ITO (IT) 3(1), MUMBAI V. CHANDERSEN JATWANI, MUMBAI

ITA 3548/MUM/2010

• Counselvise Citation: 354819914 RSA 2010
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 09-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.3584/MUM/2010 (ASSESSMENT YEAR: 2007-08) ITO(IT)-2(1), AAYAKAR BHAVAN, 4TH FLOOR, MUMBAI -400 020 ....REVENUE VS SHRI JAYESH SETH, R. NO.14, SCINDIA HOUSE, BALLARD PIER, MUMBAI -400 038 ASSESSEE PAN: AVZPS 4465 P ASSESSEE BY: SHRI RAJESH P SHAH REVENUE BY: SHRI SUNIL KUMAR SINGH O R D E R PER R.S. PADVEKAR, JM THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE I MPUGNED ORDER OF THE LD. CIT (A)-II MUMBAI DATED 24.2.2010 FOR TH E A.Y. 2007-08. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN HOLDING THAT THE ASSESSEE IS E NTITLED TO THE BENEFITS OF INDEXED COST OF ACQUISITION W.E.F. 01.0 4.1981 WITHOUT APPRECIATION THAT CLAUSE (III) OF EXPLANATION TO TH E PROVISO TO SEC. 84 OF THE I.T. ACT, 1961 SPECIFICALLY ALLOWS INDEXATIO N FROM THE DATE OF ITA 3548/M/2010 SHRI JAYESH SETH 2 HOLDING OF THE ASSET BY THE ASSESSEE AND ACCORDINGL Y THE LD. CIT (A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO CON SIDER THE PERIOD OF HOLDING OF THE PREVIOUS OWNER FOR THE PURPOSE OF CO MPUTING INDEXED COST OF ACQUISITION. 2. BRIEFLY SATED, THE FACTS ARE AS UNDER. THE ASSE SSEE WHO IS A NRI SOLD HIS FLAT BEING FLAT NO.12/A(132A), 12TH FLOOR, GRAND PARADI CHS, 572, DADYSETH HILL, AUGUST KRANTI MARG, MUMBAI -36 FOR A CONSIDERATION OF ` 4,50,00,000/-. THE SAID FLAT WAS INHERITED BY HIM FROM HIS MOTHER MRS. TARAMATI JAMNADS SETH WHO EXPIRED ON 26.7.2002 . THE ASSESSEE INHERITED THE FLAT AS PER THE WILL & LETTER OF PROB ATE. LATE SMT. TARAMATI J. SETH MOTHER OF THE ASSESSEE HAD PURCHASED THE SA ID FLAT FOR ` 1,13,600/- ON 31.05.1972. AS THE FLAT WAS PURCHASE D BEFORE 1.4.1981, THE ASSESSEE CLAIMED INDEXED COST OF ACQUISITION AT ` 1,74,17,640/-, WHICH THE ASSESSEE SUBSTITUTED FOR THE ACTUAL PURCH ASE COST OF THE SAID FLAT. CERTAIN EXPENSES ON THE TRANSFER WERE ALSO C LAIMED. THE A.O. WAS NOT IN AGREEMENT WITH THE ASSESSEES CLAIM THAT THA T THE INDEXATION IS AVAILABLE FROM 1.4.1981. HE, THEREFORE, ADOPTED C OST INFLATION INDEX (CII) FOR THE FINANCIAL YEAR 2002-03, INSTEAD OF FINANCIA L YEAR 1981-82 ON THE REASON THAT THE ASSESSEE BECAME THE LEGAL HAIR OF T HE PROPERTY ON 27.6.2002. THE A.O. APPLIED THE COST OF INFLATION INDEX FOR THE FINANCIAL YEAR 2002-03 AND WORKED OUT THE INDEX COST OF ACQU ISITION AT ` 38,96,564/- WHICH RESULTED INTO HIGHER CAPITAL GAIN . THE ASSESSEE CHALLENGED THE WORKING MADE BY THE A.O. BEFORE THE LD. CIT (A). THE LD. CIT (A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOW ING THE DECISION OF THE HONBLE ITAT SPECIAL BENCH, MUMBAI IN THE CASE OF D CIT MUMBAI VS. MANJULA J. SHAH 35 SOT 105 (MUM)(SB) / 226 TTJ 145 (MUM)(SB). NOW, THE REVENUE IS IN APPEAL BEFORE US. ITA 3548/M/2010 SHRI JAYESH SETH 3 3. WE HAVE HEARD THE PARTIES AND ALSO PERUSED THE R ECORDS. WE FIND THAT NOW THIS ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE HONBLE SPECIAL BENCH OF THE ITAT MUMBAI IN THE CAS E OF MANJULA J. SHAH (SUPRA) IN FAVOUR OF THE ASSESSEE. ADMITTEDLY , THE ASSESSEE HAS ACQUIRED THE FLAT BY WAY OF INHERITANCE FROM HIS MO THER ON HER DEATH. THE SAID FLAT WAS PURCHASED PRIOR TO 1.4.1981, HENC E, THE ASSESSEE IS AT LIBERTY TO ADOPT INDEXED COST OF ACQUISITION BY TAK ING FAIR MARKET VALUE OF SAID FLAT AS ON 1.4.1981 AND COST INFLATION INDEX FOR THE FINANCIAL YEAR 1981-82. WE FIND NO REASON TO INTERFERE WITH THE O RDER OF THE LD. CIT (A) AS SAME IS IN CONFORMITY WITH LAW. ACCORDINGLY, TH E SAME IS CONFIRMED. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 7TH APRIL 2011. SD/- SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 27TH APRIL 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 11, MUMBAI. 4) THE DIT (INT. TAXATION), MUMBAI. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 3548/M/2010 SHRI JAYESH SETH 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 27.04.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 27.04.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER