Sasidhar Malladi, CHENNAI V. ITO, CHENNAI

ITA 3390/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7991 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-02-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Set aside; Capital Gains
• 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; 48

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , !' . #$#% , & '' ( [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 3390/MDS/2016 / ASSESSMENT YEAR : 2013-2014. SHRI SASIDHAR MALLADI, 10/7A, LALITHA MAHAL, ANNAI SATYA NAGAR, MAIN ROAD, RAMAPURAM, CHENNAI 600 089. VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 1(2) CHENNAI. [PAN AQIPM 1186F] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI. VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : SHRI. DURAI PANDIAN, IRS, JCIT. /DATE OF HEARING : 07-02-2017 ! /DATE OF PRONOUNCEMENT : 10-02-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER DATED 26.09.2016 OF LD. COMMISSIONER OF INCOM E TAX (APPEALS)- 16, CHENNAI, FOR THE IMPUGNED ASSESSMENT YEAR. 2. ASSESSEE HAS TAKEN ALTOGETHER SIX GROUNDS OF WHICH GROUND NOS.1 & 6 ARE GENERAL IN NATURE NEEDING NO SPECIFIC ADJUDICATION. ITA NO. 3390/MDS/2016 :- 2 -: LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTE D THAT HE WAS NOT PRESSING GROUNDS OTHER THAN GROUND NO.5 WHICH IS RE GARDING APPLICATION OF COST INFLATION INDEX FOR COMPUTING C APITAL GAINS. 3. FACTS APROPOS ARE THAT ASSESSEE HAS SOLD A PROPERTY FOR A ADMITTED SALE CONSIDERATION OF B2,56,50,000/- ON 25 .10.2012. SALE WAS AFFECTED BY EXECUTING A GENERAL POWER OF ATTOR NEY IN FAVOUR OF ONE SHRI.K. RAVICHANDRAN AND ONE SHRI. K.K.MANI. W HILE COMPUTING CAPITAL GAINS ARISING OUT OF ABOVE SALE, ASSESSEE H AD APPLIED BASE INFLATION INDEX AS APPLICABLE FOR THE FINANCIAL YEA R 2006-2007. CONTENTION OF THE ASSESSEE WAS THAT THE SAID PROPER TY WAS PURCHASED BY HIS MOTHER DURING FINANCIAL YEAR 2006-2007 AND HE HAD RECEIVED A SHARE THEREIN THROUGH A SETTLEMENT DEED DATED 12.10 .2012. RELYING ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. MANJULA J. SHAH 355 ITR 474, ASSESSEE ARGUED BEFORE LD. ASSESSING OFFICER THAT COST INFLATION INDEX HAD TO BE COMPUTE D WITH REFERENCE TO THE YEAR OF PURCHASE OF PROPERTY BY HIS MOTHER. HOW EVER, LD. ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTION. ACCORDING TO HIM, ASSESSEE BECAME OWNER OF THE PROPERTY ONLY THROUGH THE SETTL EMENT DEED DATED 12.10.2012, AND BY VIRTUE OF EXPLANATION (III) TO SEC. 48 OF THE INCOME TAX ACT, 1961 COST INFLATION INDEX TO BE APPLIED WA S THAT FOR FINANCIAL YEAR 2012-2013. CAPITAL GAINS OF THE ASSESSEE WAS R ECOMPUTED ACCORDINGLY BY THE LD. ASSESSING OFFICER. ITA NO. 3390/MDS/2016 :- 3 -: 4. ASSESSEES APPEAL ON THIS ISSUE DID NOT MEET WITH A NY SUCCESS. LD. COMMISSIONER OF INCOME TAX (APPEALS) H ELD THAT BY VIRTUE OF EXPLANATION (III) TO SEC. 48 OF THE ACT, LD. ASS ESSING OFFICER WAS JUSTIFIED IN CONSIDERING FINANCIAL YEAR 2012-2013 A S THE BASE YEAR FOR APPLYING COST INFLATION INDEX. 5. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE ASSAIL ING THE ORDERS OF THE LOWER AUTHORITIES SUBMITTED THAT BASE YEAR WAS TO BE CONSTRUED WITH REFERENCE TO THE YEAR OF PURCHASE OF THE PROPERTY BY ASSESSEES MOTHER. RELIANCE WAS ONCE AGAIN PLACED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH (SUPRA). 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND THE O RDERS OF THE AUTHORITIES BELOW. ASSESSEE HAD SPECIFICALLY RE LIED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH (SUPRA) WHEREIN IT WAS HELD THAT HOLDING PERIOD OF THE PREV IOUS OWNER ALSO SHOULD BE CONSIDERED FOR COMPUTING THE INDEXED COS T WHERE THE PROPERTY CAME TO THE NAME OF THE ASSESSEE THROUGH A GIFT DEED. IN OUR OPINION A SETTLEMENT DEED CANNOT BE VIEWED DIF FERENTLY. NEVERTHELESS, WE FIND THAT NONE OF THE LOWER AUTHOR ITIES HAD VERIFIED THE SETTLEMENT DEED DATED 12.10.2012, BY VIRTUE OF WHICH ASSESSEE ITA NO. 3390/MDS/2016 :- 4 -: CLAIMED OWNERSHIP OF THE PROPERTY WHICH WAS SOLD. A CAREFUL VERIFICATION OF SUCH SETTLEMENT DEED IS NECESSARY S INCE THE SALE WAS AFFECTED WITHIN A FORTNIGHT OF THE DATE OF THE SETT LEMENT. IT IS NECESSARY TO VERIFY WHETHER SETTLEMENT DEED WAS A P URE SETTLEMENT OR A TRANSFER FOR CONSIDERATION. IT IS ALSO NECESSARY TO VERIFY WHO WAS THE ACTUAL OWNER OF THE PROPERTY WHICH WAS SOLD. WE TH EREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE I SSUE REGARDING COMPUTATION OF CAPITAL GAINS AND APPLICATION OF COS T INFLATION INDEX BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR C ONSIDERATION AFRESH IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 10 TH DAY OF FEBRUARY, 2017, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( !' . #$#% ) (ABRAHAM P. GEORGE) & / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 10TH FEBRUARY, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF