ITO 19(3)(1), MUMBAI V. DHARAMCHAND AMARCHAND JAIN, MUMBAI

ITA 3138/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88448 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: SUBODH RATNAKARKHI
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 3138/MUM/2013 (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER -19(3)(1) VS. SHRI DHARAMCHAND AMARCHAND JAIN ROOM NO. 307, 3RD FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI 400012 120, BAZAAR ROAD, 1ST FLOOR BANDRA (W), MUMBAI 400050 PAN - AABPJ1746M APPELLANT RESPONDENT APPELLANT BY: SHRI AKHILENDRA YADAV RESPONDENT BY: SHRI SUBODH RATNAKARKHI DATE OF HEARING: 24.02.2015 DATE OF PRONOUNCEMENT: 24.02.2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER DATED 13.02.2013 PASSED BY THE CIT(A)-30, MUMBAI. 2. FOLLOWING GROUNDS WERE URGED BEFORE US: - (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO ALLOW THE COST OF INFLATION INDEX FROM 01.04.1981 ON THE BASIS OF HOLDING BY TH E PREVIOUS OWNER WITHOUT APPRECIATING THE FACT THAT THE ASSESS EE HAS BEEN THE OWNER OF 1/9 TH SHARE OF THE PROPERTY SUBSEQUENT TO THE DEATH OF HIS FATHER ON 6.2.1995 AND 7/9 TH OF THE PROPERTY IN F.Y. 2004-05 IN VIEW OF THE GIFTS DEEDS BY CO-OWNER. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FACT TH AT THE EXPLANATION (III) TO SECTION 48 CLEARLY STATES THAT THE COST INFLATION INDEX SHALL BE ADOPTED FROM THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FACT TH AT THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MAN JULA J. SHAH (249 CTR 270) HAS NOT BEEN ACCEPTED BY THE DEPARTME NT. ITA NO. 3138/MUM/2013 SHRI DHARAMCHAND AMARCHAND JAIN 2 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. ASSESSEE INHERITED FROM HIS FATHER 1/9 TH SHARE IN THE PROPERTY. THE REMAINING 8/9 TH SHARES WERE INHERITED BY HIS BROTHERS AND SISTER OF THE ASSESSEE. ASSESSEE INHERITED THE PROPERTY IN 1995. SUBSEQUENTLY, IN 20 04 ASSESSEE RECEIVED 7/9 TH SHARE OF THE PROPERTY AS GIFT FROM HIS BROTHERS AN D SISTER. THIS PROPERTY WAS IN TURN SOLD DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09 FOR A CONSIDERATION OF ` 20 LAKHS WHEREAS AS PER STAMP DUTY ACT THE VALUATIO N WORKS OUT TO ` 62,75,000/-. THERE IS ALSO NO DISPUTE ABOUT THE FAC T THAT THE COST OF THE PROPERTY AS ON 01.04.1981 IS ` 11,23,000/- IF INDEXATION METHOD IS APPLIED THE COST OF THE PROPERTY AT ` 11,23,000/- WILL GIVE RISE TO INDEXATION COST OF ` 61,87,730/-. 4. THE AO WORKED OUT THE LONG TERM CAPITAL GAINS BY HO LDING THAT THE ASSESSEE WOULD BE ELIGIBLE FOR INDEXED COST OF ACQU ISITION FROM THE DATE ON WHICH THE PROPERTY WAS FIRST HELD BY THE ASSESSEE A ND NOT FOR THE PERIOD THE PROPERTY WAS HELD BY THE PREVIOUS OWNER FROM WHOM H E HAS RECEIVED BY WAY OF INHERITANCE/GIFT. ASSESSEE CHALLENGED THE VIEW T AKEN BY THE AO BY CONTENDING BEFORE THE CIT(A) THAT INDEXATION OUGHT TO HAVE BEEN GRANTED FROM 01.04.1981 IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH 355 ITR 474. W ITH REGARD TO THE REMAINING SHARE RECEIVED AS GIFT RELIANCE WAS PLACE D UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF JANHAVI S. DESAI (ITA NO. 126 OF 2011). 5. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) OBSERVED AS UNDER: - ON THE ISSUE OF INDEXATION I FIND THAT THE DECISIO N OF THE BOMBAY HIGH COURT IN THE CASE OF MANJULA SHAH, IS DIRECTLY APPL ICABLE TO THE 1/9 TH SHARE INHERITED BY THE APPELLANT FROM FATHER. AO IS THEREFORE DIRECTED TO GRANT INDEXATION W.E.F. 1.4.1981 IN RESPECT OF THIS SHARE. THE HON'BLE COURT HAVE ELABORATED UPON THE PROVISI ONS OF SECTION 49(1) EXPLANATION DEFINING PREVIOUS OWNER AND ITS INCORPO RATION IN EXPLANATION (1)(I)(B) TO SECTION 2(42A) AND HAVE CO ME TO THE CONCLUSION THAT IN CIRCUMSTANCES PROVIDED IN SEC. 49(1), THE P ERIOD DURING WHICH ASSET WAS HELD BY THE PREVIOUS OWNER REFERRED TO IN THAT SECTION SHALL BE INCLUDED. IT IS CONSEQUENTLY HELD FOR THE REMAIN ING 7/9 TH SHARE RECEIVED BY APPELLANT AS GIFT FROM BROTHERS AND SIS TERS, THE INDEXATION ITA NO. 3138/MUM/2013 SHRI DHARAMCHAND AMARCHAND JAIN 3 WILL HAVE TO BE GIVEN FROM APRIL 1 ST , 1981. THE AO IS DIRECTED ACCORDINGLY. THIS TAKES CARE OF FIRST GROUND OF APP EAL OF THE APPELLANT. 6. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. AT THE T IME OF HEARING THE LEARNED D.R. SUBMITTED THAT BOTH THE ISSUES STAND C OVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT BUT THE APPEAL WAS PR EFERRED BECAUSE THE REVENUE HAS NOT ACCEPTED THE VIEW TAKEN BY THE HON' BLE BOMBAY HIGH COURT. HAVING REGARD TO THE PRINCIPLES LAID DOWN BY THE JURISDICTIONAL HIGH COURT, IN THE AFORECITED CASES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY, 2015. SD/- SD/- (D. KARUNAKARA RAO) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 24 TH FEBRUARY, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 30, MUMBAI 4. THE CIT 19, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.