WUNDEVALLI KRISHNA DEEPTI, CHENNAI V. ITO NON CORPORATE WARD 1(4), CHENNAI

ITA 3096/CHNY/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7504 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 13-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G. CHANDRABABU
• Assessee Lawyers: VISHVA PADMANABHAN
• Keywords: Capital asset; Gift; Cost of acquisition
• Section: 54; 64; 48

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . , !' # $% , & !' %' BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R # ./ ITA NO.3096/CHNY/2018 ( )( /ASSESSMENT YEAR: 2015-16 MS. WUNDEVALLI KRISHNA DEEPTHY, NEW NO.32, OLD NO.19, F-3, I FLOOR, JAINS ANURAG APARTMENTS, ARCOT STREET, T. NAGAR, CHENNAI 600 017. VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 1(4), CHENNAI. [PAN: DQDPK 5546M ] ( *+ /APPELLANT) ( ,-*+ /RESPONDENT) *+ . / / APPELLANT BY : SHRI VISHVA PADMANABHAN, C.A ,-*+ . / /RESPONDENT BY : SHRI G. CHANDRABABU, ADDL. CIT . 0& /DATE OF HEARING : 04.02.2021 12) . 0& / DATE OF PRONOUNCEMENT : 24.02.2021 !3 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI, IN ITA NO.55/2017- 18/A.Y. 2015-16/CIT(A)-2 DATED 27.09.2018 FOR THE A SSESSMENT YEAR 2015-16. 2. THE ASSESSEES FATHER HAD PURCHASED A PROPERTY L OCATED AT T. NAGAR, CHENNAI ON 20.04.1982 AND SETTLED IT IN FAVO UR OF THE ASSESSEES BROTHERS AND RESERVING LIFE INTEREST TO HIS WIFE, S MT. JAYASHREE VIDE ITA NO.3096/CHNY/2018 :- 2 -: SETTLEMENT DOCUMENT NO.531 DATED 11.03.2008. THE AS SESSEES BROTHERS AND HER MOTHER, IN TURN SETTLED 1/3 RD OF THE TOTAL PROPERTY TO MS. KRISHNA DEEPTHY, THE ASSESSEE VIDE SETTLEMENT DOCUMENT NO.9 00 DATED 28.04.2011. DURING THE PERIOD RELEVANT TO THIS ASSE SSMENT YEAR 2015-16, THE ASSESSEE AND HER BROTHERS JOINTLY SOLD THE PROP ERTY AND THE ASSESSEE CLAIMED EXEMPTION U/S. 54 OF THE INCOME TAX ACT, 19 61 TOWARDS RE- INVESTMENT MADE IN ANOTHER RESIDENTIAL PROPERTY. WH ILE MAKING THE ASSESSMENT, THE AO FOUND, INTER ALIA, THAT THE ASSE SSEE HAD CLAIMED THE INDEXED COST OF ACQUISITION OF THE PROPERTY, WHICH INCLUDED THE COST OF LAND AND BUILDING RELATING TO THE YEAR 1982 AND SHE CLAIMED INDEXED COST OF IMPROVEMENT TOWARDS ADDITIONAL CONSTRUCTION MADE IN THE YEAR 1985. THE AO RELYING ON THE PROVISIONS OF S. 48 OF THE AC T, HELD THAT FOR THE PURPOSE OF INDEXED COST OF ACQUISITION, THE YEAR HA S TO BE RECKONED WITH THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE A SSESSEE AND ACCORDINGLY, HE WORKED OUT THE INDEXED COST OF ACQU ISITION APPLYING THE COST INFLATION INDEX FOR THE YEAR 2011 IN WHICH THE ASSET IS FIRST HELD BY THE ASSESSEE. WITH REGARD TO THE INVESTMENT MADE IN ADD ITIONAL FLOORS IN THE YEAR 1985, THE AO RESTRICTED THE RATE PER SQ. FT. C LAIMED BY THE ASSESSEE AT RS. 380/- FOR THE REASON THAT IT WAS ALMOST THRE E TIMES THE COST ADOPTED BY THE ASSESSEE IN THE YEAR 1982 AND ESTIMA TED THE COST AT RS. 175/- PER SQ. FT. AND THUS ARRIVED LONG TERM CAPITA L GAIN IN THE ASSESSEES HAND. THE ASSESSEE CLAIMED RS. 1,33,333/- AS BROKER AGE FOR ACQUIRING ITA NO.3096/CHNY/2018 :- 3 -: THE NEW PROPERTY AND THE AO ASKED TO PRODUCE THE EV IDENCE TOWARDS THAT CLAIM. SINCE, THE ASSESSEE COULD NOT PRODUCE ANY E VIDENCE HE REFUSED TO ALLOW THE CLAIM MADE BY THE ASSESSEE. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A). TH E LD. CIT(A) PARTLY ALLOWED THE APPEAL. AGGRIEVED AGAINST ORDER, THE AS SESSEE FILED THIS APPEAL. 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. T HE LD. AR SUBMITTED THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEES FATHER PURCHASED THE PROPERTY ON 20.04.1 982 AND SETTLED THE SAME IN FAVOUR OF HER BROTHERS AND RESERVING LIFE I NTEREST TO HIS WIFE, SMT. JAYASHREE VIDE A SETTLEMENT DOCUMENT NO.531 DATED 1 1.03.2008. IN TURN, THE BROTHERS AND MOTHER SETTLED 1/3 RD OF THE PROPERTY TO THE ASSESSEE VIDE SETTLEMENT DEED NO. 900 DATED 28.04.2011. DURING TH E PERIOD RELEVANT TO THIS ASSESSMENT YEAR 2015-16, THE ASSESSEE AND HER BROTHERS JOINTLY SOLD THE PROPERTY AND THE ASSESSEE CLAIMED EXEMPTION U/S . 54 OF THE ACT TOWARDS RE-INVESTMENT MADE IN ANOTHER RESIDENTIAL P ROPERTY. THEREFORE, THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE PREVIOUS OWNER OF THE PROPERTY IS THE ASSESSEES FATHER IN ACCORDANCE WITH THE EXP LANATION BELOW SECTION 49(1). THE LD. CIT(A) ERRED IN CONCLUDING T HE PERIOD OF HOLDING OF THE CAPITAL ASSET BY THE PREVIOUS OWNER SHOULD BE R ECKONED FROM 11.03.2008 AND NOT FROM THE DATE WHEN THE PREVIOUS TO PREVIOUS OWNER ITA NO.3096/CHNY/2018 :- 4 -: HAD HELD THE PROPERTY. IN THIS REGARD, THE LD. AR I NVITED OUR ATTENTION TO EXPLANATION BELOW SUB SECTION (1) OF S. 49, WHICH I S EXTRACTED AS UNDER: COST WITH REFERENCE TO CERTAIN MODES OF ACQUISITIO N. 49. (1) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE (I) ON ANY DISTRIBUTION OF ASSETS ON THE TOTAL OR P ARTIAL PARTITION OF A HINDU UNDIVIDED FAMILY; (II) UNDER A GIFT OR WILL; (III) (A) BY SUCCESSION, INHERITANCE OR DEVOLUTION, OR (B) ON ANY DISTRIBUTION OF ASSETS ON THE DISSOLUTIO N OF A FIRM, BODY OF INDIVIDUALS, OR OTHER ASSOCIATION OF PERSON S, WHERE SUCH DISSOLUTION HAD TAKEN PLACE AT ANY TIME BEFORE THE 1ST DAY OF APRIL, 1987, OR]```````` (C) ON ANY DISTRIBUTION OF ASSETS ON THE LIQUIDATIO N OF A COMPANY, OR (D) UNDER A TRANSFER TO A REVOCABLE OR AN IRREVOCAB LE TRUST, OR (E) UNDER ANY SUCH TRANSFER AS IS REFERRED TO IN CL AUSE (IV) OR CLAUSE (V) [OR CLAUSE (VI)] [OR CLAUSE (VIA)] [OR CLAUSE (VIAA)] [OR CLAUSE (VICA) OR CLAUSE (VICB)] OF SECT ION 47; (IV) SUCH ASSESSEE BEING A HINDU UNDIVIDED FAMILY, BY THE MODE REFERRED TO IN SUB-SECTION (2) OF SECTION 64 AT ANY TIME AFTER THE 31ST DAY OF DECEMBER, 1969,] THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEME D TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY A CQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROVEMENT OF THE ASS ETS INCURRED OR BORNE BY THE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. EXPLANATION. IN THIS [SUB-SECTION] THE EXPRESSION PREVIOUS OWNER OF THE PROPERTY IN RELATION TO ANY CAPITAL A SSET OWNED BY AN ASSESSEE MEANS THE LAST PREVIOUS OWNER OF THE CA PITAL ASSET WHO ACQUIRED IT BY A MODE OF ACQUISITION OTHER THAN THAT REFERRED TO IN CLAUSE (I) OR CLAUSE (II) OR CLAUSE (III) [OR CLAUSE (IV)] OF THIS 64[SUB-SECTION].] AND SUBMITTED THAT IN THIS CASE, THE PREVIOUS OWNE R IS THE LAST PREVIOUS OWNER OF THE CAPITAL ASSET I.E., THE ASSES SEES FATHER, WHO ACQUIRED IT BY A MODE OF ACQUISITION OTHER THAN THA T REFERRED TO IN CLAUSE (I) OR CLAUSE (II) OR CLAUSE (III) OR CLAUSE (III) OR CLAUSE (IV) OF SUB SECTION (1) OF SECTION 49 OF THE ACT. IN THIS REGARD, THE LD. A R RELIED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. MINOR SHANTHI CHANDRAN ITA NO.3096/CHNY/2018 :- 5 -: [2000] 241 ITR 0371 (MAD) AND THE DECISION IN THE C ASE OF CIT VS. JANHAVI S. DESAI [2012] 209 TAXMAN 0289 (BOM). WITH REGARD TO THE ISSUE OF ESTIMATING THE RATE TOWARDS ADDITIONAL CON STRUCTION IN THE YEAR 1985 AT RS. 175/-, THE LD. AR INVITING OUR ATTENTIO N TO THE GROUNDS TAKEN BEFORE THE LD. CIT(A) VIDE GROUND NO. IV, V, VI, VI I AND VIII AND ALSO INVITING OUR ATTENTION TO PARA 17 OF THE ORDER OF THE LD. CI T(A) SUBMITTED THAT THE LD. CIT(A) FAILED TO ADJUDICATE THIS ISSUE WHILE D ISPOSING THE APPEAL. WITH REGARD TO THE BROKERAGE EXPENDITURE CLAIMED BY THE ASSESSEE, THE LD. AR SUBMITTED THAT WITHOUT INCURRING THAT EXPEND ITURE THE ASSESSEE WOULD NOT HAVE ACQUIRED THE PROPERTY AND HENCE PLEA DED TO ALLOW THE APPEAL. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEES FATHER HAD PURC HASED A PROPERTY LOCATED AT T. NAGAR, CHENNAI ON 20.04.1982 AND SETT LED IT IN FAVOUR OF THE ASSESSEES BROTHERS AND RESERVING LIFE INTEREST TO HIS WIFE, SMT. JAYASHREE, VIDE A SETTLEMENT DOCUMENT NO.531 DATED 11.03.2008. THE ASSESSEES BROTHERS AND HER MOTHER, IN TURN SETTLED 1/3 RD OF THE TOTAL PROPERTY TO MS. KRISHNA DEEPTHY, THE ASSESSEE, VIDE SETTLEMENT DOCUMENT NO.900 DATED 28.04.2011. DURING THE PERIOD RELEVANT TO THIS ASSESSMENT YEAR 2015-16, THE ASSESSEE AND HER BROTH ERS JOINTLY SOLD THE ITA NO.3096/CHNY/2018 :- 6 -: PROPERTY AND THE ASSESSEE CLAIMED EXEMPTION U/S. 54 OF THE ACT TOWARDS THE RE-INVESTMENT MADE BY HER IN ANOTHER RESIDENTIA L PROPERTY. IN THIS REGARD, THE ASSESSEE RELIED ON THE DECISION OF HON'B LE JURISDICTIONAL HIGH COURT IN CIT VS. MINOR SHANTHI CHANDRAN [2000] 241 ITR 0371 (MAD) AND THE DECISION IN THE CASE OF CIT VS. JANHAVI S. DESA I [2012] 209 TAXMAN 0289 (BOM). IN ACCORDANCE WITH EXPLANATION TO SUB SECTION (1) OF S.49, IT IS CLEAR THAT THE LAST PREVIOUS OWNER OF THE CAPITA L ASSET IS THE ASSESSEES FATHER AND HENCE, WE DIRECT THE AO TO WORK OUT THE INDEXED COST OF ACQUISITION OF THE PROPERTY FROM 1982. WITH REGARD TO THE ISSUE OF ESTIMATING THE RATE PER SQ. FT. TOWARDS ADDITIONAL CONSTRUCTION IN THE YEAR 1985, WE FIND THAT THE LD. CIT(A) HAS NOT ADJUDICAT ED THIS ISSUE AND HENCE, WE REMIT THIS ISSUE BACK TO THE LD. CIT(A) T O HEAR THE ASSESSEE AND DISPOSE THIS ISSUE IN ACCORDANCE WITH LAW. ON THE ISSUE OF BROKERAGE CLAIM, WE FIND THAT THE ASSESSEE HAD FAIL ED TO PRODUCE DOCUMENTARY EVIDENCE, NAME AND ADDRESS OF THE PERSO N/PERSONS WHO WERE PAID BROKERAGE ETC. AND FAILED TO SUBSTANTIATE THE GENUINENESS OF THE CLAIM BEFORE THE LOWER AUTHORITIES. EVEN BEFORE US, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THIS CLAIM. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITI ES ON THIS ISSUE. THEREFORE, THE CORRESPONDING GROUNDS OF THE ASSESSE E FAIL. ITA NO.3096/CHNY/2018 :- 7 -: 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE DAY OF 24 TH FEBRUARY, 2021 IN CHENNAI. SD/ - SD/ - ( . ) (DUVVURU RL REDDY) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 4!# /DATED: 24 TH FEBRUARY, 2021 . EDN, SR. P.S !3 . ,056 76)0 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 80 ( )/CIT(A) 4. 80 /CIT 5. 69: ,0 /DR 6. :( ; /GF