A.C.I.T.12(2), MUMBAI V. SHOBHA K. NAYAR, MUMBAI

ITA 4505/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71298 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 03-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PHEROZE A DHANBHOORA
• Keywords: Capital asset; Gift; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 4505/MUM/12 ASSESSMENT YEAR: 2009 - 10 THE ASSISTANT COMMISSIONER OF INCOME TAX 12 ( 2 ), ROOM NO.134, A AYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. MISS. SHOBHA KAHANCHAND NAYAR, FLAT NO.17, JAMES COURT, MARINE DRIVE, MUMBAI - 400 020 PAN: AAA PN2969H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PHE ROZE A. DHANBHOORA REVENUE BY : SHRI JAVED AKHTAR, D.R. DATE OF HEARING : 06.08.13 DATE OF PRONOUNCEMENT : 25.09.13 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) D ATED 30.04.12. 2. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT ARE REPRODUCED AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) JUSTIFIED IN DIVERTING THE ASSESSING OFFICER TO COMPUTE THE INDEX COST OF ACQUISITION WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER, VIZ. THE HUF, FIRST HELD THE ASSET. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE ASSESSEE, AN INDIVIDUAL , IN HER RETURN OF INCOME HAD SHOWN CAPITAL GAINS OF RS. 3,84,54,048/ - ARISING ON THE SALE OF IMMOVABLE PROPERTY. THE ITA NO. 4505/M/12 MISS SHOBHA K. NAYAR 2 ASSESSEE HAD ACQUIRED THE SAID PROPERTY BY INHERITANCE ON PARTITION OF HUF AS PER PARTITION DEED DATED 28.03.07. THE ASSESSEE HAS DETERMINED THE C APITAL GAIN BY APPLYING INDEXED COST OF ACQUISITION WITH REFERENCE TO THE COST INFLATION INDEX FOR THE YEAR IN WHICH THE COST OF ACQUISITION WAS INCURRED. IN THE PRESENT CASE, THE PREVIOUS OWNER HELD IT FROM 1958 AND HENCE COST INFLATION INDEX FOR 1981 - 82 WAS APPLIED BY THE ASSESSEE. 4. THE AO HOWEVER OBSERVED THAT THE ASSET WAS HELD BY THE ASSESSEE FROM 28.03.07 ONLY . H E ACCORDINGLY HELD THAT THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE COST OF INFLATION INDEXED FOR FINANCI AL YEAR 2006 - 07. 5. IN APPEAL THE LD. CIT(A) WHILE RELYING UPON AN AUTHORITY OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J . SHAH IN ITA NO. 3378/10 DECIDED ON 11.10.11 HELD THAT THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERE NCE TO THE YEAR IN WHICH THE PREVIOUS OWNER I.E. THE HUF FIRST HELD THE ASSET. HE THEREFORE DIRECTED THE AO TO ALLOW THE INDEXATION ACCORDINGLY AND RE - COMPUTE THE CAPITAL GAIN. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 2.2 IN APPEAL PROCEEDINGS, THE APPELLANT AGAIN RELIED UPON THE DECISION OF MANJULA J. SHAH OF BOMBAY HIGH COURT IN ITA NO.3378 OF 2010 WHICH HELD THAT THE ITAT WAS JUSTIFIED IN HOLDING THAT WHILE THE CAPITAL GAINS ARISING ON TRANSFER OF CAPITAL ASSET ACQ UIRED BY THE ASSESSEE UNDER A GIFT, THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. THE APPELLANT ALSO AGA IN RELIED UPON DECISION IN MRS. PUSHPA SOFAT VS. ITO, REPORTED IN 81 ITD (CHD) (SMC). THAT THE DECISION OF THE HIGHER AUTHORITIES ARE ALWAYS BINDING ON THE LOWER AUTHORITIES. 2.3 THE ASSESSING OFFICER HAS APPLIED EXPLANATION (III) TO SECTION 48 AND HEL D THAT EXPLANATION (III) TO SECTION 48 SPECIFICALLY PROVIDES THAT THE INDEXED COST OF ACQUISITION HAS TO BE DETERMINED WITH REFERENCE TO THE FIRST YEAR IN WHICH THE CAPITAL ASSET WAS HELD BY THE ASSESSEE WHICH IS F.Y. 2006 - 07 AS THE APPELLANT ACQUIRED THE PROPERTY UNDER PARTITION OF HUF ON 28.03.07. ITA NO. 4505/M/12 MISS SHOBHA K. NAYAR 3 THE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF MANJULA J SHAH (SUPRA) HAS HELD THAT 23) SINCE THE ASSESSEE IN THE PRESENT CASE IS HELD LIABLE FOR LONG TERM CAPITAL GAINS TAX BY TREATING THE PERIOD FO R WHICH THE CAPITAL ASSET IN QUESTION WAS HELD BY THE PREVIOUS OWNER AS THE PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE ASSESSEE, THE INDEXED COST OF ACQUISITION HAS ALSO TO BE DETERMINED ON THE VERY SAME BASIS. 24) IN THE RESULT, WE HOLD THAT THE I TAT WAS JUSTIFIED IN HOLDING THAT WHILE COMPUTING THE CAPITAL GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED BY THE ASSESSEE UNDER A GIFT, THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRS T HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. FOLLOWING THE CITED DECISION, IN THE PRESENT CASE THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER, VIZ., THE HUF, FIRST HELD THE ASSET. THE ASSESSING OFFICER IS DIRECTED TO ALLOW INDEXATION ACCORDINGLY AND RE - COMPUTE CAPITAL GAIN. 5. WE MAY OBSERVE THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED WITH THE LAW LAID DOWN BY THE HONBLE BOMBAY HI GH COURT IN MANJULA J SHAH (SUPRA). THE LD. D.R. COULD NOT BRING BEFORE US ANY CONTRARY FACT OR CASE LAW WHICH MAY JUSTIFY DEPARTURE THERE FROM. SO RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE BOMBAY HIGH COURT , WE UPHOLD THE ORDER OF THE CIT(A) AND THE APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.09. 2013. SD/ - SD / - (P.M. JAGTAP) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 2013. * KISHORE ITA NO. 4505/M/12 MISS SHOBHA K. NAYAR 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) C ONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.