ITO, CHENNAI V. Mohammed Anaikar, CHENNAI

ITA 35/CHNY/2015

• Counselvise Citation: 3521714 RSA 2015
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2015
• Court: TRIBUNAL
• Department Lawyers: M DAS GUPTA JCITD R
• Keywords: Capital asset; Gift; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.35/MDS./2015 ( ! '! / ASSESSMENT YEAR : 2010-11) INCOME TAX OFFICER, NON-CORPORATE WARD 3(4), 121,MAHAMA GANDHI ROAD CHENNAI 600 034. VS. SHRI MOHAMMED ANAIKAR 20/21,SIVAGANGA ROAD, APARTMENTS,3A,NUNGAMBAKKAM, CHENNAI 600 034. PAN ANPPA 6456 Q ( / APPELLANT ) ( / RESPONDENT ) #$ % & / APPELLANT BY : MR.M.DAS GUPTA, JCIT,D.R '(#$ % & / RESPONDENT BY : MR.SANJAY KUMAR,ADVOCATE ) * % +, / DATE OF HEARING : 08.07.2015 -' % +, /DATE OF PRONOUNCEMENT : 17.07.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-V, CHENNA I DATED 23.09.2014 IN ITA NO.1038/13-14, PASSED UNDER SECT ION143(3), READ WITH SECTION 250 OF THE INCOME-TAX ACT, 1961. ITA NO. 35/MDS/15 2 2. THE REVENUE HAS RAISED FOUR ELABORATE GROUNDS I N ITS APPEAL; HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD.CIT ( A) HAD ERRED IN DIRECTING THE LD.A.O TO COMPUTE THE LONG TERM CAPIT AL GAINS BY ADOPTING THE COST OF INFLATION INDEX OF F.Y 1991-92 ADOPTED BY THE ASSESSEE INSTEAD OF ADOPTING COST OF INFLATION INDEX OF F.Y 2006-07 & 2008-09 AS COMPUTED BY THE LD.A.O. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 28.9.2010 ADMITTING HIS INCOME AS ` 1,74,940/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT U/S.143(3) WAS COMPLETE D ON 18.03.2013 WHEREIN THE LD. ASSESSING OFFICER COMPUT ED THE LONG TERM CAPITAL GAIN AT ` 68,42,038/- BY ADOPTING THE COST INFLATION INDEX OF F.Y 2006-07 & 2007-08 AS AGAINST F.Y 1990-91 ADOPTED BY THE ASSESSEE. THE ASSESSEE IS ONE OF THE CO-OWNERS OF THE PROPERT Y HAVING 1/6 TH SHARE IN THE PROPERTY SOLD. THE PROPERTY FELL INTO THE HANDS OF THE ASSESSEE DUE TO THE SETTLEMENT DEED EXECUTED BY HIS FATHER IN FAVOUR OF HIM ON 31.3.2007. THE LD. ASSESSING OFFICER OPIN ED THAT FOR THE PURPOSE OF DETERMINING THE INDEXED COST OF ACQUISIT ION, COST OF ITA NO. 35/MDS/15 3 INFLATION INDEX OF THE F.Y 2006-07 & 2008-09 SHOULD BE ADOPTED BECAUSE IT WAS THE FIRST YEAR IN WHICH THE ASSET WA S HELD BY THE ASSESSEE AS PER EXPLANATION (III) TO SECTION 48 AS AGAINST COST OF INFLATION INDEX OF THE ASSESSMENT YEAR 1991-92 BEIN G THE YEAR IN WHICH THE ASSESSEES FATHER HAD INITIALLY ACQUIRED THE PROPERTY. THE LD. CIT (A) FOLLOWING THE DECISION OF THE CASE MANJ ULA J.SHAH VS. DCIT REPORTED IN 318 ITR (AT) 417 AND THE DECISION OF THE CASE D.N VYAS REPORTED IN 159 ITR 141 (GUJ.) DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT (A) IS EXTRACTED HEREIN BELOW FOR REFERENCE:- 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER, GROU NDS OF APPEAL AND SUBMISSIONS OF THE AR OF THE APPELLANT CAREFULLY. THE ONLY ISSUE RAISED BY THE AR OF THE APPELLANT IS THAT THE ASSESSING OFFIC ER WRONGLY DETERMINED THE LONG TERM CAPITAL GAIN AT RS.68,42,038/- AS AGAINST LONG TERM CAPITAL GAIN COMPUTED WITH THE ASSESSEE AT RS.54,51,181/-. THE ASSESSING OFFICER WORKED OUT THE INDEXED COST OF ACQUISITION BY ADOP TING THE COST INFLATION INDEX AS APPLICABLE TO F.Y 2006-07 AND F.Y 2008-09 ON THE GROUND THAT IT WAS THE FIRST TIME IN WHICH THE EFFECT WAS HELD BY THE ASSESSEE AS PER EXPLANATION (III) TO SECTION.48 AS AGAINST COST INF LATION INDEX FOR 1991-92 ADOPTED BY THE ASSESSEE. THE ASSESSEE ADOPTED INDE XED COST OF ACQUISITION AT RS.21,11,175/- BASED ON THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET I.E. 1991 AND NOT THE YEAR IN WHICH THE ASSESSEE BECOME THE OWNER OF THE ASSET AS THE ASSESSEE HAS INHERITE D THE ASSET FROM HIS FATHER. THE A.R OF THE APPELLANT ARGUED THAT AS PER SECTION 49 OF THE ACT THE ITA NO. 35/MDS/15 4 COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED T O BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT, AS INCR EASED BY THE COST OF ANY IMPROVEMENT OF THE ASSET INCURRED OR BORNE BY THE P REVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. SHRI MOHAMMED ANAIKAR, THE ASSESSEE WAS ONE OF THE CO-OWNERS OF THE PROPERTY AT 14, WALLACE GARDEN, 3 RD STREET, CHENNAI-6 HAVING A SHARE OF 22.22%. 1/6 TH SHARE OF THE PROPERTY WAS SETTLED TO HIM BY HIS FA THER SHRI SHAFEEQ AHMED ON 31.01.2007 AND 1/8 TH SHARE SETTLED ON 29.08.2008 WHEN THE ASSESSEE WAS A MINOR. THE PROPERTY WAS ACQUIRE D BY HIS FATHER ON 25.2.1991. THE SAID PROPERTY WAS SOLD BY THE CO-OW NERS ON 12.3.2010 FOR A SUM OF RS.4 CRORES. THE ASSESSEE TOOK DATE OF ACQU ISITION AS 25.2.1991 BEING THE DATE ON WHICH THE FATHER ACQUIRED THE PRO PERTY. ACCORDINGLY, LONG TERM CAPITAL GAIN WAS COMPUTED ADOPTING THE COST IN FLATION INDEX FOR THE YEAR 1991-92 AND WORKED OUT TO THE INDEXED COST OF ACQUISITION OF RS.21,11,175/-. THE AR OF THE APPELLANT ARGUED THAT THE RATIOS HELD BY THE JURISDICTIONAL ITAT IN THE CASE OF SYED MAQBUL HUSSAIN VS. ACIT (2010) 4 ITR (TRIB) 44 WHEREIN IT WAS HELD WHILE COMPUTING THE INDEX COST OF ACQUISITION, IN RELATION TO AN ASSET ACQUIRED THROUGH INHERITANCE PRIOR TO 1 981-82, INDEXATION HAS TO BE WITH REFERENCE TO YEAR 1981-82 AND THE COST OF A CQUISITION TO BE ADOPTED WOULD BE AS ON 1981. THE ABOVE DECISION IS BASED O N THE RATIO HELD IN MANJULA J SHAH VS. DCIT (2009) 318 ITR (AT) 417 AS WELL AS B N VYAS (GUARDIAN OF MINOR B.B.VYAS) 159 ITR 141(GUJ.), BASE ON THE ABOVE SUBMISSIONS AS WELL AS THE RATIO HELD IN THE CASE LAWS MENTIONED, WHILE COMPUTING THE INDEX COST OF ACQUIS ITION, IN RELATION TO AN ASSET WHICH HAS BEEN ACQUIRED TO INHERITANCE, THE I SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SP ECIAL BENCH IN THE CASE OF MANJULA J SHAH VS. DCIT AND OTHER CASES MENTIONE D SUPRA WHEREIN IT WAS HELD THE COST OF ACQUISITION OF ASSET SHALL BE DEEMED TO BE THE COST FOR ITA NO. 35/MDS/15 5 WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED I T, AS INCREASED BY THE COST OF ANY IMPROVEMENT OF AN ASSET INCURRED OR BOR NE BY THE PREVIOUS OWNER OR THE ASSESSEE AS THE CASE MAY BE. THUS IT IS CLEARLY HELD WHILE COMPUTING THE CAPITAL GAIN ARISING ON TRANSFER OF T HE CAPITAL ASSET WHICH BECOME THE PROPERTY OF THE ASSESSEE UNDER GIFT, WIL L SUCCESSION, INHERITANCE OR DEVOLUTION ETC., THE DATE OF ACQUISITION WILL BE THE DATE OF ACQUISITION OF THE PREVIOUS OWNER. ACCORDINGLY INDEXED COST OF ACQ UISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PR EVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BE CAME THE OWNER OF THE ASSET. KEEPING IN VIEW OF THE VARIOUS CASE LAWS HEL D IN FAVOUR OF THE ASSESSEE, THE ISSUE IS DECIDED IN FAVOUR OF THE APP ELLANT AND ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE COMP UTATION OF LONG TERM CAPITAL GAIN ADOPTING THE INDEXED COST OF ACQUISITI ON WORKED OUT BY THE ASSESSEE AT RS.21,11,175/-. 4. LD. A.R RELIED IN THE ORDER OF THE LD. CIT (A) AND THE DECISIONS CITED THEREIN WHEREAS THE LD. D.R ARGUED IN SUPPORT OF THE ORDER OF THE LD. ASSESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE DE CISION OF THE CASE RELIED BY THE LD. CIT (A) IN THE CASE MANJULA J.SHA H VS. DCIT(SUPRA) HAS BEEN CONFIRMED BY THE HONBLE BOMBAY HIGH COURT WHICH IS REPORTED IN 355 ITR 474. IT HAS BEEN CATEGORICALLY HELD BY THE HONBLE ITA NO. 35/MDS/15 6 BOMBAY HIGH COURT THAT WHEN THE ASSESSEE SELLS HIS IMMOVABLE PROPERTY WHICH IS ACQUIRED UNDER GIFT OR WILL, WHIL E COMPUTING THE CAPITAL GAIN THE INDEX COST OF ACQUISITION HAS TO B E COMPUTED WITH REFERENCE TO THE YEAR IN WHICH PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. THEREFORE, THE RATIO OF THIS DECISION IS SQUARELY A PPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. THE LD. CIT (A) HAS ON LY FOLLOWED THE DECISION OF THE TRIBUNAL IN THE SAME CASE WHICH WAS UPHELD BY THE HONBLE BOMBAY HIGH COURT. THEREFORE WE HEREBY CON FIRM THE ORDER OF THE LD. CIT (A). 6. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. ORDER PRONOUNCED ON 17 TH JULY, 2015 AT CHENNAI. SD/- SD/- ( . ) ( N.R.S.GANESAN) ( ' . #$% &# ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH JULY, 2015. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA NO. 35/MDS/15 7