JCIT, Noida V. Smt. Sarla Vig, Noida

ITA 3384/DEL/2011

• Counselvise Citation: 338420114 RSA 2011
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-03-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: SUNIL GOEL; SUSHAL GEOL C AS
• Keywords: Capital asset; Gift; Cost of acquisition; Valuation report
• Section: 54; 63; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: G NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SMT. DIVA SINGH, JUDICIAL MEMBER ITA NO: 3384/DEL/2011 A.Y. : 2008-2009 JCIT, NOIDA RANGE, NOIDA VS. SMT. SARLA VIG W/O LATE SHRI RAJ PAL A-3/209, TOWER 5 SILVERY CITY, SECTOR 63 NOIDA (APPELLANT) (RESPOND ENT) APPELLANT BY : SHRI S.MOHANTY, D.R. RESPONDENT BY : SHRI SUNIL GOEL & SHRI SUSHAL GEOL, C.AS. O R D E R PER DIVA SINGH, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 24.7.2011 OF CIT(A), GHAZIABAD PERTAINING TO A .Y. 2008-2009 ON THE FOLLOWING GROUNDS. 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FAC TS BY ALLOWING RELIEF TO THE ASSESSEE ON ACCOUNT OF COMPUTATION OF LONG TERM CAPITAL GAIN BY ADOPTING INDEXED COST W.R.T. 1982-8 2 WITHOUT APPRECIATING THE FACTS AS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER WHEREAS LTCG WAS CALCULATED AS PER SECTION 49(1) OF THE I.T.ACT, 1961. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATION THE FACT THAT THE ASSETS HAS BEEN ACQU IRED THROUGH WILL (COVERED U/S 49(1)(II)) AND COST INFLATION IND EX IN SUCH CASE IS APPLIED FOR THE FIRST YEAR IN WHICH THE PROPERTY WAS HELD BY THE ASSESSEE (EXPLANATION (III) TO S.48). AS IN TH IS CASE PROPERTY WAS FIRST HELD BY THE ASSESSEE IN THE YEAR 2001-02 HENCE THE A.O. HAS RIGHTLY APPLIED THE CII APPLICABLE FOR F.Y . 2001-02. 3. HENCE THE ORDER OF THE LD.CIT(A) DESERVES TO BE SET ASIDE AND THE ORDER OF THE A.O. BE RESTORED. ITA 3384/DEL/2011 PAGE 2 OF 6 A.Y. 2008-2009 SMT. SARLA VIG, NOIDA 2. THE RELEVANT FACTS AS PER THE ORDERS ON RECORD A RE THAT THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN AT RS.74, 66,550/- ARISING FROM THE SALE OF HOUSE NO.1208, SECTOR 8, CHANDIGAR H FOR A SALE CONSIDERATION OF RS.1,35,00,000/- AS PER SALE DEED DT. 16.10.2007 AFTER DEDUCTING THE INDEXED COST OF ACQUISITION OF RS.60, 33,450/- ADOPTING THE MARKET VALUE OF RS.10,95,000/- AS ON 1.4.1981 AS PE R VALUATION REPORT DT. 16.10.2007 FROM APPROVED VALUER WHICH HAS BEEN CLAIMED AS EXEMPT U/S 54 BY INVESTING RS.62,21,800/- (RS.59,30,750/- + STAMP DUTY RS.2,91,050/-) IN THE PURCHASE OF HOUSE NO. A-3/209 , SILVER CITY, SECTOR 93, NOIDA AND U/S 54EC BY INVESTING RS.15,40,000/- IN THE PURCHASE OF NHAI CAPITAL BONDS AS PER COPY OF BOND CERTIFICATE DT. 31.1.2008 (TOTAL INVESTMENT MADE AT RS.77,61,800/- (RS.62,21,800/- + RS.15,40,000/-). THE SAID PROPERTY WAS A SELF ACQUIRED PROPERTY OF THE HUSBAND (SHRI RP VIG)OF THE ASSESSEE AND ITS CONSTRUCTION WAS COMPLE TED IN 1969. SHRI RP VIG EXECUTED A WILL DT. 23.11.2000 WHEREBY HE DEVIS ED AND BEQUEATHED THE ABOVE HOUSE NO.1208/8-C CHANDIGARH IN FAVOUR OF ASSESSEE IN THE EVENT OF HIS DEATH. SHRI RP VIG (HUSBAND OF THE AS SESSEE) EXPIRED ON 18.4.2001 AS PER COPY OF DEATH CERTIFICATE DT. 25.5 .2001 FILED BY THE ASSESSEE AND THE ASSESSEE BECAME OWNER OF THE ABOVE PROPERTY ON 18.4.2001. THUS THE ASSESSEE ACQUIRED THE PROPERTY IN THE P.Y. 2001-02 UNDER WILL WHICH IS A MODE COVERED U/S 49(1) OF I.T .ACT, 1961. THE A.O. WAS OF THE VIEW THAT THEREFORE F.Y. 2001-02 IS THE YEAR IN WHICH PROPERTY WAS FIRST HELD BY THE ASSESSEE AND COST INFLATION I NDEX (CII) OF F.Y. 2001- ITA 3384/DEL/2011 PAGE 3 OF 6 A.Y. 2008-2009 SMT. SARLA VIG, NOIDA 02 IS 426 WHEREAS THE ASSESSEE ADOPTED CII OF 1981- 82 I.E. 100. ACCORDINGLY THE A.O. REQUIRED THE ASSESSEE EXPLAIN AS TO WHY CII OF FY 2001-02 BE NOT TAKEN AS 426 INSTEAD OF CII OF 1981- 82 AS ADOPTED BY THE ASSESSEE. 2.1. IN RESPONSE TO THE SAME THE ASSESSEE SOUGHT T O PLACE RELIANCE UPON THE CIT VS. MANJULA J SHAH IN REGARD TO THE I NTERPRETATION OF THE RELEVANT PROVISIONS OF THE ACT. RELIANCE WAS FURTHE R PLACED UPON SIMILAR DECISIONS CITED BEFORE THE A.O. NOT CONVINCED WITH THE EXPLANATION OFFERED THE A.O. HELD THAT THE BASE YEAR FOR THE PU RPOSE OF INDEXATION IS F.Y. 2001-02 IN WHICH THE PROPERTY WAS HELD BY THE ASSESSEE AND THE COST OF INFLATION INDEX OF 2001-02 WAS TAKEN AS 426 . 3. AGGRIEVED BY THIS THE ASSESSEE CAME IN APPEAL BE FORE THE CIT(A) BEFORE WHOM THE ARGUMENTS ADVANCED BEFORE THE A.O. WERE REITERATED. RELIANCE WAS YET AGAIN PLACED UPON THE DECISIONS R ELIED UPON BEFORE THE AO NAMELY MINA DEOGUN VS ITO (2008) 19 SOT 183 ITAT CALCUTTA BENCH; AFTAB SETH VS DIT, NEW DELHI (2009-TIOL-566-ITAT-DE L) DT. JULY 23,2009 ITAT, DELHI BENCH; DY.CIT VS SMT.MEERA KHERA (2 SOT 902) ITAT, MUMBAI BENCH (DT. 5 TH AUGUST, 2003); PUSHPA SOFAT VS ITO (81 ITD 1), ITAT, CHANDIGARH BENCH (DT. 4 TH JULY, 2001); DCIT VS. MANJULA J SHAH (2009) 126 TTJ (MUMBAI) (SB) 145(2010) 35 SOT 105(2 009) 30 DTR 601. 3.1. CONSIDERING THE SUBMISSIONS THE ASSESSEES PRA YER WAS ACCEPTED BY THE CIT(A) HOLDING AS UNDER:- I FIND THAT THIS LEGAL ISSUE ALREADY COVERED IN FA VOUR OF APPELLANT BY FOLLOWING CASE LAWS. (I) MRS. PUSHPA SOFAT VS ITO (2004) 89 TTJ (CHD.) 499: (2002) 81 ITD 1 (CHD.) (II) KAMAL MISHRA VS ITO (2008) 19 SOT 251 (DEL) (III) AFTAB SETH VS DIT-ITA NO. 3364/DEL/08 ITA 3384/DEL/2011 PAGE 4 OF 6 A.Y. 2008-2009 SMT. SARLA VIG, NOIDA (IV) SMT. MINA DEOGUN VS ITO (2008) 117 TTJ (KOL) 121; 19 SOT 183 (2008) 8 DTR 233 (V) DCIT VS. MANJULA J SHAH(2009) 126 TTJ (MUMBAI) (SB) 145: (2010) 35 SOT 105: (2009) 30 DTR 601 IN THE ABOVE MENTIONED CASE OF MANJULA J SHAH, ITAT MUMBAI SSB HAS HELD : . A COMBINED READING OF THE PROVISIONS OF S.2(42A) A ND 48, WHICH ARE RELEVANT IN THE PRESENT CONTEXT, CLEA RLY SHOWS THAT IMPORTANCE IS ASSIGNED TO THE PERIOD OF HOLDING OF THE CAPITAL ASSET IN AS MUCH AS EXPLN.(III) TO S .48 REFERS TO THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY TH E ASSESSEE, WHEREAS EXPLN. 1(B) TO S.2(42A) PROVIDES FOR INCLUSION OF THE PERIOD FOR WHICH THE ASSET WAS HEL D BY THE PREVIOUS OWNER IN DETERMINING THE PERIOD FOR WHICH ANY CAPITAL ASSET IS HELD BY THE ASSESSEE. HAVING REGA RD TO THIS ASPECT AS WELL AS KEEPING IN VIEW THAT THE DEF INITIONS GIVEN IN S.2 ARE APPLICABLE FOR THE ENTIRE ACT, THE LEGISLATIVE INTENTION BEHIND ENACTING THE PROVISIONS IS VERY CL EAR TO TREAT THE DATE AS WELL AS COST OF ACQUISITION OF CA PITAL ASSET OF THE PREVIOUS OWNER TO BE THE DATE AND COST OF AC QUISITION OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING CAPITA L GAIN IN TERMS OF S.48. .. IF IT IS SO DONE, THE ONLY VIEW POSSIBLE FROM THE INTERPRETATION OF RELEVANT PROVISIONS IS THAT T HE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER IS TO BE INCLUDED IN DETERMINING THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE ASSESSEE AS PROVIDED IN EXPLN. 1(B) TO S.2(42A) AND THIS POSITION IS APPLICABLE EVEN FOR W ORKING OUT THE INDEXED COST OF ACQUISITION WITHIN THE MEAN ING OF EXPLN.(III) TO S.48. THIS IS SO ALSO BECAUSE WHEN THE COST OF ACQUISITI ON TO THE PREVIOUS OWNER AS ON THE DATE OF ACQUISITION OF THE CAPITAL ASSET BY HIM IS TO BE ADOPTED AS COST OF AC QUISITION TO THE ASSESSEE EVEN FOR THE PURPOSE OF WORKING OUT THE INDEXED COST OF ACQUISITION AS PER THE MEANING GIVE N IN EXPLN. (III) TO S.48 .. SUCH AN INTERPRETAT ION THUS WILL LEAD TO ABSURDITY AND UNJUST RESULT WHICH HAS TO BE AVOIDED. MOREOVER, IT WILL DEFEAT THE VERY PU RPOSE OF INTRODUCING THE CONCEPT OF INDEXED COST OF ACQUISITION .. FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAI N ARISING FROM THE TRANSFER OF A CAPITAL ASSET WHICH HAD ITA 3384/DEL/2011 PAGE 5 OF 6 A.Y. 2008-2009 SMT. SARLA VIG, NOIDA BECOME PROPERTY OF THE ASSET UNDER GIFT, THE FIRST YEAR IN WHICH THE CAPITAL ASSET WAS HELD, BY THE PREVIOUS OWNER I.E. INDEXED COST OF ACQUISITION OF SUCH CAPITAL AS SET HAS TO BE COMPUTED W.R.T. THE YEAR IN WHICH THE PREVIOUS O WNER FIRST HELD THE ASSET. . ... IN VIEW OF THE AFORE MENTIONED CASE LAWS, THE ISSU E UNDER CONSIDERATION IS DECIDED IN FAVOUR OF THE ASSESSEE. THE A.O. IS DIRECTED TO REVISE THE COMPUTATION OF CAPITAL GAIN, ALLOWING IN DEXED COST W.R.T. 1981- 82. THE A.O.SHOULD ALSO KEEP, IN VIEW, THE ORDER U /S 154 ALREADY PASSED BY THE AO HIMSELF DT. 10.12.2010. IN THE RESULT THE APPEAL IS ALLOWED. 4. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. 5. LD.D.R. PLACES RELIANCE UPON THE ASSESSMENT ORDE R. THE LD.A.R. OF THE ASSESSEE PLACES RELIANCE UPON THE IMPUGNED ORDE R AND ORDERS OF THE TRIBUNAL TAKEN INTO CONSIDERATION BY THE CIT(A). O N A CAREFUL CONSIDERATION OF THE FACTS ON RECORD AND THE POSITI ON OF LAW AS DISCUSSED IN THE IMPUGNED ORDER WE FIND NO INFIRMITY IN THE F INDING ARRIVED AT IN THE IMPUGNED ORDER WHICH HAS BEEN REPRODUCED ABOVE. BE ING SATISFIED BY THE REASONING AND THE FINDING THE GROUND RAISED BY THE DEPARTMENT IS DISMISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED AS PER THE PRONOUNCEMENT MADE IN THE OPEN COURT. ORDER PRONOUNCED ON 27 TH MARCH, 2012. SD/- SD/- (S.V.MEHROTRA) (DIVA SINGH) ACCOUNTNAT MEMBER JUDICIAL MEMBE R DATED: 27.3.2012 *MANGA ITA 3384/DEL/2011 PAGE 6 OF 6 A.Y. 2008-2009 SMT. SARLA VIG, NOIDA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR 6.GUARD FILE BY ORDER DY.REGISTRAR // C O P Y //