DCIT 25(3), MUMBAI V. MANMOHAN KUMAR SONI, MUMBAI

ITA 4543/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92283 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Gift; Cost of acquisition

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.4543/MUM/2012 ASSESSMENT YEAR: 2008-09 DCIT-25(3), 308, C-11, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. SHRI MANMOHAN KUMAR SONI A-504, SENATE, AKURLI ROAD, LOKHANDWALA COMPLEX, KANDIVALI (E), MUMBAI-400101 ( / REVENUE) ( '#$% & /ASSESSEE) P.A. NO. AAKPS9415P / REVENUE BY SHRI VIJAY KUMAR BORA-DR '#$% & / ASSESSEE BY SHRI ASHOK PATIL ' '( ) & * / DATE OF HEARING : 06/04/2015 ) & * / DATE OF ORDER: 06/04/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 04/03/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED PERTAINS TO THE DIRECTION TO THE SHRI MANMOHAN KUMAR SONI 2 ASSESSING OFFICER TO ACCEPT THE CLAIM OF THE ASSESS EE IN ALLOWING INDEXATION OF THE COST OF THE ACQUISITION OF THE PREVIOUS OWNER WITH REFERENCE TO 01/04/1981 WITHOUT APPRECIATING THE PLAIN AND UNAMBIGUOUS LANGUAGE CON TAINED IN EXPLANATION-III TO SECTION 48 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. AT THE TIME OF HEARING, SHRI VIJAY KUMAR BORA, L D. DR, STRONGLY DEFENDED THE CONCLUSION ARRIVED AT IN THE ASSESSMENT ORDER BY ADVANCING HIS ARGUMENTS WHICH A RE IDENTICAL TO THE GROUND RAISED, BY SUPPORTING THE R EWORKING OF THE PROPERTY ADOPTING COST INFLATION INDEX PERTAINI NG TO FINANCIAL YEAR 2006-07. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, SHRI ASHOK PATIL, DEFENDED THE CO NCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE AN INDIVIDUAL DECLARED INCOME OF RS.6,49,520/- IN HIS RETURN, FILED ON 31 ST JULY, 2008, WHICH WAS SUBSEQUENTLY, REVISED TO RS.43,38,647/- ON 19/12/2008. THE ASSESSEE SOLD A PLOT OF LAND WHICH WAS INHERITED BY HIM FROM HIS MOTHER WHO EXPIRED ON 10 TH APRIL, 2006. THE MOTHER OF THE ASSESSEE INHERITED THE PRO PERTY IN THE YEAR 1977 ON THE DEMISE OF HER HUSBAND. THE AS SESSEE WHILE COMPUTING THE LONG TERM CAPITAL GAIN GOT THE PROPERTY VALUED AS ON 01 ST APRIL 1991 BY CLAIMING INDEXATION FROM THAT ASSESSMENT YEAR TO THE DATE OF SALE OF PROPERTY. H OWEVER, THE LD. ASSESSING OFFICER ALLOWED THE INDEXATION FROM T HE SHRI MANMOHAN KUMAR SONI 3 DATE/YEAR WHEN IT WAS INHERITED BY THE ASSESSEE IN AY 2007- 08 AND NOT FROM THE ASSESSMENT YEAR 1981-82. THE L D. ASSESSING OFFICER ASSESSED THE LONG TERM CAPITAL GA IN TO THE TUNE OF RS.51,61,527/- AS AGAINST RS.36,89,125/-, D ECLARED BY THE ASSESSEE. THE AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPE AL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , WHO VIDE ORDER DATED 04/03/2013 ANALYZED SECTION 48 ALO NG WITH EXPLANATION-III AND FOUND THAT THE PROPERTY WAS INH ERITED BY THE ASSESSEE FROM HIS MOTHER AND FURTHER FOR THE PU RPOSES OF CAPITAL GAINS FOUND THAT THE PROPERTY WAS ACQUIRED BEFORE 01/04/1981 AS THE SAME WAS ACQUIRED BY HIS FATHER, WHO DIED ON 02/07/1977. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO EXAMINED THE CONVEYANCE DEED. FACT R EMAINS, THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE BEFO RE 01/04/1981 FOR THE PURPOSES OF CAPITAL GAINS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PLACE RELIANCE UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF MANJULA SHAH 318 ITR (AT) 417 (MUM.)(SB) AND DECIDED IN FAVOUR OF TH E ASSESSEE AGAINST WHICH THE REVENUE IS IN APPEAL BEF ORE THIS TRIBUNAL. WE FIND THAT THE FACTUAL MATRIX OF THE DATES IS NO T DISPUTED BY EITHER SIDE MORE SPECIFICALLY THE REVEN UE. THE DECISION OF THE SPECIAL BENCH IN THE CASE OF MANJUL A SHAH WAS AFFIRMED BY HONBLE JURISDICTIONAL HIGH COURT I N 16 TAXMAN.COM 42. IDENTICALLY, VIDE ORDER DATED 24/04 /2011 IN JAYESH SHETH VS ITO, ITA NO.3584/MUM/2010, IT WAS HELD SHRI MANMOHAN KUMAR SONI 4 THAT FOR ACQUISITION OF PROPERTY BY INHERITANCE, TH E DECISION OF THE SPECIAL BENCH IN MANJULA SHAH SHALL APPLY. IN ANOTHER DECISION, THE HONBLE HIGH COURT OF BOMBAY IN CIT V S SMT. NITA KAMLESH TANNA (2014) 220 TAXMAN 165 (BOM.) WHI LE INTERPRETING SECTION 48 OF THE ACT AND COMPUTATION OF CAPITAL GAINS (COST INFLATION INDEX), WHEREIN THE ASSESSEE INHERITED PROPERTY FROM HIS MOTHER IN AY 2007-08, WHICH WAS ORIGINALLY ACQUIRED BY HIS FATHER IN 1979, HELD TH AT THE COST OF ACQUISITION, AS ON 01/04/1981 HAS TO BE TAKEN IN TO CONSIDERATION. IN THE AFOREMENTIONED CASE, THE HON BLE HIGH COURT DULY CONSIDERED THE DECISION PRONOUNCED IN TH E CASE OF CIT VS MANJALA J. SHAH (2013) 355 ITR 474 AND DECID ED IN FAVOUR OF THE ASSESSEE. WE ARE OF THE VIEW, THE BE NEFIT OF INDEXED COST OF INFLATION IS GIVEN TO ENSURE THE TA XPAYER PAYS CAPITAL GAINS TAX ON REAL OR ACTUAL GAIN AND NOT ON INCREASE IN CAPITAL VALUE OF PROPERTY DUE TO INFLATION. WHI LE COMPUTING CAPITAL GAINS ARISING ON TRANSFER OF CAPITAL ASSETS , ACQUIRED BY THE ASSESSEE UNDER A GIFT, INDEXED COST OF ACQUISIT ION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH PRE VIOUS OWNER, FIRST HELD THE ASSET AND NOT THE YEAR IN WHI CH ASSESSEE BECAME THE OWNER OF THE ASSET. EXPLANATION (III) P ROVIDES INDEX COST OF ACQUISITION MEANS AN AMOUNT WHICH BEA RS TO THE COST OF ACQUISITION THE SAME PROPORTION AS COST INFLATION INDEX FOR THE YEAR, IN WHICH THE ASSET IS TRANSFERR ED BEARS TO THE COST INFLATION INDEX FOR THE FIRST YEAR IN WHIC H THE ASSET WAS HELD BY THE ASSESSEE OR FOR THE YEAR BEGINNING ON THE FIRST DAY OF APRIL, 1981. THE PROPERTY IN QUESTION WAS INHERITED BY THE ASSESSEE AND THE PREVIOUS OWNER IS MERELY SHRI MANMOHAN KUMAR SONI 5 THE MOTHER OF THE ASSESSEE, THEREFORE, FOR THE PURP OSE OF COMPUTATION OF CAPITAL GAINS, THE PROPERTY WAS ACQU IRED BY THE ASSESSEE BEFORE 01/04/1981 AS THE SAME WAS ACQU IRED BY THE FATHER OF THE ASSESSEE WHO DIED ON 02/07/197 7. RESPECTFULLY, FOLLOWING THE DECISION FROM THE HONB LE JURISDICTIONAL HIGH COURT, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN DIRECTING THE ASSESSING OFFICER. IT I S AFFIRMED. FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 06/04/2015. +, ) -. /'0 06 /0 4 /2015 ) ( 5 SD/- SD/- ( D.KARUNAKAR A RAO ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' ( MUMBAI; /' DATED : 06/04/2015 F{X~{T? P.S/. '. . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. 6789 / THE APPELLANT 2. :;89 / THE RESPONDENT. 3. + + ' <& ( 67 ) / THE CIT, MUMBAI. P4. + + ' <& / CIT(A)- , MUMBAI 5. >? :&'# , + 67* 6# , ' ( / DR, ITAT, MUMBAI 6. $ @( / GUARD FILE. / BY ORDER, ;>7& :& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI