSESSEE IN THE YEAR 1993 AND THE INDEXED COST HAS TO BE WORKED ON THE BASIS OF THE RESPECTIVE YEAR 1993-94. HOWEVER, THE PERUSAL OF TH E COMMUNICATION OF THE MUMBAI URBAN DEVELOPMENT PROJECT, DATED 12.04.1993, IN RES PONSE TO THE APPLICATION FOR HIG APARTMENT PLOT INDICATES THAT THE POSSESSION OF THE PLOT WILL BE GIVEN TO THE ASSESSEE AFTER THE FULL PAYMENT IS MADE AND THE LEA SE AGREEMENT IS EXECUTED TO THAT EFFECT. THE SAID COMMUNICATION ALSO INDICATES THAT ENTIRE PAYMENT CAN ALSO BE MADE AT ONE TIME. THE SAID FACTS DO NOT CLEARLY SUGGEST WHETHER THE PROPERTY HAS BEEN HELD BY THE ASSESSEE IN THE YEAR 1993, SINCE THE PA YMENTS HAVE BEEN MADE OVER A PERIOD OF TIME. 4.1 CONSIDERING THE FACTS IN TOTO, WHILE WE HOLD TH AT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN WORKING OUT THE INDEXED COST ON THE BA SIS OF PAYMENTS OF INSTALLMENTS, WE ARE OF THE VIEW THAT IT IS JUST AND PROPER TO SE T ASIDE THE ENTIRE MATTER BACK TO THE FILE OF THE AO TO VERIFY THE FIRST YEAR IN WHIC H THE PLOT HAS BEEN HELD BY THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE INDEXED C OST OF ACQUISITION IN ACCORDANCE WITH THE PROVISION OF SECTION 48 OF THE ACT AND ACC ORDINGLY ALLOW THE INDEXED COST OF ITA NO. 3055/MUM/2011 HEMANT H. MALKAN ASSESSMENT YEAR: 2006-07 3 ACQUISITION AFTER GIVING A REASONABLE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. WE ORDER AND DIRECT ACCORDINGLY. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2013. SD/- SD/- (D. KARUNAKARA RAO) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.12.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR H BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.