V.P.Anandhan, CHENNAI V. ITO, CHENNAI

ITA 39/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8516 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVASRINIVAS IRS
• Assessee Lawyers: SHRI A S SRIRAMAN
• Keywords: Capital asset; Gift; Cost of acquisition
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.39/MDS/2016 # % &% / ASSESSMENT YEAR : 2012-2013 SHRI. V.P. ANANDHAN, 38, 2 ND CROSS STREET, ANANDA NAGAR, THORAIPAKKAM, CHENNAI 600 097 [PAN BCBPP 4731M] VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION II(1) CHENNAI. ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. SHRI. A.S. SRIRAMAN, ADVOCATE +,'( ) * /RESPONDENT BY : SHRI. SHIVA SRINIVAS, IRS, JCIT. ! ) - / DATE OF HEARING : 22-08-2016 ./& ) - / DATE OF PRONOUNCEMENT : 19-09-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1 6, CHENNAI IN ITA NO.61/A-16/2012-13, DATED 06.11.2015 FOR THE ASSESS MENT YEAR 2012- 2013 PASSED U/S.143(3) AND 250 OF THE INCOME TAX A CT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). ITA NO.39/MDS/2016 :- 2 -: 2. THE ASSESSEE HAS RAISED SOLE SUBSTANTIVE GROUND THA T THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ACTION OF THE LD. ASSESSING OFFICER THAT COST INFLATION IN DEXATION HAS TO BE ALLOWED FROM THE YEAR IN WHICH THE ASSESSEE HAS INH ERITED THE PROPERTY FROM FATHER WITHOUT CONSIDERING THE FACT THAT PREVI OUS OWNER WAS HOLDING THE PROPERTY PRIOR TO 01.04.1981. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN NON RESIDENT AND HAVING INCOME FROM HOUSE PROPERTY, CA PITAL GAINS AND OTHER SOURCES AND FILED RETURN OF INCOME ON 14.07.2 012 ADMITTING TOTAL INCOME OF >2,00,11,857/-. UNDER SCRUTINY NORMS THE CASE WAS SELECTED AND NOTICE U/SEC. 143(2) OF THE ACT AND ALSO NOTICE U/S.142(1) OF THE ACT WERE ISSUED. IN COMPLIANCE T O NOTICES, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED DETAILS. THE LD. ASSESSING OFFICER IN TH E ASSESSMENT PROCEEDING FOUND THAT THE ASSESSEE WHILE OFFERING INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF PROPERTY HAS ADOPTED COST INFLATION INDEXATION FROM 01.04.1981 FOR THE PURPOSE OF COMPU TATION OF LONG TERM CAPITAL GAINS WHEREAS THE PROPERTY WAS INHERIT ED AFTER DEMISE OF HIS FATHER ON 30.12.2002. THE LD. ASSESSING OFFICE R IS OF THE OPINION THAT INDEX COST OF ACQUISITION HAS TO BE ALLOWED FR OM FINANCIAL YEAR 2002-03 AS PER EXPLANATION (III) TO SEC. 48 OF THE ACT. FURTHER DEALT ON THE PROVISIONS AND CALCULATED THE COST TO THE PREVI OUS OWNER BUT ITA NO.39/MDS/2016 :- 3 -: BENEFIT OF COST OF INDEXATION HAS TO BE GRANTED IN THE YEAR IN WHICH THE PROPERTY WAS LEGALLY VESTED TO THE ASSESSEE. S INCE THE ASSESSEE INHERITED PROPERTY AFTER DEMISE OF HIS FATHER ON 30 .12.2002 THE BENEFIT OF COST OF INDEXATION WAS ALLOWED FROM FINANCIAL YE AR 2002-03 AND THE LD. ASSESSING OFFICER HAS WORKED OUT LONG TERMS C APITAL GAINS AND ALLOWED DEDUCTION U/SE. 54 AND 54EC AND DETERMINED TOTAL INCOME OF >2,09,60,050/-. AGGRIEVED BY THE ORDER, THE ASSESSE E FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ARGUED THE GROUNDS THAT THE LD. ASSESSING OFFICER HAS ERRED IN ALLOWING INDEXATION FROM FINA NCIAL YEAR 2002-03 INSTEAD OF DATE OF ACQUISITION BY ASSESSEES FATHE R PRIOR TO 01.04.1981 AND INDEXATION FROM FINANCIAL YEAR 1981-82 IN RESPE CT OF PURCHASE OF LAND AND CONSTRUCTION OF THE PROPERTY. THE LD. AU THORISED REPRESENTATIVE RELIED ON THE PROVISIONS AND EXPLANA TIONS U/SEC. 2(42A) OF THE ACT AND THE EXPLANATIONS 1(I)(B) FOR DETERMI NING PERIOD OF HOLDING, WHEREAS THE LD. ASSESSING OFFICER HAS ALLO WED COST OF ACQUISITION UNDER THE PROVISIONS AS HELD BY THE FAT HER BUT ALLOWED COST INFLATION INDEX FROM THE FINANCIAL YEAR 2002-03 AND THE LD. AUTHORISED REPRESENTATIVE ALSO SUPPORTED HIS SUBMISSIONS WITH JUDICIAL DECISIONS AND PRAYED FOR ALLOWING THE APPEAL. THE LD. COMMISS IONER OF INCOME TAX (APPEALS) CONSIDERED THE GROUNDS, SUBMISSIONS A ND DISTINGUISHED ITA NO.39/MDS/2016 :- 4 -: THE DECISIONS RELIED BY THE ASSESSEE AND ALSO WRITT EN SUBMISSIONS FILED BY THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASS ESSEE. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE ASSESSEE HAS ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, LD.A.R REITERATED THE SUBMISSIONS MADE I N THE ASSESSMENT AND FIRST APPELLATE PROCEEDINGS ON PROV ISIONS OF INHERITANCE, SUCCESSION AND GIFT. THE LD.A.R EXPLAI NED THAT THE PROPERTY WAS DEVOLVED UPON THE ASSESSEE ON SUCCESSI ON AFTER DEATH OF ASSESSEES FATHER AND THE INDEX COST OF ACQUISITION HAS TO BE DETERMINED WITH REFERENCE TO THE COST OF INFLATION INDEX OF THE FIRST YEAR IN WHICH THE CAPITAL ASSET WAS HELD BY THE PREVIOUS OWNER. THE LD.CIT(A) HAS ERRED IN DISTINGUISHING THE DECISIONS AND OBSERVED THAT ASSESSEE INHERITED THE PROPERTY AFTER DEATH OF THE FATHER ON 30.12.2002 DURING FINANCIAL YEAR 2002-03 AND INDEXE D COST OF ACQUISITION HAS TO BE ALLOWED IN RESPECT TO THE YEA R, WERE THE ASSET WAS FIRST HELD BY THE ASSESSEE. FURTHER ASSESSEES FATHER WAS HOLDING THE PROPERTY AS ON 01.04.1981 AND AS PER TH E PROVISIONS OF THE SECTION 48 & 49(I) OF THE ACT, THE COST OF PREVIOUS OWNER AND HOLDING PERIOD HAS TO BE CONSIDERED FOR INDEXATION AND SUPP ORTED WITH THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J.SHAH 355 ITR 474 AND PRAYED FOR THE DELETION OF CAPITAL GAINS. ITA NO.39/MDS/2016 :- 5 -: 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE RELIE D ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND VEHEMENTLY OPPOSED TO THE SUBMISSIONS OF LD. AUTHORISED REPRE SENTATIVE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE M ATERIAL ON RECORD AND JUDICIAL DECISION CITED. THE LD.A.R H AS EMPHASIZED ON THE DISPUTED ISSUE ON HOLDING PERIOD OF THE ASSESSE E ON WHOM THE PROPERTY WAS DEVOLVED ON THE DEATH OF ASSESSEES F ATHER, THE PROVISIONS OF SECTIONS 48 & 49(I) (III) OF THE ACT ALLOW CERTAIN MODE OF TRANSFER BY SUCCESSION AND INHERITANCE. THE ACTI ON OF THE ASSESSING OFFICER CANNOT BE APPRECIATED THAT THE PROPERTY WAS ACQUIRED BY ASSESSEES FATHER BUT INHERITED BY THE ASSESSEE ON DEMISE FATHER ON 30.12.2002 WHEREAS THE ASSESSEE BECAME A RIGHTFUL O WNER AS PER EXPLANATION 1(I)(B) TO SECTION 2(42A) OF THE ACT AN D IN THE PRESENT CASE, ASSESSEE DEEMED TO HOLD THE PROPERTY FROM 198 1 AND INDEXED COST OF ACQUISITION HAS TO BE CALCULATED FROM 01.04 .1981 WITH THE BASE YEAR AS 100 AND THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS OF THE PREVIOUS OWNER AND RIGHTFULLY CLAIMED THE COST IN FLATION INDEXATION FROM THE BASE YEAR I.E. 01.04.1981 AND THE ARGUMENT S OF THE LD.A.R ARE SUPPORTED BY THE DECISION OF THE BOMBAY HIGH C OURT IN THE CASE OF CIT VS. MANJULA J.SHAH (SUPRA) HELD THAT WHEN THE ASSESSEE SELLS HIS IMMOVABLE PROPERTY WHICH IS ACQUIRED UNDER GIFT OR WILL, WHILE COMPUTING THE CAPITAL GAIN THE INDEX COST OF ACQUIS ITION HAS TO BE ITA NO.39/MDS/2016 :- 6 -: COMPUTED WITH REFERENCE TO THE YEAR IN WHICH PREVIO US OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESS EE BECAME THE OWNER OF THE ASSET AND KARNATAKA HIGH COURT IN TH E CASE OF CIT VS. SMT. KAVERI THIMMAIAH (2014) 369 ITR 0081 HELD THAT WHEN AN ASSET IS ACQUIRED BY WAY OF INHERITANCE, COST OF AC QUISITION OF ASSET SHOULD BE CALCULATED ON BASIS OF COST OF ACQUISITIO N BY PREVIOUS OWNER AND SAID COST OF ACQUISITION OF PREVIOUS OWNER HAS TO BE CALCULATED ON BASIS OF INDEXED COST OF ACQUISITION. THE RATIO OF THESE DECISIONS ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E OF THE ASSESSEE. 8. WE RELY ON THE ABOVE JUDICIAL DECISIONS AND DIRECT THE AO TO ALLOW THE COST INFLATION INDEXATION TO THE ASSESSEE FROM 01.04.1981 FOR COMPUTATION OF CAPITAL GAINS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON MONDAY, THE 19 TH DAY OF SEPTEMBER, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI 1 / DATED:19.09.2016 KV 2 ) +#-34 54&- / COPY TO: 1. '( / APPELLANT 3. ! 6- () / CIT(A) 5. 4 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 6- / CIT 6. :;% < / GF