ITO, CHENNAI V. Smt. Radha Jayaraman, CHENNAI

ITA 3128/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7419 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 10-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. DURAI PANDIAN
• Keywords: Capital asset; Gift; Cost of acquisition
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3128/MDS/2016 & C.O. NO.199/MDS/2016 (IN I.T.A. NO.3128/MDS/2016) * +* / ASSESSMENT YEAR : 2012-13 THE INCOME TAX OFFICER, NON-CORPORATE WARD 2(3), CHENNAI - 600 034. V. SMT. RADHA JAYARAMAN, NEW NO.17, 5 TH MAIN ROAD, RAJA ANNAMALAIPURAM, CHENNAI - 600 028. PAN : AADPJ 9948 D ( APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) -. / 0 / APPELLANT BY : SHRI R. DURAI PANDIAN, JCIT 12-. / 0 / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE ' / 3& / DATE OF HEARING : 21.02.2017 45+ / 3& / DATE OF PRONOUNCEMENT : 23.03.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -2, CHENNA I, DATED 31.08.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS FILED CROSS-OBJECTION AGAINST VERY SAM E ORDER OF THE 2 I.T.A. NO.3128/MDS/16 C.O. NO.199/MDS/16 CIT(APPEALS). THEREFORE, WE HEARD BOTH THE APPEAL AND CROSS- OBJECTION TOGETHER AND DISPOSING OF THE SAME BY THI S COMMON ORDER. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO COST OF INDEXATION. 3. SHRI R. DURAI PANDIAN, THE LD. DEPARTMENTAL REPR ESENTATIVE, SUBMITTED THAT THE SUBJECT PROPERTY WAS ORIGINALLY PURCHASED BY THE DAUGHTER OF THE ASSESSEE ON 29.01.1993. SUBSEQUENT LY, IT WAS GIFTED TO THE ASSESSEE ON 01.01.2003. ON 30.06.200 3, THE ASSESSEE SOLD THE CAPITAL ASSET AND OFFERED LONG TE RM CAPITAL LOSS. THE ASSESSING OFFICER FOUND THAT THE INDEX COST OF ACQUISITION HAS TO BE DETERMINED WITH REFERENCE TO COST INFLATION INDE X OF THE YEAR IN WHICH THE ASSESSEE HELD THE PROPERTY, I.E. ON 01.01 .2003. HOWEVER, THE CIT(APPEALS) IN VIEW OF JUDGMENT OF BOMBAY HIGH COURT IN DCIT V. MANJULA J SHAH (2013) 355 ITR 474, FOUND THAT TH E COST INFLATION INDEX HAS TO BE ADOPTED FROM 21.01.1993 WHEN THE DA UGHTER OF THE ASSESSEE INITIALLY PURCHASED THE FLAT. ACCORDING T O THE LD. D.R., THE COST INFLATION INDEX HAS TO BE ADOPTED ONLY FROM TH E DATE ON WHICH THE ASSESSEE BECAME THE OWNER BY VIRTUE OF THE GIFT ON 01.01.2003. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 3 I.T.A. NO.3128/MDS/16 C.O. NO.199/MDS/16 4. WE HAVE HEARD SHRI S. SRIDHAR, THE LD.COUNSEL FO R THE ASSESSEE ALSO. ADMITTEDLY, THE ASSESSEE ACQUIRED T HE PROPERTY BY MEANS OF GIFT DEED DATED 01.01.2003. THEREFORE, AS HELD BY BOMBAY HIGH COURT IN MANJULA J SHAH (SUPRA), THE PE RIOD OF HOLDING OF THE PROPERTY BY THE PREVIOUS OWNER HAS TO BE TAK EN INTO CONSIDERATION FOR THE PURPOSE OF INFLATION INDEX. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RI GHTLY FOLLOWED THE JUDGMENT OF BOMBAY HIGH COURT IN MANJULA J. SHA H (SUPRA) AND ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. NOW COMING TO THE CROSS-OBJECTION OF THE ASSESSE E, THE ONLY CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE IS ELIGI BLE FOR LONG TERM CAPITAL LOSS. 6. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT INCOME FROM SALE OF ADORA FLAT WAS CLAIMED B Y THE ASSESSEE AS LONG TERM CAPITAL LOSS. HOWEVER, THE CIT(APPEAL S) FOUND THAT IT IS NOT A SHORT TERM CAPITAL GAIN. THE CIT(APPEALS) HA S ALSO CONFIRMED THE FINDING OF THE ASSESSING OFFICER. REFERRING TO THE ORDER OF THE 4 I.T.A. NO.3128/MDS/16 C.O. NO.199/MDS/16 ASSESSING OFFICER, MORE PARTICULARLY PARA 4.2.1, TH E LD.COUNSEL SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN THE DATE OF POSSESSION OF THE FLAT HANDED OVER BY THE BUILDER. ACCORDING TO THE LD. COUNSEL, WHEN THE ASSESSEE WAS ALLOTTED A FLAT, THE ASSESSEE GETS TITLE OF THE PROPERTY AND PAYMENT OF INSTALMEN T IS ONLY A CONSEQUENTIAL ACTION. THE PHYSICAL POSSESSION OF P ROPERTY WOULD FOLLOW AUTOMATICALLY. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) OUGHT TO HAVE FOUND THAT THERE WAS CAP ITAL LOSS IN THE TRANSACTION. 7. ON THE CONTRARY, SHRI R. DURAI PANDIAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE SOLD THE FLAT ON 17.06.2011 FOR A TOTA L CONSIDERATION OF ` 68,00,000/-. AFTER DEDUCTING INDEXED COST OF LAND AT ` 35,97,917/- AND THE INDEXED COST OF CONSTRUCTION AT ` 57,94,837/-, THE ASSESSEE HAS COMPUTED THE LONG TERM CAPITAL LOSS AT ` 31,41,462/-. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE PAYMENT WAS MADE ON 17.06.2011 FOR PURCHASE OF ADORA FLAT . THE DETAILS OF THE PAYMENTS WERE EXTRACTED BY THE ASSESSING OFF ICER AT PARA 5.3 OF THE ASSESSMENT ORDER. THE ASSESSEE ONLY ENTERED INTO AN AGREEMENT FOR CONSTRUCTION AND THE BUILDER DID NOT EVEN OBTAIN THE 5 I.T.A. NO.3128/MDS/16 C.O. NO.199/MDS/16 BUILDING PERMISSION. THEREFORE, ACCORDING TO THE L D. D.R., THE ASSESSEE AT THE BEST CAN SELL THE PROPERTY ONLY AFT ER TAKING THE PHYSICAL POSSESSION OF THE SAME. THE POSSESSION OF PROPERTY WAS ACTUALLY TAKEN BY THE ASSESSEE ONLY ON 12.02.2010 A ND THE PROPERTY WAS ACTUALLY SOLD BY THE ASSESSEE ON 17.06.2011, HE NCE THERE WAS SHORT TERM CAPITAL GAIN. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF PROPERTY WHEN THE BUILDING ITSELF WAS UNDER CONSTRUCTION. THE PROPERTY DID NO T COME INTO EXISTENCE. IT IS NOT A CASE OF CLAIMING EXEMPTION AS INVESTMENT. IF THE ASSESSEE CLAIMS EXEMPTION UNDER SECTION 54 OR 5 4F OF THE INCOME-TAX ACT, 1961 IN RESPECT OF PURCHASE OF FLAT DURING CONSTRUCTION, THE MATTER WOULD STAND ON A DIFFERENT FOOT. IN THIS CASE, THE ASSESSEE IS SELLING THE FLAT WHICH DID NO T EVEN COME INTO EXISTENCE. UNDER TRANSFER OF PROPERTY ACT, WHAT CA N BE SOLD IS ONLY EXISTING PROPERTY AND NOT PROPERTY WHICH WOULD COME INTO EXISTENCE IN THE FUTURE. THEREFORE, AS RIGHTLY FOUND BY THE CIT(APPEALS), THE PHYSICAL POSSESSION OF PROPERTY WAS TAKEN BY THE AS SESSEE ONLY ON 12.02.2010 AND THE PROPERTY WAS SOLD ON 17.06.2011. THEREFORE, 6 I.T.A. NO.3128/MDS/16 C.O. NO.199/MDS/16 THERE WAS SHORT TERM CAPITAL GAIN. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 9. IN THE RESULT, BOTH THE APPEAL AND CROSS-OBJECTI ON ARE DISMISSED. ORDER PRONOUNCED ON 23 RD MARCH, 2017 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 23 RD MARCH, 2017. KRI. / 13#8 98+3 /COPY TO: 1. -. /APPELLANT 2. 12-. /RESPONDENT 3. ' :3 () /CIT(A)-2, CHENNAI-34 4. PRINCIPAL CIT-1, CHENNAI 5. 8; 13 /DR 6. * < /GF.