Shri Sharadbhai D.Chandarana, Ahmedabad V. The Jt.CIT.,Circle-3, Ahmedabad

ITA 3276/AHD/2010

• Counselvise Citation: 327620514 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT , JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.3276 / AHD/2010 (ASSESSMENT YEAR 2007-08) SHARADBHAI D CHANDARANA, C/O NEW NANDI SEEDS CORPORATION, 1, PATEL SOCIETY NEAR EARS TOWER, GULBAI TEKRA, AHMEDABAD-06 VS. DCIT, CIRCLE 3, AHMEDABAD PAN/GIR NO. : ACVPC3781F (APPELLANT) .. (RESPONDENT) APPELLANT BY: MS. URVASHI SHODHAN, AR RESPONDENT BY: SHRI SAMIR TEKRIWAL, SR. DR DATE OF HEARING: 16.12.2011 DATE OF PRONOUNCEMENT: ___01.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) XVI, AHMEDABAD DATED 08.11.2010 FOR THE ASS ESSMENT YEAR 2007-08/ THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF A.O. IN GRANTING LONG TERM CAPITAL LOSS O FRS.7,12,384/- INSTEAD OF RS.10,61,563/- AS CLAIMED BY THE APPELLA NT. BOTH THE LOWER AUTHORITIES FAILED TO APPRECIATE THE FACT THA T THE APPELLANT PURCHASED THE FLAT IN F.Y. 1995/96 BY MAKING FULL P AYMENT FOR THE SAME AND HENCE, THE INDEXATION OUGHT TO HAVE BEEN F ROM THAT YEAR AND TAKING ACTUAL POSSESSION IN F.Y. 1997/98 DOES N OT IPSO FACTO CHANGE THE YEAR OF PURCHASE. 2) INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT IS N OT JUSTIFIED. I.T.A.NO. 3276 /AHD/2010 2 2. THE BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NO TED BY LD. CIT(A) IN PARA 2 OF HIS ORDER, WHICH ARE REPRODUCED BELOW: 2. THE GROUND OF APPEAL IS REGARDING ALLOWING LONG -TERM CAPITAL LOSS OF RS. 7,12,384/- INSTEAD OF RS. 10,61,563/- C LAIMED BY THE ASSESSEE ON SALE OF FLAT. IN THE ASSESSMENT ORDER, THE AO HAS STATED THAT THE ASSESSEE HAS SOLD THE FLAT OF RS. 12,50,00 0/- DURING THE YEAR. THE COST OF ACQUISITION OF THIS FLAT IS RS. 1 2,51,540/-. THERE IS NO DISPUTE BETWEEN THE ASSESSEE AND THE AO IN RESPE CT OF THESE TWO FIGURES. THE ONLY DISPUTE IS REGARDING INDEXATION O F THE PROPERTY SOLD BY THE ASSESSEE. THE AO HAS ADOPTED THE INDEXA TION OF THE YEAR IN WHICH THE ASSESSEE TOOK THE POSSESSION OF T HE FLAT I.E. FROM THE YEAR 1997. THE APPELLANT HAS ON THE OTHER HAND, CLAIMED INDEXATION FROM THE YEAR 1995. THE ASSESSEE HAS CLA IMED THAT IT HAS ACQUIRED (INTEREST IN THIS PROPERTY, AND HAS BECOME OWNER OF THE SAID PROPERTY FROM 26TH OF JUNE 1995. THE ASSESSEE STATED THAT ALMOST ENTIRE PAYMENT HAS BEEN MADE BY THE ASSESSEE IN THE SAID FINANCIAL YEAR I.E. 1995-96 AND THE STRUCTURE OF TH E COMPLEX WAS ALSO ALMOST COMPLETE. THE POSSESSION WAS DELAYED IN VIEW OF VARIOUS COMMUNITIES LIKE LIFT, WATER SUPPLY ETC. IN VIEW OF THIS REASON, THE ASSESSEE HAS STATED THAT IT HAD RECEIVE D THE ALLOTMENT LETTER AND IT HAD ALSO PAID MAJOR AMOUNT AND THEREF ORE AS PER THE DECISION OF HONORABLE GUJARAT HIGH COURT IN THE CAS E OF JINDAS PANCHANAND GANDHI AND THE DECISION OF HONORABLE BOM BAY HIGH COURT IN -THE CASE OF TATA SERVICES LTD. 122 ITR 5 94 THE ALLOTMENT SHOULD BE ADOPTED. THE AO DID NOT ACCEPT THIS EXPLA NATION STATED THAT IN THOSE CASES, THE HONORABLE COURT WERE ADJUD ICATING THE ISSUE OF TRANSFER AND CAPITAL GAIN. IN THE PRESENT CASE, THE ISSUE IS DIFFERENT AND IT PERTAINS TO INDEXATION OF COST IN RESPECT OF WHICH A CLEAR DEFINITION HAS BEEN GIVEN IN THE ACT. THE EXP LANATION TO SECTION 48 DEFINES THE INDEXED COST OF ACQUISITION .' AS PER THIS DEFINITION, THE COST INFLATION INDEX FOR PURCHASE I S TO BE ADOPTED FOR THE YEAR IN WHICH FOR THE FIRST TIME THE ASSET WAS HELD BY THE ASSESSEE OR FOR THE YEAR BEGINNING 01/04/1981 WHICH EVER IS LATER. THE AO STATED THAT IN THE PRESENT CASE, IT IS VERY CLEAR THAT THE ASSESSEE HELD THE FLAT IN ITS POSSESSION OF THE FIR ST TIME IN 1997 AND NOT IN 1995. THE AO THEREFORE, ADOPTED THE INDEXATI ON FOR THE YEAR 1997 AT 331 INSTEAD OF THE CLAIM OF THE ASSESSEE OF INDEXATION FOR THE YEAR 1995 AT 281. THE CONSEQUENCE OF THIS AMOUN TED TO LONG TERM CAPITAL LOSS OF ONLY RS. 6973S4/- INSTEAD OF T HE CLAIM OF THE APPELLANT OF RS. 10,46, 563/-. I.T.A.NO. 3276 /AHD/2010 3 3. THEREAFTER, THE ASSESSEE BEING AGGRIEVED, CARRIE D THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NO W, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS JINDAS PANCHAND GAND HI AS REPORTED IN 279 ITR 552. 5. AS AGAINST THIS, IT IS SUBMITTED BY THE LD. D.R. THAT IN THE PRESENT CASE, NO SHARE WAS ALLOTTED TO THE ASSESSEE, AND TH EREFORE, THIS JUDGMENT IS NOT APPLICABLE. RELIANCE WAS PLACED ON THE JUDGMEN T OF HONBLE KARALA HIGH COURT RENDERED IN THE CASE OF S N ZUBIN GEORGE VS CIT AS REPORTED IN 265 ITR 683 (KER.). RELIANCE WAS ALSO PLACED BY HIM ON TWO TRIBUNAL DECISION RENDERED IN THE CASE OF DCIT VS KISHORE KA NUNGO AS REPORTED IN 102 ITD 437 (MUM.) AND IN THE CASE OF MRS. MANGLA D ILIP SABLE VS JCIT 104 ITD 204 (PUNE). IN REJOINDER, IT IS SUBMITTED BY THE LD. A.R. THAT THESE TRIBUNAL DECISIONS WERE REVERSED BY THE SPECI AL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF DCIT VS MANJULA J SHAH AS REPORTED 126 TTJ 145 (MUM.) (SB). SHE ALSO PLACED RELIANCE ON A NOTHER TRIBUNAL DECISION RENDERED IN THE CASE OF POOJA EXPORTS IN I .T.A.NO. 2222/MUM/2010 DATED 15.07.2011 AND SHE HAS SUBMITTE D A COPY OF THIS TRIBUNAL DECISION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDER OF AUTHORITI ES BELOW AND THE JUDGMENTS CITED BY BOTH THE SIDES. REGARDING TWO T RIBUNAL DECISIONS CITED BY THE LD. D.R., WE FIND THAT THESE TRIBUNAL DECISI ONS ARE NO MORE APPLICABLE AS THE SAME WERE REVERSED BY THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF DCIT VS MANJULA J SHAH (SUP RA). REGARDING THE I.T.A.NO. 3276 /AHD/2010 4 JUDGMENT OF HONBLE KERALA HIGH COURT RENDERED IN T HE CASE OF S N ZUBIN GEORGE (SUPRA) ON WHICH RELIANCE IS PLACED BY THE LD. D.R., WE FIND THAT THIS JUDGMENT OF HONBLE KERALA HIGH COUR T IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE OF DIFFERENCE IN FACTS AND MOREOVER, IN COMPARISON OF THIS JUDGMENT OF HONBLE KERALA HI GH COURT, WE ARE DUTY BOUND TO FOLLOW THE JUDGEMENT OF HONBLE JURIS DICTIONAL HIGH COURT RENDERED IN THE CASE OF JINDAS PANCHAND GANDHI. IN THAT CASE, IT WAS HELD BY THE HONBLE GUJARAT HIGH COURT THAT THE RELEVANT DATE COULD BE THE DATE ON WHICH THE MEMBER ACQUIRES THE SHARES IN THE PROPERTY OF THE HOUSING SOCIETY AND THE DATE ON WHICH THE MEMBER HA S SOLD HIS SHARES IN THE SAID COOPERATIVE HOUSING SOCIETY. REGARDING TH E APPLICABILITY OF THIS JUDGEMENT OF HONBLE GUJARAT HIGH COURT, IT WAS SUB MITTED BY THE LD. D.R. THAT NO SHARE WAS ALLOTTED TO THE ASSESSEE IN THE PRESENT CASE. IN THIS REGARD, WE FIND THAT THE ALLOTMENT LETTER ISSUED BY THE SKY REACH TOWER APARTMENT OWNERS ASSOCIATION IS AVAILABLE ON PAGE 1 1 OF THE PAPER BOOK. IN THIS ALLOTMENT LETTER DATED 26.06.1995 IT IS CER TIFIED THAT MR. SHARADBHAI D CHANDARANA, THE ASSESSEE IS A MEMBER OF SKY REACH TOWER APARTMENT OWNERS ASSOCIATION AND HE HAS BEEN ALLOTTED FLAT NO . B-7 OF 153 SQ. YARDS. THIS GOES TO SHOW THAT THE ASSESSEE WAS A M EMBER OF THE SOCIETY AND IF THE SHARES WERE NOT ALLOTTED THEN HOW HE WAS A MEMBER OF THE SOCIETY AND THEREFORE, THIS ARGUMENT OF THE LD. D.R . THAT NO SHARE WAS ALLOTTED TO THE ASSESSEE, IS WITHOUT ANY BASIS. HE NCE, WE FIND THAT THIS JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS JINDAS PANCHAND GANDHI (SUPRA) IS SQUARELY APPLICAB LE. WE ALSO FIND THAT ALMOST THE ENTIRE PAYMENT HAS BEEN MADE BY THE ASSE SSEE ON 24.06.1995 BY CHEQUE AS PER MONEY RECEIPT AVAILABLE ON PAGE 16 OF THE PAPER BOOK AND ONLY AMOUNT OUTSTANDING WAS RS.3060/- WHICH WAS PAID ON I.T.A.NO. 3276 /AHD/2010 5 06.06.1997. CONSIDERING ALL THESE FACTS AND BY FOL LOWING THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF JINDAS PANCHAND GANDHI (SUPRA), WE DECIDE THE ISSUE IN FAVOUR OF THE ASSES SEE. GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 7. REGARDING GROUND NO.2, WE FIND THAT THIS IS PREM ATURE AND HENCE, NO ADJUDICATION IS CALLED FOR. 8. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 23/01 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 24/01.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 25/01 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 31/1 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.31/1 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31/01/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .