DARRYL D MONTE, MUMBAI V. ASST CIT 19(3), MUMBAI

ITA 411/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5662 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 18-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K MUTSADDI
• Keywords: Capital asset; Cost of acquisition; Tax effect
• Section: 14A

Judgement Text

, MH MHMH MH INCOME TAX APPELLATE TRIBUNAL MUMB AI - D BENCH MUMBAI . . , / ! ! ! ! , BEFORE S/SH.B.R.MITTAL,JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 411/MUM/2012, ' ' ' ' # # # # / ASSESSMENT YEAR 2008-09 DARRYL D.MONTE 29-B, KINARA, CARTER ROAD, BANDRA(WEST), MUMBAI-400050 VS. ASST CIT 19(3) PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012 PAN: AABPO1931A ( $% / ASSESSEE ) ( &'$% / REVENUE) /. ITA NO. 958/MUM/2012, ' ' ' ' # # # # / ASSESSMENT YEAR 2008-09 ASST CIT 19(3) R.NO. 305 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400012 VS. DARRYL D.MONTE 29-B, KINARA, CARTER ROAD, BANDRA(WEST), MUMBAI-400050 PAN: AABPO1931A ( $% / REVENUE) ( &'$% / ASSESSEE) $% $% $% $% ( (( ( ) ) ) ) / ASSESSEE BY : SHRI S.K.MUTSADDI &'$% ( ) / REVENUE BY : SHRI SANJEEV JAIN ' ' ' ' ( (( ( +, +, +, +, / DATE OF HEARING : 06 . 01 .201 4 -.# ( +, / DATE OF PRONOUNCEMENT : 06 . 01 .201 4 ' ' ' ' , 1961 ( (( ( 254 )1( +/+ +/+ +/+ +/+ 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,A.M: ASSESSING OFFICER (AO) AND THE ASSESSEE HAVE FILED CROSS APPEALS CHALLENGING THE ORDER DATED 11.11.2011 OF THE CIT(A)-30,MUMBAI.AO HAS FILED FOL LOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING TO APPLY THE COST OF INFLATION INDEX FROM 01.04.1981 IN WHICH THE PREVIOUS OWNER FIRST HELD THE PROPERTY WITHOUT APPRECIATING THE FACT THA T THE ASSESSEE BECAME THE OWNER OF PROPERTY IN THE YEAR 1998 I.E. AFTER THE DEATH OF HIS FATHER DR . C.J.MMONTE ON 21.11.1998. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE EXPLANATION (III) TO S ECTION 48 CLEARLY STATES THAT THE COST INFLATION INDEX SHALL BE ADOPTED FROM THE FIRST YEAR IN WHIC H THE ASSET WAS HELD BY THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE DECISION OF THE SPECIA L BENCH OF THE ITAT IN THE CASE OF MANJULA J. SHAH 935 SOT 105 (MUM) SB HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 2 ITA NO. 411 & 958/MUM/2012 DARRYL D.MONTE 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR AD A NEW GROUND WHICH MAY BE NECESSARY. GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UND ER: 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] HAS ERRED IN UPHOLDING THE VIEWS OF THE ASSESSING OFFICER (AO) IN DISALLOWING RS. 2,40,924/- U/S 14A AS PER THE WORKI NG OF RULE 8D. 2. THE APPELLANT RESERVES ITS RIGHT TO ADD TO, ALTER, AMEND, MODIFY OR DELETE ANY OF THE GROUNDS TAKEN IN THIS APPEAL. 2. ASSESSEE, AN INDIVIDUAL,FILED HIS RETURN OF INCO ME ON 25.09.2010 DECLARING TOTAL INCOME OF RS. 15.53 LACS.AO FINALISED THE ASSESSMENT ON 27.12.201 0 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 55.06 LACS. EFFECTIVE GROUND OF APPEAL FILED BY THE AO IS ABOUT COMPUTATION OF COST OF INFLATION INDEX. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT TH E ASSESSEE HAD INHERITED PLOT OF LAND ADMEASURING 1 ACRE AND 29.25 GUNTHAS(APP.)FROM HIS FATHER AS PER HIS WILL, THAT HIS FATHER PASSED AWAY ON 21.11.1998, THAT ASSESSEE RECEIVED 1 /3 RD SHARE IN THE SAID PROPERTY, THAT THE ASSESSEE SOLD THE PROPERTY IN QUESTION ALONG WITH T HE TWO OTHER CO-OWNER FOR A CONSIDERATION OF RS. 1.50 CRORES, THAT THE STAMP DUTY AND AUTHORITIE S HAD DETERMINED THE VALUE OF THE PROPERTY AT RS. 1.61 CRORES, THAT THE SHARE OF THE ASSESSEE WAS OF RS. 53.70 LACS, THAT WHILE COMPUTING CAPITAL GAINS THE ASSESSEE HAD APPLIED INDEXATION F ROM 01.04.1981. AO WAS OF THE OPINION THAT ASSESSEE WAS NOT ENTITLED FOR INDEXATION TO THE COS T OF PROPERTY FROM 01.04.1981 IN VIEW OF THE EXPLANATION (III) TO THE 5 TH PROVISO TO SECTION 48 OF THE ACT. HE CALLED FOR AN EXPLANATION FROM THE ASSESSEE IN THIS REGARD. ASSESSEE RELIED UPON THE D ECISION RENDERED BY THE SPECIAL BENCH OF ITAT, MUMBAI IN THE CASE OF MANJULA J. SHAH (ITA NO. 7321 /MUM/2007).AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, AO HELD THAT EXPLANATIO N 1(B) TO THE SECTION 2(42A) WAS APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION, THAT THE COST INFLATION INDEX HAD TO BE TAKEN IN THE YEAR IN WHICH THE PROPERTY WAS FIRST HELD BY THE AS SESSEE FOR THE FIRST TIME, THAT THE ORIGINAL OWNER OF THE PROPERTY, THE FATHER OF THE ASSESSEE, PASSED AWAY ON 21.11.1998, THAT PROPERTY WAS HELD BY THE ASSESSEE FROM 1998 TO THE AY-2008-09, T HAT THE COST INFLATION INDEXATION SHOULD HAVE BEEN TAKEN BY THE ASSESSEE FROM 1998 AND NOT F ROM 01.04.1981. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA). FOLLOWING THE DECISION OF THE MANJULA J. SHAH DELIVERED BY THE MU MBAI TRIBUNAL (35 SOT 105) HE HELD THAT INDEXATION COST OF ACQUISITION OF THE CAPITAL ASSET HAD TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET. . 4. DURING THE COURSE OF HEARING BEFORE US, DEPARTME NTAL REPRESENTATIVE(DR) FAIRLY CONCEDED THAT THE ISSUE WAS DECIDED AGAINST THE REVENUE BY THE HO NBLE JURISDICTIONAL HIGH COURT. AUTHORISED REPRESENTATIVE (AR) SUPPORTED THE ORDER OF THE FAA AND REFERRED TO THE CASE OF MANJULA J. SHAH(SUPRA). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT HONBLE BOMBAY HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE DEPARTMENT IN THE CASE OF MANJULA J. SHAH AND HAS UPHELD THE ORDER OF THE TRIBUNAL (249 CTR 270). 6. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE HO NBLE JURISDICTIONAL HIGH COURT, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. 3 ITA NO. 411 & 958/MUM/2012 DARRYL D.MONTE ITA NO. 411/MUM/2012 7. THE ONLY GROUND OF APPEAL FILED BY THE ASSESSEE IS ABOUT DISALLOWANCE OF RS. 2.40 LACS MADE BY THE AO U/S. 14A OF THE ACT R.W. RULE 8D OF INCOM E TAX RULES 1962 (RULES). 8. DURING THE COURSE OF HEARING BEFORE US. AUTHORIS ED REPRESENTATIVE(AR) OF THE ASSESSEE SUBMITTED THAT CONSIDERING SMALLNESS OF TAX EFFECT ASSESSEE WAS NOT PRESSING THE GROUND. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE ST AND DISMISSED AS NOT PRESSED. AS A RESULT,APPEALS FILED BY THE ASSESSEE AS WEL L AS AO STAND DISMISSED. 1 2 '1+ ,OA FU/KKZFJRH VF/KDKJH 3 4 S V 5+ ( + 67. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E. 6 TH JANUARY, 2014. 0 ( -.# 9 VKT VKTVKT VKT 6 TUOJH] TUOJH] TUOJH] TUOJH] 2014 . ( /. SD/- SD/- ( . . . B.R.MITTAL ) ( ! ! ! ! / RAJENDRA ) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, :' /DATE: 06.01.2014 SK 0 0 0 0 ( (( ( &+; &+; &+; &+; < ;#+ < ;#+ < ;#+ < ;#+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR D BENCH, ITAT, MUMBAI / ;?/ &+' MH MHMH MH , . . . 6. GUARD FILE/ / @ . ';+ &+ //TRUE COPY// 0' / BY ORDER, A / 6 DY./ASST. REGISTRAR , /ITAT, MUMBAI.