ITO WD19(3)(3), MUMBAI V. NARESH CHELLARAM GIDWANI, MUMBAI

ITA 3794/MUM/2012

• Counselvise Citation: 379419914 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAVESH MAGITHIA
• Assessee Lawyers: SURENDRA KUMAR
• Keywords: Capital asset; Gift; Cost of acquisition

Judgement Text

VK;DJ VIH VK;DJ VIH VK;DJ VIH VK;DJ VIHY YY YH HH H; VF/KDJ.K ; VF/KDJ.K ; VF/KDJ.K ; VF/KDJ.K CH CHCH CH [KAMIHB EQACBZ [KAMIHB EQACBZ [KAMIHB EQACBZ [KAMIHB EQACBZ INCOME TAX APPELLATE TRIBUNAL MUMBAI - B BENCH MUMBAI . , , BEFORE S/SH.D.MANMOHAN, VICE-PRESIDEN T & RAJENDRA,ACCOUNTANT MEMBER ! ! ! ! ' ' ' ' /. ITA NO. 3794/MUM/2012, # $% # $% # $% # $% & & & & / ASSESSMENT YEAR 2008-09 ITO WD 19(3)(3) 3 RD FLOOR, PIRAMAL CHAMBER, MUMBAI-400012 VS. NARESH CHELLARAM GIDWANI, 801,C-WING,HILLCREAST, 16 TH ROAD, OPP.SHIVSAGAR HOTEL,BANDRA(W), MUMBAI-400050 PAN: AAACM9514C ( ''( / ASSESSEE ) ( )*'( / RESPONDENT) ''( ''( ''( ''( !+ !+!+ !+ , , , , / ASSESSEE BY :SHRI BHAVESH MAGITHIA )*'( !+ , / RESPONDENT BY :SHRI SURENDRA KUMAR - . - . - . - . !+ !+!+ !+ / / / / / DATE OF HEARING : 19 . 12 .2013 0 &% !+ / / DATE OF PRONOUNCEMENT : 08 . 01 .201 4 ! ! ! ! '#$# '#$# '#$# '#$# , 1961 !+ !+!+ !+ $ $ $ $ 254 )1( ! !! ! '/1/ '/1/ '/1/ '/1/ 2 2 2 2 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 26.03.2012 OF THE CIT(A )-30,MUMBAI ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING TO APPLY THE COST OF INFLATION INDEX FROM F.Y. 1981 -82 IN WHICH THE PREVIOUS OWNER FIRST HELD THE IMMOVABLE PROPERTY WITHOUT APPRECIATING THE FACT TH AT THE ASSESSEE BECAME THE OWNER OF INHERITED IMMOVABLE PROPERTY IN THE F,Y. 2002-03 BY WAY OF IN HERITANCE FROM HER MOTHER WHO EXPIRED ON 18/05/2002. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIA TE THE FACT THAT THE EXPLANATION (III) TO SECTION 48 C LEARLY STATES THAT THE COST INFLATION INDEX SHALL B E ADOPTED FROM THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIA TE THE FACT THAT THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MANJULA J. SHAH [35 SOT 105 (MUM) SB] HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE,AN INDIVIDUAL HAD FILED ITS RETURN OF INCO ME ON 30.09.2008 DECLARING TOTAL INCOME OF RS.1,18,060/-.ASSESSMENT WAS FINALISED BY THE ASSES SING OFFICER(AO) ON 24.12.2010 DETER - MINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 31.4 7 LACS. 2.1. BRIEFLY STATED THAT FACTS OF THE CASE ARE THAT DURING THE YEAR UND ER CONSIDERATION,ASSESSEE AND HIS BROTHER HAD SOLD FLAT NO. 52,MADHUR MILAN 14B R OAD, KHAR (W), MUMBAI, (JOINTLY OWNED 35% AND 65% RESPECTIVELY) FOR A TOTAL CONSIDERATION OF RS.1,89,00,000/-WHICH WAS INHERITED BY THEM FROM THEIR MOTHER ON HER DEATH ON 23-01-2006,T HAT THE SAID FLAT WAS ALLOTTED TO SMT. KAMALA CHELLARAM GIDWANJ UNDER A REDEVELOPMENT SCHEME ON S URRENDER OF FLAT NO.12,BUILDING B MADHUL ITA NO. 3794/MUM/2012 NARESH CHELLARAM GIDWANI 2 MILAN COOPERATIVE HOUSING SOCIETY, PLOT NO.66 G SOU TH AVENUE, SANTACRUZ-MUMBAI, THAT WAS PURCHASED BY MR.CHELLARAM B. GIDWANI,THE ASSESSEES FATHER ON 3 RD AUGUST, 1966. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT WHILE CALCULAT ING CAPITAL GAINS,THE ASSESSEE HAD ADOPTED THE RATE OF COST INFLATION INDEX AS ON 01-04-1981 I NSTEAD OF THE RATE APPLICABLE FOR AY.2005-06.AO FURTHER FOUND THAT FOR THE SHARES OF GIDWANI SILK MILL PVT. LTD.,THE ASSESSEE HAD ADOPTED THE COST INFLATION INDEX AT THE RATE APPLICABLE TO THE PERIO D PRIOR TO 01.04.1981. HE DIRECTED THE ASSESSEE TO SHOW CAUSE AS TO WHY RATE OF COST INFLATION INDEX S HOULD NOT BE ADOPTED AS APPLICABLE FOR F.Y. 2005-06 I.E. THE FIRST YEAR IN WHICH