ACIT CIR 16(2), MUMBAI V. ASHOK B GARWAR, MUMBAI

ITA 315/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1643 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARAS S SAVLA
• Keywords: Capital asset; Gift; Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 315/MUM/2012 (ASSESSMENT YEAR: 2008-09) A C I T - 16(2) SHRI ASHOK B. GARWARE MATRU MANDIR, TARDEO ROAD L.D. RUPAREL MARG, 3A MAN EK MUMBAI 400007 VS. MUMBAI 400006 PAN - AAKPG 7790 B APPELLANT RESPONDENT APPELLANT BY: SHRI MANOJ KUMAR RESPONDENT BY: SHRI PARAS S. SAVLA DATE OF HEARING: 08.01.2013 DATE OF PRONOUNCEMENT: 08.01.2013 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE REVE NUE AND IT PERTAINS TO A.Y. 2008-09. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO CONSI DER FMV AS ON 1.4.1981 RATHER THAN AS ON THE DATE OF INHERITANCE WHILE COMPUTING THE INDEXED COST OF ACQUISITION. 2. THE FACTS RELEVANT FOR DISPOSAL OF THE APPEAL ARE S TATED IN BRIEF. PLOT NO. 59, KOREGAON PARK, PUNE ALONGWITH BUILDING STAN DING THEREON WAS ACQUIRED ON 23.03.1968 BY SHRI BHALCHANDRA GARWARE AND SMT. VIMLATAI BHALCHANDRA GARWARE. SHRI BHALCHANDRA GARWARE EXPIR ED ON 02.11.1990. AS PER HIS LAST WILL DATED 24.05.1989 HIS 50% SHARE IN THE AFOREMENTIONED PROPERTY WAS BEQUEATHED TO HIS SON SHRI ASHOK B. GA RWARE, THE ASSESSEE HEREIN. UPON THE DEATH OF SHRI BHALCHANDRA GARWARE THE ASSESSEE HEREIN BECAME THE OWNER OF 50% OF THE SHARE IN THE AFOREME NTIONED PROPERTY WHICH WAS ULTIMATELY SOLD BY HIM UNDER AN ASSIGNMENT OF L EASE-CUM-INDENTURE DATED 05.05.2007 FOR A TOTAL CONSIDERATION OF ` 4.50 CRORES. THE ASSESSEE ACCORDINGLY OFFERED TO TAX THE LONG TERM CAPITAL GA IN ON SALE OF THE SAID ITA NO. 315/MUM/2012 SHRI ASHOK B. GARWARE 2 PROPERTY. WHILE COMPUTING THE NET CAPITAL GAIN, THE COST OF ACQUISITION AS ON 01.04.1981 WAS DETERMINED BY APPLYING THE COST INDE XATION METHOD AND HE ARRIVED AT THE COST OF THE TOTAL PROPERTY AT ` 60,71,600/- AND WITH REFERENCE TO HIS SHARE, THE COST WORKS OUT TO ` 30,35,800/-, WHICH WAS DEDUCTED FROM THE LONG TERM CAPITAL GAIN. THE AO WAS, HOWEVER, OF THE OPINION THAT THE COST WITH REFERENCE TO THE ASSET OWNED BY THE ASSESSEE S HOULD BE THE COST AS ON THE DATE ON WHICH THE ASSESSEE BECAME THE OWNER AND THE COST FOR WHICH THE PROPERTY WAS PURCHASED BY THE PREVIOUS OWNER OR THE VALUE AS ON 01.04.1981 SHOULD NOT BE TAKEN INTO CONSIDERATION. HE ACCORDINGLY REJECTED THE CONTENTION OF THE ASSESSEE AND RECOMPUTED THE C APITAL GAINS IN HIS ORDER DATED 23.12.2010. 3. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE ITAT MUMBAI SPECIAL BENCH (DCIT VS. MANJULA J. SHAH 126 TTJ 145) WHEREIN THE SPECIA L BENCH HELD THAT THOUGH THE ASSESSEE ACQUIRED THE PROPERTY UNDER THE WILL, FOR THE PURPOSE OF ARRIVING AT THE NET CAPITAL GAINS, ASSESSEE WOULD B E ENTITLED TO CONSIDER THE FAIR MARKET VALUE AS ON 01.04.1981, I.E. THE COST O F ACQUISITION THAT HAS TO BE TAKEN INTO CONSIDERATION IN THE CASE OF THE PREVIOU S OWNER IN A CASE WHERE THE PROPERTY IS ACQUIRED PRIOR TO THAT DATE. 4. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO IN THE LIGHT OF THE DECISION OF THE ITAT SPECIAL BENCH (SUPRA) THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE. 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD THE LEARNED D.R. AS WELL AS THE LEARNED COUNSEL FOR THE ASSESSE E. BOTH THE PARTIES ADMITTED THAT THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE ITAT MUMBAI SPECIAL BENCH, WHICH IN TURN WAS UPHELD BY T HE HON'BLE BOMBAY HIGH COURT (204 TAXMAN 691) WHEREIN THE HON'BLE BOM BAY HIGH COURT OBSERVED IN THE PENULTIMATE PARAGRAPH AS UNDER: - 24. IN THE RESULT, WE HOLD THAT THE TRIBUNAL WAS J USTIFIED IN HOLDING THAT WHILE COMPUTING THE CAPITAL GAINS ARISING ON T RANSFER OF A CAPITAL ASSET ACQUIRED BY THE ASSESSEE UNDER A GIFT, THE IN DEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO TH E YEAR IN WHICH THE ITA NO. 315/MUM/2012 SHRI ASHOK B. GARWARE 3 PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEA R IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. 6. SINCE THE VIEW TAKEN BY THE LEARNED CIT(A) IS IN CO NSONANCE WITH THE VIEW TAKEN BY THE HON'BLE BOMBAY HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A). UNDER THE CIRCUM STANCES WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JANUARY, 2013. SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 8 TH JANUARY, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 27, MUMBAI 4. THE CIT XVI, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.