The Asstt. Commissioner of Income-tax, Bathinda V. Smt. Gian Wati, Bathinda

ITA 43/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8850 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Capital asset; Gift; Cost of acquisition
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.43 (ASR)/2014 ASSESSMENT YEAR:2010-11 PAN: AAFPW6539B ASSTT. COMMR. OF INCOME TAX, VS. SMT. GIAN WATI, CIRCLE-1, 4927, POST OFFICE BAZAR, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. S.S. KANWAL, DR RESPONDENT BY:WRITTEN SUBMISSIONS. DATE OF HEARING: 09/02/2016 DATE OF PRONOUNCEMENT: 16/02/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), BATHINDA, DATED 29.11.2013 FOR THE ASSESSMENT YEAR 2010-11. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED BOTH IN LAW AND FACTS IN APPRECIAT ING THE EXPLANATION TO SECTION 148 OF THE INCOME TAX ACT, 1 961 IN A MANNER O INTERPRET THE PHRASE WHICHEVER IS EA RLIER AND ALSO BY MIS-INTERPRETING THE PHRASE FIRST YEAR IN WHICH THE ASSET WAS HELD, THEREBY ALLOWING THE ASSESSEE TO C ALCULATE THE INDEX COST OF ACQUISITION BY ADOPTING THE COST INFLATION INDEX (CII) IN PLACE OF 351, THE CII FOR 1998, THE YEAR WHEN THE PROPERTY WAS FIRST HELD BY THE ASSESSEE, AND TH EREBY ALLOWING A RELIEF OF RS.70,52,194/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED BOTH IN LAW AND FACTS IN RELYING O N EXPLANATION 1(I)(B) TO SECTION 2(24A), WHICH RELATE S ONLY TO ITA NO.43(ASR)/2014 ASSESSMENT YEAR: 2010-11 2 SHORT TERM CAPITAL ASSETS, AND HAS NO RELEVANCE TO THE DISPUTE IN THE INSTANT CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED BOTH IN LAW AND FACTS IN RELYING U PON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF P & H IN THE CASE OF JASWANT V. CWT (107 ITR 477) AS IN THE INSTANT CASE, THE AO HAS NOT DONE ANY SUCH THING AS APPLYIN G DIFFERENT COST INFLATION INDICATES FOR DIFFERENT CO -OWNERS. 2. AT THE TIME OF HEARING, NOBODY WAS PRESENT ON BE HALF OF THE ASSESSEE. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS AND IN THE WRITTEN SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS MENTIONED THAT IN SIMILAR FACTS AND CI RCUMSTANCES OF THE CASE, THE AMRITSAR BENCH OF THE TRIBUNAL, IN THE CA SE OF THE HUSBAND OF THE ASSESSEE IN ITA NO.86(ASR)/2013 FOR THE ASSESSM ENT YEAR 2009-10, VIDE ORDER DATED 19.08.2013, HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL FILED BY THE REVE NUE. 3. THE LD. DR, HOWEVER, RELIED UPON THE ORDERS OF T HE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE HAVE ALSO GONE THROUG H THE ORDER OF THE TRIBUNAL DATED 19.08.2013, PASSED IN ITA NO. 86(ASR )/2013 IN THE CASE OF LATE SH. RAMJI DASS AND FIND THAT THE REVENUE HAD TAKEN SIMILAR GROUNDS OF APPEAL, AS HAS BEEN TAKEN IN THE PRESENT APPEAL AND THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE BY DISMISSING THE APPEAL OF THE REVENUE. FOR THE SAKE OF CONVENIE NCE, THE RELEVANT ITA NO.43(ASR)/2014 ASSESSMENT YEAR: 2010-11 3 PORTION OF THE ORDER OF THE TRIBUNAL DATED 19.08.2 013 IS REPRODUCED AS UNDER: 8) THE SECOND ISSUE RELATES TO THE ADDITION OF RS. 75,95,431/- ON ACCOUNT OF LONG TERM CAPITAL GAINS O N THE SALE OF HOTEL AND PLOT OF LAND FOR RS. 1,41,75,000/ - DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2 009-10. IT IS A FACT THAT THE BIGGER HUF OF THE ASSESSEE OW NS THE PROPERTY BEFORE 01.04.1981 WHICH IS CLEAR FROM THE VARIOUS PARTIAL PARTITIONS MADE BY THE BIGGER HUF ON 30.01. 