THE APPELLANT HELD THE PROPERTY ON THE DATE O F HIS MOTHER AS PER PROVISO (III) TO SECTION 48 OF THE ACT.AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE, AO HELD THAT REPLY FILED BY THE ASSESSEE WAS NOT ACCEPTABLE ,THAT THE ASSESSEE WAS RELYING UPON THE DECISION DELIVERED BY THE SPECIAL BENCH MUMBAI ITAT (ITA NO. /MUM/2007)IN THE CASE OF MANJULA SHAH,THAT THE SAID DECISION HAD NOT BEEN ACCEPTED B Y THE DEPARTMENT AND THE DEPARTMENT HAD FILED FURTHER APPEAL IN HONBLE HIGH COURT OF MUMBAI. AS A RESULT,HE ADOPTED THE RATE OF COST INFLATION INDEX APPLICABLE TO FY. 2005-06 AND THEN WORKED OUT THE CAPITAL GAINS OF THE ASSESSEE WITH REGARD TO THE FLAT AND THE SHARES OF GIDWANI SILK MILL PVT . LTD. 2.2. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R,HE HELD THAT THE DECISION OF MANJULA SHAH(SUPRA) WAS SQUARELY APPLICABLE TO THE CASE UND ER CONSIDERATION,THAT THE INDEXED COST OF ACQUISITION OF THE PROPERTY AND SHARES OF THE ASSES SEE HAD TO BE COMPUTED WITH REFERENCE TO THE PREVIOUS OWNER WHO FIRST HELD THE ASSET.HE DIRECTED THE AO TO CONSIDER THE INDEXATION FROM AY.L981-82. 2.3. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) RELIED U PON THE ORDER OF THE AO.AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT ISSUE WAS DECIDE D IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL DELIVERED IN THE CASE OF MANJULA SHAH (SUPRA),THAT HONBLE MUMBAI HIGH COURT HAD UPHELD THE ORDER OF THE TRIBUNAL IN THE CASE OF MAN JULA SHAH. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE OF THE MANJULA SHAH(,UPRA) SPECIAL BENCH OF MU MBAI ITAT HAD DECIDED THE MATTER AS UNDER: FOR THE REASONS GIVEN ABOVE, WE ARE OF THE VIEW TH AT FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL G AIN ARISING FROM THE TRANSFER OF A CAPITAL ASSET WHICH HAD BECOME PROPERTY OF THE ASSESSEE UNDER GIFT, THE FIRST YEAR IN WHICH THE CAPITAL ASSET WAS HELD BY THE ASSESSEE HAS TO BE DETERMINED TO WORK O UT THE INDEXED COST OF ACQUISITION AS ENVISAGED IN EXPLANATION (III) TO SECTION 48 AFTER TAKING INTO ACCOUNT THE PERIOD FO R WHICH THE SAID CAPITAL ASSET WAS HELD BY THE PREVIOUS OWN ER. IN THAT VIEW OF THE MATTER, WE HOLD THAT THE IN DEXED COST OF ACQUISITION OF SUCH CAPITAL ASSET HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET.ACCORDINGLY, WE ANSWER THE QUESTION REFERRED TO US IN FAVOUR OF TH E ASSESSEE AND UPHOLD THE IMPUGNED ORDER OF THE LEARN ED CIT(A) ON THIS ISSUE. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS ALREADY ENDORSED THE VIEW OF THE FAA AND THE TRIBUNAL.THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE HIGH COURT DELIVERED IN THE CASE OF MANJULA SHAH(355ITR474),WE DECIDE THE E FFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FIL ED BY THE AO STANDS DISMISSED. # $3/ VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH 4 5 !+ 1. ' 6 !+ / 7. ORDER PRONOUNCED IN THE OPEN CO URT ON 8 TH DAY OF JANUARY,2014. 2 !+ 0 &% - 9 2 !+ 0 &% - 9 2 !+ 0 &% - 9 2 !+ 0 &% - 9 8 ,2014 ! !+ 1. ! !+ 1. ! !+ 1. ! !+ 1.. .. . SD/- SD/- ( . / D.MANMOHAN) ( / RAJENDRA) / VICE-PRESIDENT / ACCOUNTANT MEMBER ITA NO. 3794/MUM/2012 NARESH CHELLARAM GIDWANI 3 ->. / MUMBAI, ? ! /DATE: 08.01 . 2014. SK 2 2 2 2 !+ !+!+ !+ )#/#@ )#/#@ )#/#@ )#/#@ 'A@&/ 'A@&/ 'A@&/ 'A@&/ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / ''( 2. RESPONDENT / )*'( 3. THE CONCERNED CIT (A)/ >B ' ! -C , 4. THE CONCERNED CIT / >B ! -C 5. DR B BENCH, ITAT, MUMBAI / @D1 )#/# #$ CH CHCH CH E , . ' . . ->. 6. GUARD FILE/ 1 F. *@/ *@/ *@/ *@/ )#/ )#/)#/ )#/ //TRUE COPY// 2 - / BY ORDER, / ! ! DY./ASST. REGISTRAR ! ' '#$!% , ->. /ITAT, MUMBAI