1964, 05.02.1964 AND 12.04.1971 WHICH WERE DULY ACCEPTED BY THE DEPARTMENT U/S 171(3) ON 14.01.1966, 12.04.1971 AND 21.12.1974 RESPECTIVELY. THE FULL PARTITION WAS MAD E ON 20.02.1995 WHICH WAS ACCEPTED BY THE A.O. ON 19.02. 1988. HOWEVER, THE ASSESSEE ALSO GOT IT MADE A RULE OF CO URT OF LAW FROM ADDITIONAL DISTRICT JUDGE ON 19.05.1998. THE A .O. HAS HIMSELF ACCEPTED THE CLAIM OF THE ASSESSEE U/S 49(1 )(I) OF THE ACT TAKING THE COST OF THE PREVIOUS OWNER AS ON 01. 04.1981. HOWEVER, THE A.O. HAS APPLIED THE COST OF INFLATION INDEX FOR THE YEAR 1998-99 INSTEAD OF 1981-82. THE ASSESSEE H AS POINTED OUT THAT THIS VERY A.O. HAS ACCEPTED THE CO ST OF INFLATION INDEX OF 1981-82 INSTEAD OF 1998-99 IN TH E CASE OF OTHER CO-OWNERS WHO HAVE SOLD THE PROPERTY DURING T HE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2009- 10. THE A.O. COULD NOT GIVE A SATISFACTORY REPLY IN HIS REM AND REPORT DATED 29.10.2012 FILED DURING THE COURSE OF APPELLA TE PROCEEDINGS. THERE SHOULD BE CONSISTENCY IN THE APP LICATION OF LAW WHILE DEALING WITH THE VARIOUS ASSESSEES PLA CED SIMILARLY. THE ASSESSEE HEAVILY RELIED ON THE JUDGM ENT OF HON'BLE JURISDICTIONAL HIGH COURT REPORTED AT JASWA NT RAI VS. CWT (107 ITR 477) IN WHICH IT WAS HELD IF A VAL UATION IS SUBJECT TO LOW RATE OF TAXATION IN ONE CO-OWNER THE N IT WOULD LOOK HIGHLY IMPROPER TO BURDEN A SIMILARLY SITUATED CO-SHARER WITH A HIGHER RATE OF TAX. IF SUCH AN ACTION ON THE PART OF THE A.O. IS SANCTIONED IT WOULD CLEARLY MILITATE AGAINS T THE PRINCIPLE OF EQUALITIES OF LAW ENRICHED IN ARTICLE 14 OF THE CONSTITUTION OF INDIA. THIS JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IS CLEARLY APPLICABLE TO THE FACTS OF THE CASE AND THE LEARNED A.O. ERRED IN MAKING DISCR IMINATION IN APPLYING THE COST OF INFLATION INDEX OF 1998-99 IN THE CASE OF ASSESSEE WHEREAS HE APPLIED THE COST OF INFLATIO N INDEX OF 1981-82 IN THE CASE OF OTHER CO-OWNERS. EVEN ON MER ITS, THE CASE OF THE ASSESSEE IS LIABLE TO BE ACCEPTED WHICH IS BASED ON THE INTERPRETATION OF SECTION 49(1)(I) AND ITS E XPLANATION AND DEFINITION OF SHORT TERM CAPITAL ASSET IN SECTI ON 2(42A) ITA NO.43(ASR)/2014 ASSESSMENT YEAR: 2010-11 4 AND ITS EXPLANATION 1(I)(B) READ WITH SECTION 48 WI TH EXPLANATION (III) WHICH ARE REPRODUCED BELOW:- SECTION 49(1)(I):- WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE:- (I) ON ANY DISTRIBUTION OF ASSETS ON THE TOTAL OR P ARTIAL PARTITION OF A HUF, THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWN ER OF THE PROPERTY ACQUIRED IT, AS INCREASED BY THE COST OF A NY IMPROVEMENT OF THE ASSETS INCURRED OR BORNE BY THE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. EXPLANATION: IN THIS SUB-SECTION THE EXPRESSION PREVIOUS OWNER OF THE PROPERTY IN RELATION TO ANY CAPITAL ASSET OWNED BY THE ASSESSEE MEANS THE LAST PREVIOUS OWNER OF THE CAPIT AL ASSET WHO ACQUIRED IT BY A MODE OF ACQUISITION OTHER THAN THAT REFERRED TO IN CLAUSE (I) OR CLAUSE (II) OR CLAUSE (III) OR CLAUSE (IV) OF THIS SUB-SECTION. EXPLANATION I(I)(B) TO SECTION 2(42A) DEFINING SHO RT TERM CAPITAL ASSET:- SHORT TERM CAPITAL ASSET MEANS A CAPITAL ASSET HE LD BY AN ASSESSEE FOR NOT MORE THAN 36 MONTHS IMMEDIATELY PRECEDING THE DATE OF TRANSFER. EXPLANATION I(I)(B):- IN THE CASE OF A CAPITAL ASSET WHICH BECOMES THE PR OPERTY OF THE ASSESSEE IN THE CIRCUMSTANCES MENTIONED IN SUB- SECTION (1) OF SECTION 49, THEN SHALL BE INCLUDED THE PERIO D FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER REFERRED T O IN THE SAID SECTION. EXPLANATION (III) TO SECTION 48:- INDEXED COST OF ACQUISITION MEANS AN AMOUNT WHICH M EANS TO THE COST OF ACQUISITION THE SAME PROPORTION AS T HE COST INFLATION INDEX FOR THE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE COST INFLATION INDEX FOR THE FIRST YEA R IN WHICH THE ASSET WAS HELD BY THE ASSESSEE OR FOR THE YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 1981, WHICHEVER IS LATER; THE ISSUE IS DIRECTLY COVERED BY THE LATEST SPECIAL BENCH DECISION OF MUMBAI BENCH IN THE CASE OF DCIT VS MAN JULA J ITA NO.43(ASR)/2014 ASSESSMENT YEAR: 2010-11 5 SHAH 318 ITR (AT) 417 WHERE IN IT WAS HELD AS UNDER :- WE ARE OF THE VIEW THAT FOR THE PURPOSE OF COMPUTI NG LONG TERM CAPITAL GAINS ARISING FROM THE TRANSFER O F A CAPITAL ASSET WHICH HAD BECOME THE 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 OUT THE INDEX ED COST OF ACQUISITION ENVISAGED IN EXPLANATION (III) TO SE CTION 48 AFTER TAKING INTO ACCOUNT THE PERIOD FOR WHICH THE SAID CAPITAL ASSET WAS HELD BY THE PREVIOUS OWNER. IN TH AT VIEW OF THE MATTER, WE HOLD THAT THE INDEXED COST OF ACQUIS ITION OF SUCH CAPITAL ASSET HAS TO BE COMPUTED WITH REFERENC E, TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASS ET. IT IS FURTHER MENTIONED THAT THIS JUDGMENT OF SPECI AL BENCH OF I.T.A.T., MUMBAI BENCH HAS SINCE BEEN APPROVED B Y THE HON'BLE BOMBAY HIGH COURT ON 11.10.2011 AND THE SAM E HAS SINCE BEEN REPORTED AT CIT VS MANJULA J SHAH 24 9 CTR 270. THIS VIEW OF THE BOMBAY HIGH COURT HAS BEEN FO LLOWED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF ARUN SHUNGLOO TRUST VS CIT REPORTED AT 249 CTR 294 WHILE INTERPRETING THE SECTION 49(1)(II) READ WITH SECTIO N 2(42A) AND EXPLANATION (III) TO SECTION 48 OF THE ACT. THE A.O . HAS NOT POINTED OUT ANY JUDGMENT EITHER OF I.T.A.T. OR HIGH COURT OR SUPREME COURT IN HIS FAVOUR ON THE ISSUE DURING THE COURSE OF APPELLATE PROCEEDINGS. AS THE PREVIOUS OWNER I.E. BIGGER HUF OWNED THE PRO PERTY BEFORE 01.04.1981, ACCORDINGLY, IT IS HELD THAT THE A.O. SHOULD HAVE APPLIED THE COST OF INFLATION INDEX OF 1981-82 AT 100 AS THE FACTS OF THE ABOVE THREE CASES ARE ALMOS T SIMILAR WITH THE CASE OF THE ASSESSEE AND THE LONG TERM CAP ITAL GAINS IS RECOMPUTED BY TAKING THE COST OF INFLATION INDEX OF 1981-82 AT 100. SALE OF HOTEL ON 30.04.2008 18,00,000 COST AS ON 01.04.1981 2,60,000 INDEXED COST 260000X582/100 15,13,200 CAPITAL GAINS 2,86,800 SALE OF PLOT OF LAND ON 24.12.2008 1, 23,75,000 COST AS ON 01.04.1981 15,65,000 INDEXED COST 1565000X582/100 91, 08,300 CAPITAL GAINS 32,66,700 TOTAL CAPITAL GAINS (LONG TERM) 35,53,500 ITA NO.43(ASR)/2014 ASSESSMENT YEAR: 2010-11 6 ACCORDINGLY, THE ADDITION OF RS. 75,95,431/- MADE O N ACCOUNT OF LONG TERM CAPITAL GAIN IS HEREBY DELETED . OTHER GROUNDS OF APPEAL ARE REJECTED AS THE SAME IS CHALL ENGED TO CHARGING OF INTEREST U/S 234B/C WHICH IS CONSEQUENT IAL IN NATURE. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 9) KEEPING IN VIEW THE AFORESAID FINDINGS GIVEN BY THE LEARNED FIRST APPELLATE AUTHORITY ON THE ISSUES IN DISPUTE, WE ARE OF THE VIEW THAT THE ASSESSEES HAVE NOT FILED ANY EVID ENCE SUPPORTING THE EXPENSES CLAIMED BY THEM BEFORE THE ASSESSING OFFICER AS WELL AS LEARNED FIRST APPELLAT E AUTHORITY AND EVEN BEFORE US. THEREFORE, WE ARE OF THE VIEW T HAT LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY REJEC TED THE ASSESSEESS CLAIM OF EXPENSES IN DISPUTE EVEN OTHER WISE THESE EXPENSES ARE NOT ALLOWABLE UNDER THE RULES AS MENTIONED BY THE CIT(A) IN THE IMPUGNED ORDER. 1S5) WITH REGARD TO THE SECOND ISSUE RELATING TO TH E ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN ON THE SALE OF PROPERTY IN DISPUTE, IT IS A MATTER OF RECORD THAT THE BIGGE R HUF OF THE ASSESSEE OWNS THE PROPERTY BEFORE 01.04.1981 WHICH IS CLEAR FROM THE VARIOUS DOCUMENTARY EVIDENCES FILED BY THE SSESSEE BEFORE THE AUTHORITY BELOW AND THE SAME HAS BEEN AC CEPTED BY THE DEPARTMENT ON VARIOUS OCCASIONS. THE ASSESSE E ALSO GOT IT MADE A RULE OF COURT OF LAW FROM ADDITIONAL DISTRICT JUDGE ON 19.05.1998. THE ASSESSING OFFICER HAS HIMSELF ACCEPTED THE CLAI MS OF THE ASSESSEE UNDER SECTION 49(1)(I) OF THE ACT TAKING T HE COST OF THE PREVIOUS OWNER AS ON 01.04.1981. THE ISSUE IN D ISPUTE HAS ALREADY BEEN ADJUDICATED AND DECIDED BY THE HON 'BLE JURISDICTIONAL PUNJAB & HARYANA HIGHCOURT IN THE CA SE OF JASWANT RAI VS. CWT (107 ITR 477) IN FAVOUR OF THE ASSESSEE. LEARNED FIRST APPELLATE AUTHORITY HAS DEC IDED THE ISSUE IN DISPUTE IN FAVOUR OF THE ASSESSEE BY RESPE CTFULLY FOLLOWING THE ORDER OF THE HON'BLE JURISDICTIONAL H IGH COURT. THEREFORE, IN OUR VIEW NO INTERFERENCE IS CALLED FO R IN THE WELL REASONED ORDER PASSED BY LEARNED FIRST APPELLATE AU THORITY AND WE UPHOLD THE SAME BY DISMISSING THE APPEALS FI LED BY THE REVENUE. 5. WE FIND THAT SINCE THE ISSUE HAS ALREADY BEEN AD JUDICATED IN FAVOUR OF HUSBAND OF THE ASSESSEE ON SIMILAR GROUNDS AND E VEN GROUNDS OF ITA NO.43(ASR)/2014 ASSESSMENT YEAR: 2010-11 7 APPEAL TAKEN BY THE REVENUE ARE SIMILAR, AS IN THE CASE OF HER HUSBAND, THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID OR DER OF THE TRIBUNAL, WE DISMISS THE GROUNDS OF APPEAL TAKEN BY THE REVENUE. 6. IN VIEW OF THE ABOVE, THE APPEAL OF REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/02/201 6 SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: SMT. GIAN WATI, BATHINDA. 2. THE ACIT, CIRCLE-1, BATHINDA. 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA.S 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER